NYTimes: Developing Countries are a Drag on Profits

Major Sites Consider Limiting Access to Developing Nations

[The Shower Scene]

In a sign that the notion that information should be set free is meeting the financial reality that someone has to foot the bill, the New York Times [nytimes.com] reports that major online sites are deciding to limit and in some case entirely block access to their sites from developing countries in order to preserve profits. One analyst estimated YouTube could lose as much as $470 million in 2009, partly because of bandwidth costs. A spokesman from YouTube said YouTube "does not rule out restricting bandwidth in certain countries as a way to control costs." Unlike YouTube, Veoh has jumped off the fence and decided to block developing countries from accessing their website because, "...they are eating up bandwidth, and it’s very difficult to derive revenue from it."

Bandwidth intensive sites are considering throttling down the amount of content delivered to developing countries where online "...ad rates are ridiculously low" and "renowned brands struggle to turn even a tiny profit." The chief executive of Joost goes so far as to proclaim that if web companies "...really want to make money, they would shut off all those countries."

70% of Facebook's users live outside of the United States, many in countries that do not contribute to it's profitability. Underlining the urgency of the cost of expanding internationally, Facebook's Chief Financial Officer Gideon Yu bolted from Facebook because he reportedley objected to the company's profitability projections.

Three people familiar with the internal maneuverings at Facebook said Mr. Yu objected to such a rosy projection as the company was struggling to finance its expensive global growth.

The issue of bandwidth is critical to social networking and user generated content sites that deliver vast amounts of bandwidth intensive files and struggle to make a profit in the face of escalating bandwidth costs. Large sites like MySpace are testing "a stripped-down version of the site that is less expensive to display because it requires less bandwidth...".

The bottom line appears to be that, "from the business side of things, serving videos to the entire world is just not supportable at this time."

[edited by: The_Shower_Scene at 9:29 am (utc) on April 27, 2009]

[incrediBILL]

Eventually you get to the point where you realize it is just simpler from a business perspective to block the source of your problems when those sources aren't contributing to and are detrimental to your bottom line.

This is nothing new because many people in the Spider Forum already block entire countries for a myriad of options that include bandwidth theft, scraping, spam, fraud CC charges and many other things that are harmful to the site, server resources, bandwidth and last but not least the WEBMASTER's resources.

In the brick and mortar world the same thing happens when businesses start putting bars on the windows and finally move to a safer neighborhood when the problems exceed the rewards from doing business in that location.

[janharders]

It might, however, be a US-problem. I do admin-work for a company who does mostly focus on german markets, but does also have a few websites focues on the united states, so we decided to get local servers. I was surprised to actually see traffic limits and real price tags attached to the giga byte. Since we had, at least on the continent, not sure about the uk, vast investments in the infrastructure, traffic costs have fallen. It's not unusual to get a "flat" (that is, most providers limit your uplink to 10mbit after 1tb, which you can raise again by paying) for 50 euros a month, including hardware and rackspace.

I'm not at all saying you shouldn't do it (as a matter of fact, we do it, for reasons Bill mentioned), but traffic costs have never been the issue over here.

[pageoneresults]

Wow, this all ties in with our new mantra for 2009 and moving forward...

Ban 75% of the Planet
2008-06-23 - [WebmasterWorld.com...]

VBC - Virtual Border Control

[g1smd]

What if NYT banned large swathes of the planet?

How would US citizens working abroad be able to access it?

What about all the US military personnel spread round the world?

They'd be silly to do that.

[janharders]

>What about all the US military personnel spread round the world?

if they're living off base, they'd probably use local providers, but on base, like, can you have a local dsl-provider run cables on base? I personally doubt that, since there would be too many security problems and international borders & agreements to consider. Never really thought about that. Is there anyone that knows how soldiers get online when stationed (on temporary or long-term bases, say, iraq and germany) abroad?

[incrediBILL]

How would US citizens working abroad be able to access it?

What about all the US military personnel spread round the world?

Easily thwarted via a US-based proxy IP or proxy site.

However, I block proxies so unless you find one not on my list, you're just blocked.

[incrediBILL]

FYI, I see the military on some of my sites all the time and they're using their own IP which resolves to .mil domains from US-based IPs.

[LifeinAsia]

Is there anyone that knows how soldiers get online when stationed (on temporary or long-term bases, say, iraq and germany) abroad?

When I was working overseas as a military contractor, the military maintained its own network that connected to the "real" Internet back in the States. So to be on base and access a server that might be physically located 10 miles away, the packets would have to travel all the way to the U.S., jump onto the Internet backbone, come back to (local country), then do the exact reverse for responding packets. Just before I left, I believe at least 1 local company had started offering DSL for people with on-base housing. (Not sure how it worked, but I assume it connected directly to their local routers instead of using the military's network.)

[edited by: LifeinAsia at 11:51 pm (utc) on April 27, 2009]