Tuesday, December 19, 2006

Why So Few Web Domains?

Today, there are only 6065 web domains registered in Armenia. While it is true that this number has been growing rapidly over the past few years (see here), it remains too small to be of much economic value.



Registering a domain in Armenia requires little effort (https://www.amnic.net/). The annual cost is USD 50 for foreigners, and 13200 Drams for residents (about 370 per USD). It takes a couple of days for billing and credit card payments to go through. Getting a web hosted can be more difficult from outside Armenia (annual cost about USD 100-150), particularly with the smaller ISPs who are unable to handle credit card billing. Hosting may take place on servers inside and outside Armenia (e.g. US).

For a landlocked country, whose access to the West is further restricted by the blockade by Turkey, one would have expected a greater degree of utilization of the virtual world. What explains this very low penetration, and what are its economic consequences? How much of this trend is explained by telecom problems? Or by the quality of web hosting services and service providers? Is the market too inward looking? In short, are we looking at supply or demand driven constraints? Is anyone doing research in this area?


[Added Feb 5, 2007 -- In his keynote address to the Government Leaders Forum Europe 2007, Bill Gates stated that:
... I was meeting with leaders from Armenia, and we were talking about their borders, and we were realizing that the Internet connection is the thing that allows them to reach out and really not have geographical issues or border issues be as limiting as they would have been in the past.

8 comments:

Onnik Krikorian said...

Well, as the number of web domains increases so to has the number of internet users within Armenia. Before, many web sites instead addressed an audience more outside of Armenia than inside. Now, we're seeing shops and services create a web presence for a market inside Armenia. We even have e-drams now as well.

In other areas the same is true as well, For example, the first news sites were mainly interested in supplying information and services to an audience outside of Armenia and the languages chosen were usually English and Russian. Now, with well known political as well as economic restrictions on the media inside Armenia, many outlets are instead going online and interested in reaching an audience inside and outside the country.

However, if you're talking about an internal audience the number of subscribers is still small because the cost is still too high in relative terms. That will always limit the number of domains registered. Secondly, even if we have a huge Diaspora out there it doesn't mean that they're so interested in Armenia they want to read about it on the Internet.

Like I said, even with a huge Diaspora of millions of people, the number that read up information about Armenia is insignificantly small. For example, let's take the three main online news outlets -- A1 Plus, Hetq Online and Armenia Now.

Take a looks at their readership stats on circle.am and it's really very small. As fo writing this comment, they stand at 1270 (A1 Plus), 464 (Hetq Online) and 436 (Armenia Now) readers a day -- and those figures are for all their various language editions combined.

It's pitifully small, and even the e-dram site only had 92 individual accesses today according to it's circle.am rating. Basically, I'm guessing a lot has to do with the small internal market for .am domains. Ultimately, internal markets should drive such areas of the economy.

Yet, I don't believe the situation is so much different in Georgia and Azerbaijan where internet connections are significantly cheaper ($35 / month for ADSL in Tbilisi compared to $150 / month in Yerevan) so perhaps average incomes rather than the cost of connection is the main factor in limiting internet access.

Certainly, comparing the situation with Azerbaijan and Georgia might give you an insight into understanding what is happening in Armenia. For example, if the same is true it's not the price of the connection, it's something else and probably to do with the combined cost of equipment and connection in what is a poor country.

David said...

I think there is more to it than the poverty level. Also one would hope that the use of the internet need not be restricted to the news outlets in Armenia.

Also one need not be so inward looking. I am sure there are lots of missed apportunities to market and cater to the diaspora, in particular the 400,000 that visit the country every year, as well as to the rest of the world. There are bound to be many positive externalities to having such domains, inlcudidng web development and outsourcing.

In any event, I suspect this will take time and those from outside may act as a catalysts. It would be good to see more research on the subject. Coincidentally, I do have a web site hosted in Armenia. But I have been out of my wits trying for the past two days to overcome a spoofing of my site -- it looks like someone has "stolen" the aea.am email identity and has sent thousands of spam emails which are bouncing back.

Onnik Krikorian said...

Well, bear in mind that I'm not talking about poverty in relative terms although in international terms, ok.

Anyway, let's look at your tourism argument. Firstly, I again ask about the situation in Georgia and Azerbaijan where I doubt internet access is much higher even though they haven't had to cope with the dreaded ArmenTel monopoly.

Secondly, let's look at tourism sites based in Armenia. Despite tourism statistics, use of the internet again seems not to figure so much in this. Looking at circle.am statisics for yesterday, for example, what should be the main portal for tourist information in Armenia -- http://www.armeniainfo.am/ -- had 382 accesses.

http://www.circle.am/?go=catalog_yesterday&cat=recreation

And away from Armenia, but talking about general interest from the Diaspora in Armenia let's look at the ratings for yesterday for the main MFA Armenia-Diaspora site: 592

http://www.circle.am/?go=catalog_yesterday&cat=internet

And circle.am stats seem pretty acurate because the A-D site even posts its own which currently stand at 524.57 unique accesses a day. That's really VERY low when you consider the size of the Diaspora although let's be honest, the most connected part of the Diaspora to Armenia is now in Russia and I can't see a Russian or Armenian language version on what is an English-language site.

According to circle.am, the most popular Armenian site is www.armenia-online.ru which had 10,890 unique accesses yesterday, but which looks more like a forum than a general information web site although I don't know Russian so could be wrong.

Anyway, the long and the short of it is that few Armenians are apparently using the Internet to find out about Armenian things. Sure, in Armenia it's obvious why -- the low number of internet users. But what about the Diaspora? From what I can see is that few Armenians out there are using it either despite a high penetration of internet use.

Therefore, as an Armenian business or organization, why go online and register a domain? Why develop a web strategy and pay for all of the associated costs when it doesn't appear as though there's an online market to break through to?

And actually, the main long term market will ultimately be internal once the economy here actually gets somewhere and benefits all. Look at the penetration of the internet in many walks of life in Estonia, for example. And as I said, the media might be the one genuine area for growth (apart from forums).

Yesterday, A1 Plus had 2,066 readers, Hetq Online had 757, Armenia Now had 545, ArmenPress 509, and Arka 239.

http://www.circle.am/?go=catalog_yesterday&cat=news

Again, given the number of Armenians in the world these stats are very low, but very respectable given the number of hits for official sites as well as tourist information portals. But anyway, going on holiday is one thing. We still haven't got a proper breakdown of what constitutes a "tourist."

What would be interesting to know, however, is how many tourists are applying for e-visas. That might indicate whether the market for Armenian online services and information is there. Remember, the online media exists only because of government censorship, restrictions and the limited number of subscribers to newspapers, but mainly the first two.

It's why I have a blog, for example, although again, my hits are low. Still, I can at least be happy that given the money and staff of the main media outlets, little old me can attract 250-300 unique readers a day. Not great, but to be honest, there's not many sites out there which can attract signficantly more and most are actually attracting significantly less.

Unfortunately, many people automatically assume that millions of Armenians worldwide translates into hundreds of thousands of potential web visitors. They hear stories of this or that site having such a number of readers, but the reality is that many still confuse page views with unique accesses.

Eventually, people discover that the online audience for Armenian related things is actually very low.

Onnik Krikorian said...

Wow, I mean, let's really look at some sites in Armenia that should be getting a lot of serious interest.

The UNDPI web site (www.undpi.am) had 22 unique accesses yesterday. UNDP (www.undp.am) had 148. The Council of Europe (www.coe.am) had 45 and World Vision had 25.

http://www.circle.am/?go=catalog_yesterday&cat=organizations

In terms of using the internet for open government, the Mayor's Office (with the very sought after www.yerevan.am domain) had 116 unique accesses yesterday. And talking of tourism as we were, the official sites for some of Armenia's regions are lacking in terms of readers yesterday to say the least.

http://www.gegharkunik.am/ - 1
http://www.tavush.am/ - 4
http://www.aragatsotn.am/ - 0

Incidently, the internal economy has a lot to do with this because while foreign tourists are all very nice and bring in dollars, an internal tourism market is also very important. Ironically, however, it is cheaper for local Armenians to visit Kobuleti or Batumi than Sevan.

Still, I'm sure that might be an interesting post for you in the future. I would like to say, however, that do believe in more online activity in Armenia. The hits might be low, but there's a wealth of information out there that wasn't there before.

Onnik Krikorian said...

According to this report there are only 3,000 domain names registered in Azerbaijan so it's not economic or because of a telecommunication monopoly in Armenia.

Don't know, but I'd just guess that the internal market for online services and information is low in all three S. Caucasus Republics, and there's not enough interest in Armenia from the Diaspora.

That said, it might be precisely because of the Diaspora (and to a much lesser extent the attraction of .am domain names for radio stations worldwide) that Armenia has twice as many domain names registered as Azerbaijan.

For sure, internet penetration isn't than much different.

nazarian said...

Now when I need a .am address, I will know where to go :)

Thanks.

HansG said...

I agree with much of that has been said. Our surveys have some data on Internet usage and it's still very low.

There are some additional factors, I think. My guess would be that you have to have a fairly differentiated economy for the Internet to become attractive. Right now, business-to-business in Armenia can still be conducted direct, the market (this is my guest) is not very specialized and complex.

Moreover, trust probably is in short supply, meaning that people disbelieve what they will see on any site, preferring personal recommendations, and face-to-face interaction.

Lastly, in our experience, advanced hosting that actually can do some of the more interesting technical things is very difficult to get in the South Caucasus. So at best, the Internet is simply an advertising presence. It's not yet a business model, in any way.

David said...

Hans -- can you elaborate on the last point you made on the advance hosting in the South Caucasus. This is well beyond my economics training.