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Where are Sri Lanka’s digital media start-ups?

15 Sep 2019

“Let’s talk about sex!” I said, and my audience looked quite stunned. I was about to make my opening panel remarks at a forum on digital disruption organised by the University of Ruhuna. The participants were a few dozen students and faculty members from the university, as well as members of the Southern Province business community – all keen to find out how the digital economy brings up new opportunities and challenges for entrepreneurs. And there I was, talking sex. Okay, I was talking about sex in a digital sense – asking if they shared the widely held belief that Lankans are “obsessed” with sexual content when they go online. The previous speakers had been technical, so I wanted people to ease up. But I should have known better: Lankans may be as curious about sex as all other nationals, but they’d rather not talk about it in public! I persisted for a couple of minutes. Where did they think “sex” ranked among the top 10 Google search terms from Sri Lanka during the whole of 2018, I asked. Nobody answered, but I had the info ready. According to We Are Social, a web data monitoring service that crunches data from various sources, last year, we had searched online the most for these (in descending order): Sri Lanka, video, Facebook, gossip, Google, news, songs, YouTube, gossiplanka, FB. No, sex wasn’t among the top 10, not even in the top 20. Predictably, cricket was no. 12, and “love” was the 13th most searched term. (Source: https://datareportal.com/digital-in-sri-lanka) Of course, we should not draw too many conclusions from a simple insight like that, and I didn’t. The point I wanted to make was that we need to have a good understanding of not only tech gadgets but also tech users’ behaviours before we can innovate digitally and online. Digital media start-ups, app developers, and others need a knowledge base to build on. Digital virgins? Organisers of the Ruhuna Symposium, held in Weligama on 16 August 2019, had asked to explore ways in which digital technologies are disrupting the media industry. I noted how a good number of legacy media companies – the “old guard” of publishing and broadcasting – are struggling to evolve, many failing to go digital in ways that serve their audiences while creating new revenue streams. I noted how our legacy media outlets have extended themselves online rather clumsily and ineffectively. With very few exceptions, their online products remain mediocre, leaving the field wide open for digital-first and digital-only content publishers to innovate. Studying the digital habits of Lankans through surveys and other methods can highlight their behavioural patterns – something I urged Ruhuna’s dons and students to consider. We just don’t have adequate social science research on our people’s technology perceptions, preferences, and phobias. I cited LIRNEasia’s recently released After Access study findings for Sri Lanka (which I wrote about on 2 June and 9 June 2019). Their demand side survey covered 2,017 persons aged 15 to 65, in randomly chosen households from all nine provinces. One key finding was how awareness about the internet and digital services does not translate to enough actual use. Even among those who go online, there is very limited participation in e-commerce and e-government services. LIRNEasia found that most Lankan web users do not venture beyond simple browsing. Only 40% of internet users have done an interactive function such as a web search, posting or commenting on a website or social media, installing an app, or creating a log in for using a particular web service. It is not clear what exactly inhibits the rest. Understanding that can open up new ways of serving these underperforming users, which can make money for the right kind of service providers. Media start-ups Sri Lanka does not have many media start-ups probably because our market is limited – and already crowded. Too many print, radio, and TV media outlets are competing for pieces of a finite advertising pie. Advertisements and sponsorships drive most of the media industry, with subscriptions bringing in only meagre revenues and digital paywalls, practically non-existent. What could happen when more digital media start-ups emerge, slowly but surely? They will likely eat into the advertising share of legacy media companies, pushing the latter kind further into the red. Some legacy players – on life support for too long – could finally collapse. Data collated by Nielsen Media Watch shows that Sri Lanka’s total advertising spend (ad spend) in legacy media during 2018 was around Rs. 120.5 billion. Of this, almost Rs. 91 billion or 75% was spent on television advertising: Most of it went to the country’s 18 free-to-air, terrestrial channels. Another Rs. 22.5 billion (around 18%) was spent on radio where over 50 FM channels competed for it. Newspapers received only Rs. 7 billion or 6% of the total. (Caution: These figures are based on “rack rates”: In reality, media companies offer significant discounts to high-volume advertisers.) The same source analysing the same rack rates said Sri Lanka’s total ad spend in 2014 was Rs. 77 billion (TV accounting for 71%, radio 21%, and print 7%). This means ad spend has continued to grow during the past five years due to factors like inflation, aggressive marketing and advertising practices, and proliferation of media outlets. Advertising in print (newspapers and magazines) has stagnated over the years and is in a slow decline in percentage terms. This suggests focus is shifting from print to digital media, says one industry leader. However, there is no reliable figure on total annual ad spend in digital media. Not surprising, given that digital outlets are proliferating (with hundreds of news and gossip websites, not to mention websites of legacy media outlets). Global social media platforms like Facebook are also stepping up competition for local advertising rupees/dollars, leveraging their fine-tuned ability for microtargeting potential customers. This strategy taps web users’ data – such as what they like, who they are connected to, what their demographics are, and what they have recently purchased – for displaying advertisements customised for each user. Maturing audiences Meanwhile, audiences are maturing and becoming more discerning and demanding. This is most visible among those between 15 and 29 years. Market research sources say that younger audiences engage content on multi-screens, i.e. smartphones or tablets, besides TV screens. Attention spans are shrinking, which in turn challenges content producers to pack more into each second. Television audiences have also been fragmented between broadcast and online. More and more entertainment and news originating from TV channels is being consumed not on air, but online. With several local TV channels now uploading all or most of their programming to YouTube within hours of first broadcast, some shows now gain more traction there. Multinational companies operating in Sri Lanka realise changes in audience behaviour and are adapting fast, but many local advertisers are keeping up, says an industry source. How can media start-ups succeed in this scenario where consumers expect fast-paced, short, and punchy content across multiple platforms, delivered for cheap or free? This was another question I raised at the Ruhuna event, one for which I don’t have a full answer. One piece of advice I offered: Don’t look at legacy media dinosaurs, and study app developers instead. Some local apps have attracted a large enough customer base who make micro payments monthly for a specific content or service. Given the conservative advertisers, Sri Lanka’s digital media start-ups are challenged to augment advertising revenue by exploring non-traditional funding, for example through crowdfunding, event organising, and grants from charitable sources. (Science writer Nalaka Gunawardene has been chronicling and critiquing information society for over 25 years. He tweets from @NalakaG)

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