Why things are not so easy for ad-supported Web2.0ers outside of US

Mejiroyaesakura11 I found this article quite interesting - from my point of view, at least, when there is a big battle going on between Japanese TV stations and YouTube.

Some Web 2.0 startups have unusual problem: too many customers

Japanese consumers are quite Web2.0-savvy. They love to write blogs and upload photos from their phones. According to Technorati, Japanese holds the largest share in blog language in the world. Large portion of YouTube users (2.12million Japanese users vs. 7.76million US users in March 2006, according to Internet Watch) live in Japan, and upload their favorite anime or comedy clips from their TV recordings. Japanese TV stations and rights holders organization JASRAC have been taking a hard-nosed approach all along against YouTube, demanding them to take down nearly 30,000 video clips last October. Japanese government officials are scratching their heads how to regulate this chaos.

YouTube is probably not happy that so many "non-revenue generating customers", according to the above article, are eating up their bandwidth like a termite attack. And by the way, there is no realistic alternative to YouTube among Japanese domestic service. Nobody is brave enough to start such an evil project that is sure to be shot down from the back. Poor Japanese users are welcome by nobody in this world.

So anyway, the point is, even in this land of rising sun and sophisticated Internet users, in general, purely ad-supported Web2.0 services are hard to succeed. Japanese Internet Giant Rakuten is an e-commerce company, who has actually transformed into a sort of financial institutions through numerous acquisitions. Yahoo Japan collects fees from auction and premium services, in addition to advertisement. Mobile contents mogul Index has been comfortably paid in mobile walled garden paradise.

Why? One reason is the potential advertisement market.  According to AdAge, in 2004, US total ad market was $264 billion, nearly 7 times of Japanese market ($38 billion). My friend in Japanese ad industry says the number seems low, probably due to the different definition, but still the number she knows is approximately 1/5 of US market. And by the way, population in Japan is 1/2 of US. And by the way, Japan still is the No.2 ad market in the world, with No. 3 UK mere $18 billion, and others are even much less. U.S. has a huge competitive advantage in ad-supported Web2.0 world. That is for sure.

(Illustration by ju-goya)