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Digital Marketplace to Flourish in Asia-Pacific

The homegrown Web 2.0 industry is projected to boom with a regional population of 900 million consumers under the age of 16. This accounts for approximately a third of its population, compared to under 20 percent in mature economies such as the U.S., UK and Germany.

More than 80 percent of these consumers are coming from India and China. In terms of users, IDC estimates that a third of all (unique) Internet users in 2007 are Web 2.0 users in India, 83 percent for the same in Korea and 70 percent in China, indicating that Internet users are quickly going beyond emailing, chatting and Web surfing.

"The Digital Marketplace will flourish in Asia-Pacific because of the sheer size of the population, the growing consumer influence with the rise of new money and government push to create a vibrant IT and Internet savvy population in many parts of the region including the rural areas and villages. The region's entrepreneurial spirit and aspiration combined with the strong need for localization will lead to homegrown versions of global Web powerhouses." said Sandra Ng, Vice President of IDC Asia-Pacific Digital Marketplace research practice.

IDC estimates that the total ICT spending from the provider community of this sector to range between 0.05 percent to 0.2 percent of the total ICT spending within most countries. While this proportion and the revenue generated by these providers are small, IDC believes that monetization of business models will take off in the next 2-3 years.

With the entry of new Web 2.0 providers in these markets, the local economies will attract new venture capital, angel investors and other investments. Given the extensive localized nature of the consumer space in many parts of the Asia-Pacific region, the entry of homegrown Web 2.0 companies and their extensive activities collectively, will generate a lot of momentum, interest, demand and excitement.

This marketplace affects not only the providers and their customers, but also the regulatory authorities. The government bodies responsible for content, education and economic development often keep a close watch, in some cases discouraging certain activities and in other times encouraging efforts with incentives (such as education and economic development).

Most governments, in general, encourage the flurry of investments and activities in this space as it creates a vibrant ICT industry that supports an IT and Internet savvy population. In this newly launched research program, IDC will broadly categorize Web 2.0 in several sectors, characterizing them based on the types of services offered in India, Korea, PRC and ASEAN.

The Web 2.0 services to be explored include Multimedia, Search, and Community, among others. While not every sector or provider has figured out ways to monetize their services, the collective opportunity is growing. Advertising and subscription are the most common business models today and these are expected to grow aggressively.

Premium charges -- at times on top of subscriptions -- are a high margin model although identifying and going to market with commercial services that are extremely well received is never easy. This model, however, is generally well received among SMB users.

Transaction charges typically on top of the commission or revenue sharing model is another popular business model as more online transactions are made and linked to Web 2.0 services.

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