Just a few years ago, venture capitalists pushed Internet startups to conquer every last corner of the world. Now they're asking why they don't just pull the plug on the Third World.
The New York Times explores the problem: Free websites like MySpace, YouTube, and Facebook easily find followings overseas, but advertisers don't want those users. About half the world's Internet users are too poor to draw commercial interest.
Meanwhile, those users cost the same amount of money to serve as more lucrative targets in developed economies. The Times argues, incorrectly, that they cost more to serve. The real problem is that it's not worth it for companies to build datacenters close to their overseas users — so they leave them with balky videos and slow-loading photographs. MySpace is even trialing a low-bandwidth version of its profile pages in India. Veoh, an online-video startup, has gone as far as cutting off its site to users in Africa, Latin America, and Eastern Europe. Digg is rethinking plans to acquire foreign knockoffs of its site. Analysts believe Google's YouTube is losing hundreds of millions of dollars a year, in part because it's serving up worthless lip-synch videos to worthless audiences around the world.
The irony here: The same financiers who are balking at paying for third-worlders' bandwidth bills encouraged this international growth. News Corp. chief Rupert Murdoch famously pushed Chris DeWolfe, MySpace's recently fired CEO, to expand the site to 15 countries a year after buying it. Venture capitalists encouraged startups to grow all over the world, lest overseas copycats get entrenched in their home markets.
Only now are the moneymen realizing that not all eyeballs are created equal, at least when they're in advertisers' sights. In the meantime, the global village had one hell of a show. We hope they enjoyed the kitty pictures while they lasted.