Malaysia’s online media fast gaining ground, but revenue challenges remain

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BC - BC - Story 3(Week 6 - 30 May) - Online media storyBC - BC - Story 3(Week 6 - 30 May) - Online media storyCountry’s younger generation will be growing up reading news online.

By Carolyn H.S. Yee

It is one thing to be a popular news portal, it is quite another to be profitable as well. Page views rarely convert into Malaysian Ringgit but, 13 years after it started out as Malaysia’s first news portal, Malaysiakini has achieved the rare distinction of being both popular and profitable.

Its success reflects just how far the online media has grown in Malaysia, and gives a glimpse into a future where online communication could pose a serious challenge to the country’s traditional media.

In some respects, it already has. With dozens of websites and blogs now serving up news, newsmakers have had to take them seriously. The government has even issued online media with official accreditation.

These news sites multiplied rapidly over the last 15 years largely because they are free from the political constraints of the mainstream media, thanks to their independent ownership and the absence of licensing laws for online publications.

The ability to serve up independent and sharply-written news has quickly made newcomers like the Malaysian Insider and Free Malaysia Today widely read. More partisan sites like Sarawak Report later also jumped on the bandwagon.

But turning page views into dollars remained an elusive goal for most. Websites frequently burnt money before burning out altogether.

Still, Malaysiakini’s story suggests that this could be changing, and could put more pressure on the traditional media which has thus far remained profitable from advertising despite a declining readership.

Malaysiakini has long been profitable. But last year, for the first time since it began charging for access in 2003, advertisements overtook subscriptions in contributing to the bottomline. Its editor-in-chief Steven Gan said about 55 per cent of its revenue of over RM3 million last year came from advertising.

Jerry Lee, a media analyst with RHB Research, said there is some evidence to suggest that online advertising is growing fast but there is little hard data because it’s difficult to track.

For the first three months of this year, advertising expenditure came up to RM2.7 billion, according to the market research firm Nielsen Malaysia, but this excluded Internet ad spending.

“We believe Internet advertising is growing, and growing fast,” Mr Lee said, noting that the large media firms have all developed platforms to capitalise on online advertising.

Malaysia’s top English daily, the Star, last week (May 21) said it plans to spend RM20-30 million to develop a digital platform. It will also add more interactive content to its current website.

Lee attributed the growth in online advertising to improvements in Malaysia’s broadband infrastructure which soared to above 80% in penetration as at end last year.

Some observers believe that there has been a mindset shift among advertisers who initially shunned the online media for the very reason that it became popular with the public – its independent and sharp writing.

But Malaysiakini’s Gan said that, while advertisers may initially have been nervous, there has been a mindset shift since the tumultuous general election of 2008. Advertisers began to realise that a significant chunk of urbanites with high spending power tend to get their news mainly from online media sources.

It also helped that large corporations began to advertise online such as banks like CIMB, telecommunications providers like Maxis and Digi, government agencies and, inevitably, political parties in light of the recently concluded General Elections.

Despite this, it remains difficult for an online media company to turn a profit, let alone huge profits. The reason is simple: the competition is as vast as the Internet. The traditional media have limited competition but the online media compete with scores of websites from individual blogs to giants like Microsoft’s MSN, Google and Yahoo!.

“The online media cannot be as profitable as the traditional media, you have to work very, very hard just to turn in a profit,” said Gan.

Nevertheless, the online media has come a long way in just 15 years.

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