The Israeli Internet sector is characterized by intense competition between the big portals, all of which vie for leadership, mid-sized websites seeking a ranking among the leading sites, and niche sites looking to differentiate themselves from the others, and find their own target audience.
But some Israeli sites are aiming high - the international market. They know that it is difficult to succeed in a big way in a market that is fairly small, while in many other markets, in some of which the Internet is still in its infancy, the potential for building an audience that has a critical mass and even generating substantial revenue is far greater.
One such site is Shvoong, founded in early 2005 by Avner Avrahami and Avi Shaked, co-founder of online gaming company 888 Holding plc (LSE:888). Shvoong has set itself the goal of enabling surfers to summarize all human knowledge, put it in on an online platform, and earn money in the process.
Summarizing the Bible
Younger surfers will be all too familiar with the oppressive homework assignments set by schools - to read "Crime and Punishment" and summarize it in one page; while university students will be familiar with the syllabuses crammed with academic articles that they are required to read and learn. Their familiarity with all of this gave Shvoong's founders the idea for the site. "Shaked and I know each other from school in Netanya," says Avrahami, "and the memories of the days of matriculation exams gave us the idea for our venture - to offer surfers abstracts of all the texts that exist for people that have neither the time nor the inclination to wade into the thick of the text, together with links to the full texts themselves."
According to VP marketing and sales Muli Lahav (a former manager at Google Israel and VP marketing at Walla), the idea behind the site is based on three global trends which justify its existence and strengthen its chances of succeeding. "Firstly, Shvoong was born into a world without time to spare, and abstracts are a format for which there is a big demand in world where people assess themselves in terms of benefit vs. time," he says. "Second, user-generated content is a trend that has been gathering momentum, and it also includes information sharing and communities that are created around fields of interest and knowledge. The site enables you to earn pocket money from writing, in your own time and in a way you find convenient. In some countries, pocket money like this can provide a proper wage.
"The idea of giving surfers a share in the profit has given people a real incentive to post quality content, and to a certain degree, we are pioneers of the Web 2.0 trend."
Says Avrahami, "The site has slowly begun to fill up with content in all categories, and surfers are logging on from many countries." Surfers who post content that turns out to be exceptionally popular, as measured by the number of viewings per text, so that the ratings are determined by surfers only, will receive a 10% share of the company's revenue. "People can earn up to $150 a month, and so far we've handed out tens of thousands of dollars," says Lahav.
Company CEO Eyal Rivlin claims, "Because of the infinite variety of the texts on the site, we have seen an increase in search queries by people throughout the world. This is not a niche site, but rather, a site that incorporates all the human knowledge in every field, and in countries where competition between content sites is still in its infancy, we already rank high in search results on Google, and have seen very heavy traffic."
A popular Wikipedia
According to Shvoong's founders, six million unique users visit the site every month, and 1.8 million abstracts have already been posted on the site, which is exceptionally popular in markets such as Poland and Brazil, where one million people visit the site every month. The site supports 34 languages, including Hebrew, and in Israel, 250,000 unique users visit the site every month.
Globes: You're actually competing directly with popular content sharing sites such as Wikipedia.
Avrahami:"There is one big difference between us and Wikipedia - Wikipedia is based on the principle of overwriting and editing, while we are based on the principle of addition. In Wikipedia there is one entry only for each subject, and its editing is filtered by a small number of people, in order to improve the individual entry. On our site we enable an endless number of texts for one entry, and the surfer is the one who chooses which entry he or she feels is the best. Moreover, surfers do not remain anonymous on our site."
Avrahami adds that Wikipedia is a more elitist site, while Shvoong is a democratic site. "We do not interfere with content posted by surfers, nor do we pretend to vouch for its authenticity," he says. "Any surfer can create any content he or she wants, and manage it independently. Some entries have hundreds of texts, and that way a surfer can get different angles on the same story. Wikipedia wasn't built in one day either, and I presume that we will undergo the same process of becoming accepted, and we will be able to compete with the largest content sites in the world."
Rivlin feels that Shvoong is a "complementary product to Wikipedia, not a substitute. We compete with other sites such as Yahoo! Answers or Answers.com all the time, and there are other sites in local markets that provide a similar service, but there is nothing like our site."
To avoid copyright infringement, the site has an automatic screener that verifies that content posted has not been copied from other places, and mini social networks have been formed around content posted by surfers. "Any surfer can adopt a number of writers, on the basis of their writing style, and consume the content they post regularly. That way, surfers can achieve recognition and establish themselves as opinion makers," says Lahav. In addition, surfers can post responses and monitor the feedback to their texts.
How you can summarize an 800-page book in a 300-word text?
Avrahami:"You'll be surprised, but we even have an abstract of the Bible on the site. Obviously, it isn't intended for use in preparing for matriculation exams, but for enrichment only, like most of the texts on the site, whose purpose is to provide a little information on each subject. The site also has site abstracts, and any site owner can write 300 words on the purpose of his site and add a link to it. The goal is to get people to enter the site as a first stop, and once there they can decide whether they want to broaden their knowledge by visiting other places."
As part of the site's desire to be perceived as an educational tool, Shvoong's founders believe that collaborations could be possible with academic institutions. "Students writing seminary papers can receive recognition and payment for their work, instead of it gathering dust in a library, and universities can use this to promote themselves." To this end, Avrahami and Rivlin recently traveled to China, where they reached agreement on collaboration with one the country's leading institutions, and in Israel they are in talks with academic institutions and publishers, with a view to reaching future collaborations.
Aiming for a global reach
Shvoong's success worldwide is based on a strategy of "thinking globally and operating locally," as Lahav puts it. "In recent years we focused mainly on increasing site traffic, but our goal now is to monetize that traffic." According to him, to succeed on global markets, the site has to be localized. "You have to put on local clothes and be identified with the country's local slang and current content. Otherwise you won't make it.
"The best way to do this is by forging collaborations with local parties, educational institutions and advertising agencies. Every market needs to be addressed individually, and the trick is to target the less-developed markets, where the competition is less intense, and the penetration, as far as the commercial side is concerned, is easier. The US market, despite its size, is not the only market you should target."
Shvoong already has one serious collaboration with WP, a local portal in Poland. "It's the equivalent of Walla," explains Rivlin. The two sites have created a jointly owned, branded content environment, and Lahav believes that "the potential revenue in the Polish market stands is $1 million a year. The potential revenue we can earn in the markets where we're popular is already clear, and I believe that we will already be making a profit in the first quarter of 2009," he adds.
Shaked has invested a few million dollars to date in the building of the site, and its revenue model is based on advertising, in the form of banners and Google's successful AdSense model. "We also allow marketing content to be posted on the site, such as branded content channels," says Lahav. Another option is the forging of collaborations with sites that support online purchasing, online book retailer Amazon.com Inc. (Nasdaq: AMZN) being one logical option.
Do you have any tips for an Israeli site that wants to make it overseas?
Rivlin:"You have to understand that foreign markets have different rules, for example, a different payments system and different tax rules, and every step you take can bring many difficulties in train." Avrahami adds, "You're talking about a considerable investment, and the larger the number of new markets you aim to enter, the more investment it will take. The slightest change requires a corresponding change in all languages so you have to create an efficient mechanism. It is also important that you work with local people and institutions that know the culture and trends. Every sub-domain is a world of its own."
Lahav agrees that the key to success overseas is localization. "Even the phonetics of the site name is important, and you have to understand the complexity and difficulty that targeting foreign markets entails." He adds, "It's important to find the hungry markets, where there is phenomenal growth along with virgin territory."
Published by Globes [online], Israel business news - www.globes-online.com - on September 24, 2008
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