regional general manager for MSN's (Microsoft's internet division) recently formed intercontinental, Asia and Nordics (ICAN) territory, has a vast area to cover. "I manage everything from Russia to Australia, Portugal, Greece, Turkey, Israel, the Middle East, south America, the Asia Pacific region and Canada," she notes.
Baylay, who's been with MSN for the last four years and with Microsoft for 12 years, predictably, is constantly travelling. After her first visit to Mumbai and New Delhi last fortnight, the peripatetic Baylay headed for London and then to Canada, and returned to London (where she lives) before winging her way to Cannes.
She spoke to Business Standard in Mumbai on the internet's growth, of how internet companies can make money, among other things.
Excerpts:
You are responsible for a huge geographical area.
There are three fairly unique things about that geography. Firstly, we have several joint ventures and franchise relationships across MSN and we have put them all into my region. I have a history of managing partnerships and they are very important to us.
The second is the growth of those businesses in this region and the state of the development activities that are going on. For example, broadband penetration is extremely high in Korea and some north European countries like Sweden.
Therefore, the way people start to use the internet, interactive internet, changes quite significantly. In some of those markets you can see how it's going to move forward very quickly and there's an opportunity to capitalise on this and roll those things across the world.
In some other countries the internet is in the emerging stages still, with total online advertising penetration of less than one per cent. But many of those markets have significant potential. We are looking at learning from all our experiences about the best way to grow these businesses and to help the internet industry move forward.
The third reason is what we call the BRIC (Brazil, Russia, India and China) opportunity. Those opportunities are very important to us. It is also clear that the way that the next few billion people are going to come online is not the same way that the first few hundred billion came online.
You could argue that all us are offering internet services today predominantly to the top percentile of the global population, because they are wealthy enough to be able to afford a PC and have the opportunity to utilise those services.
In those markets, the internet experience will be very different "� they'll be through mobiles and cyber cafes. And, of course, other business models that may be quite nascent today will become more prevalent in the future. So there is a specific focus on those markets and that is one of the reasons I am here.
Why will it be different for people going online in newer markets?
The gross domestic product for people in those countries is significantly lower. Secondly, these countries are hugely diverse. You still see central hubs "�in India there are about six "� where the majority of the online population exists currently.
But if we truly bring the global world into the digital online world, we need to find ways to be able to reach people in rural communities. That's true of India, China, Russia or Brazil.
In several of those markets we have already seen interesting efforts by people utilising technology to help rural communities. The e-choupal in India is an example. ICICI Bank has been providing investment to rural communities to able to get farm quotes online.
People are hiring mobile phones to get their village online. There are some interesting entrepreneurial models in all those countries that are going to show a way forward "� of how local communities are going to be able to impact their lives through digital technology.
The second way is the access to technology. The cyber cafe phenomenon is a good example here. From ours and most of our competitors' perspective, that's not something that we have a great business model for.
The onset and penetration of mobiles globally is far more significant than PCs. That's not going to change. So how do we utilise that device to get people to have their experience online and get the information to better themselves? China is probably leading in this.
How will broadband change that experience? In Korea, it is an incredible social phenomenon to have the internet always on. It has changed the way they use internet services.
How?
Broadband is now a part of the run-of-the mill every day life. It is like electricity. You hit the switch and expect it to work, it is always on. So 80 plus per cent people in Korea have access to broadband. There's been a huge investment by the government.
It announced that all of the additional tutorial learning opportunities will be online from June 1. The Koreans are also very socially active in the way they network and socialise with each other on-line. So gaming is huge.
People go to cyber cafes and they're not sitting there on their own any more. They go there with a group of friends and they all play together. They have these huge competitions. They broadcast online gaming, internet-based competitions. They take cameras into cyber cafes. It's just an incredible social phenomenon.
The other thing is the whole way of expressing yourself online. It's called an avatar and in MSN Messenger 6.2 we've adopted a lot of this technology.
If we are chatting on Messenger, I can have a picture of me, you can have a picture of you, you know what the other looks like, you can use a smiling face, a grumpy face, whatever, in all our messages.
But that has gone to the next level in Korea. A company, Wisepost, developed an avatar. That enabled you to create an image of yourself online. You can have plastic surgery, change your hair colour, have a make over "� everything that you can do offline, you can do to your avatar.
So you have a cyber Sharon. And I can choose several different expressions of myself and dress differently. I have my jogging Sharon in the morning, my business suite Sharon at work, a golfing Sharon, a dinner party Sharon in the evening.
How do portals make money from this?
Nike sponsors my golfing outfit and Levi's gives me my jeans for the evening and you buy them. So you are buying in micropayments "� 10 cents, 20 cents, 50 cents "� a pair of Nike trainers or a pair of Levi's jeans.
Oh, you can have plastic surgery, change your hair colour, you can have a make over "� everything that you can do offline, you can do to your avatar. This becomes one of those viral things that spreads like wildfire and people pay for it.
How does MSN benefit?
Presumably if you have a relationship with a content provider, you also get a percentage of the transaction. The avatar "� we adopted it in Messenger 6.2 which is already released. But we want to continue improving on the product. We are just about to take that to Taiwan, UK and the whole world in the next 12 months.
Those things are much more likely to happen with broadband. In India , that is still quite nascent, you have 200,000 broadband users. We know that Reliance has ambitious plans.
All the telecom companies have broadband plans.
They are all taking about significant growth in that opportunity. That's one of the things we've come to look at.
In the global internet market, growth is coming from Asia. The internet is growing the fastest in China. But the overall penetration levels are still very low. In India, according to the TRAI, internet growth rates are actually falling because ISPs don't make money from dial-up access. How, then, do they make money?
It comes back to what the long term plan for the country is. India is quite clear that this is not going to be the case for the next two-five years.
How does MSN see all this?
As one great opportunity. The future growth of the use of internet is coming from Asia Pacific, particularly from those four emerging markets. The India business has been following the same kind of growth path and penetration curve that all the other markets have seen.
How do you assess internet usage?
We look at particular data points to predict what kind of opportunity it is going to be and how long it is going to take to reach that opportunity. We obviously look at PC penetration, although we are also well aware in this particular scenario that PC penetration is not a good matrix by itself because you have such a high number of cyber cafes and mobile users here.
So we look a t mobile and PC penetration and PC usage through cyber cafes. That gives some perspective on what the total internet population is and you can track that over three-five years.
In addition, you can establish the potential market opportunity in terms of the people you reach. Then you look at how to make money "� what does the advertising business look like here in India, who are the big advertisers, what do they spend on, which are the big ad agencies, how much of that money goes online and how has that grown.
In an established market like the US, you are looking at 3.5-5 per cent of the total advertising business going online. In Europe and the US the consumption of online is up to 10 per cent and above. So people are actually robbing their time from television, print and radio and shifting that to online.
You haven't quite caught up yet. In India, just under one per cent of the total advertising goes to online. So it's still early days. Over the next 3 - 5 years, those percentages will increase.
Many entertainment tickets, books, computer hardware and travel bookings are bought online. Can this list be expanded? How do portals increase their revenue?
Obviously, there's advertising. Then there is the ability for us to work through partners through games, and business development revenues. How do you expand this when broadband comes in?
Through subscription services.
Like what?
Like mobile subscription services "� I want to sign up for all cricket scores for the next season, the partner offers that service.
But in India, most of the mobile service companies themselves offer all this. Why would they want to tie up with MSN?
Because we bring the world's largest e-mail and instant messaging population to that partner. That is one of our unique attributes. Those mobile operators want to expand their user base and brand.
What is the turning point for internet usage growth?
A key turning point for revenue is the percentage of advertising business that goes online. Once that gets above 1-1.5 per cent, you are by default attracting traditional advertisers. Another is the overall online market penetration.
With portals, you are looking at upwards of 60 per cent online penetration (that is, 60 out of every 100 people online) in terms of reach in a country. From MSN's perspective, we look at our reach. The highest we've had is in Mexico "� 84 per cent reach. Out of every 100 people online, 84 use MSN. We go down from there to some of the other markets where it's 40-50 per cent.
The other turning point is how much time i s spent online "�when this becomes three hours a day or more, it changes people's habits and behaviour. The other one would be mobile services. And a disposable income to make purchases online.
You really need all of them working together to get to the point where you see real takeoff. The US has three out of five: very significant reach, advertising online and broadband. But it doesn't have mobile services. The whole SMS phenomenon doesn't exist.
Is MSN making money in India? What is your turnover?
(Laughs) I wouldn't be able to divulge this "� we don't talk about numbers on a country basis. But we've done very well here in terms of revenues, we've seen 100 per cent growth year on year in revenues for the last few years.
In 38 countries, India is definitely holding its own on a range of matrices. The business here is growing faster than in many of those countries and the opportunity here is much greater.
