Ross Settles | March 30, 2011
Peacock Coffee is a nice little 24-hour coffee shop on Yogyakarta’s Jalan Affandi near the universities. There are about a dozen universities in town. As someone used to toiling in Silicon Valley’s digital salt mines (aka coffee shops), the thing that strikes you about Peacock is not the quality of the coffee (very good), but the number of laptops, the speed of the Internet, and the buzz. That’s the only way to describe it. Buzz.
Online has momentum in Indonesia, you only have to look at the recent statistics:
- Second largest Internet audience after Malaysia in 2010, but growing three times faster
- Twitter’s largest market in Southeast Asia
- Facebook’s second largest market in Southeast Asia, after the Philippines
- Highest social network penetration in Southeast Asia and 20 percent higher than the global average.
(Source: “State of the Internet Southeast Asia – 2011“)
If you are a publisher, is there opportunity for you in Indonesia? The answer is clearly yes. But timing is important. Audiences are shifting to online and mobile quickly, especially younger audiences in Jakarta, Surabaya, and Yogyakarta. Indonesia’s traditional publishers and broadcasters are trying to follow the eyeballs, creating a very competitive environment. But, the online advertising market has continued to lag. ZenithOptimedia estimates that total online advertising will reach only $1.8 million in 2012. (Source: ADMA; ZenithOptimedia.) So, if you are a start-up online publisher planning on competing for the Indonesian market, you need to plan for the long term and think carefully about your content/audience and revenue strategies.
Traditional publishers like Kompas and the Jakarta Globe have followed the model of most markets by repurposing their printed content for online and mobile. But there are a couple of other notable content/audience experiments that build on Indonesians’ enthusiasm for blogging. SalingSilang.com is an Indonesian blog directory that uses some semantic techniques to categorise and rank blog posts into larger aggregation sites. One of their most successful aggregation sites is Politikana.com, an aggregation hub for Indonesians discussing local politics. SalingSilang has also used their technology to launch sites that aggregate and rank blogger writings on travel, food, football, and even a local site on the city of Semarang, Central Java. Swaberita is another content strategy that is worth watching. Swaberita builds on Indonesians’ enthusiasm for ‘self-publishing’ and creates a citizen journalism platform that resembles Malaysia’s KomunitiKini and Citizen Journalism movements.
An online only publisher in Indonesia faces some significant revenue challenges to start. The major traditional publishers have begun to buddle their print advertising with online advertising, taking advantage of the 70 percent share that newspaper advertising still holds in Indonesia. But, many of the ‘tools’ that start-up online media have relied on elsewhere are not fully available yet in Indonesia. According to Google’s AdSense blog, AdSense is available for search in Bahasa Indonesia, but not yet ‘technically’ available for content. Why ‘technically’? Well, resourceful entrepreneurs have created several ‘work arounds’ to use AdSense on content pages. AdSentra.com is one of the many local ad networks that can provide some revenue support. But as a whole, the advertising market is small. There are not a lot of advertising tools or services to support content, and competition is strong. So, a start-up building a local audience will need to plan for the slow growth of the local advertising market.
Finally, if you check out some of the sites mentioned in this post, you will encounter one of the more frustrating aspects of launching a site in Indonesia. The country has poor hosting infrastructure. Many of the sites that are hosted in Indonesian facilities can experience load times in the minutes. Making one of the most important strategic decisions for a start-up where to host the site. Many local Indonesian start-ups are hosted in the U.S. or Australia. When you ask the students and entrepreneurs at Peacock Coffee, you find that a lot of them are hosting their blogs overseas. But access to a foreign currency credit card can make this a difficult choice for a start-up, putting faster, more reliable, and reportedly cheaper international hosting facilities out of the reach of a small local start-up. Recently Amazon has expanded AWS to Singapore, which makes hosting on the cloud a new option for Indonesian start-ups, especially news start-ups that may experience traffic surges that can be easily and cost-effectively handled through AWS. Hopefully this will offer one solution to the hosting problem.
There is an Internet buzz in Indonesia. Entrepreneurs are working to target the large audience and rapid growth to capture what will be Southeast Asia’s largest Internet market in a year or two. While there are challenges from large traditional competition and poor infrastructure, entrepreneurial Indonesian online publishers have started to launch new products, like SalingSilang, to capture the market and address the obstacles. Stay tuned; my bet is that Indonesian entrepreneurs will see a few more acquisitions like Koprol from the large Internet multi-nationals in the next few years.