Issue #6. Global News Habits, Indonesia's Social Commerce Hurdles, & VPN Use in Particular Countries
How people consume news online; the implications of a social commerce ban in Indonesia; and VPNs in (non) democracies.
Hello dear reader,
I must admit, today's issue isn't brimming with positivity, but I hope you'll still give it a read.
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Global Patterns in Online News Consumption
The Reuters Institute has released a report called Digital News Report. It examines how the world at large and specific countries consume news. I've dived into the report and wanted to share some interesting nuggets with you.
Here are two broad observations:
First, news consumption across all mediums is dropping. Furthermore, the number of people who express a strong interest in news is also decreasing almost everywhere. For instance, within six to seven years, the percentage of news enthusiasts in Argentina fell from 77% to 43%, in the US from 67% to 49%, in France from 59% to 36%, and in Germany from 74% to 52%.
The second observation is the prevailing lack of trust in the media. Apart from a few European countries, Africa, and South Korea, fewer than 50% of consumers trust their news sources.
We us being focused on geography, we won't delve deeply into the reasons behind reduced news consumption or the skepticism towards news. However, there are several geographical insights worth discussing:
1. Online and social media consumption go hand in hand. Here's an apparent observation: as people consume more news online, they're also doing so more on social media. This trend is largely influenced by the reach of social media platforms. Interestingly, in countries like Norway and South Korea where the media landscape isn't dominated by US companies, consumption patterns are notably different.
2. Social media isn't the primary villain. News flash (he-he) — social media isn't the sole reason for society's issues. There’s basically no correlation (-0,18) between how much people consume the news through Facebooks of the world, and how much they trust the news. It probably has more to do with the various controversies and misinformation spread by media sources, irrespective of their ideological leaning.
3. If people trust, they pay (maybe). A positive correlation (0.56) exists between people's willingness to pay for online news and their trust in the media. There's also a correlation (0.57) between paying for news and online news consumption. Both are intuitive: people are unlikely to pay for what they don't trust, and the more they read news online, the more likely they are to pay for it. Other influencing factors include having a dominant national news provider like The New York Times in the US, a public entity like the BBC in the UK, or attractive subscription models like +Alt in Norway.
4. News podcasts — not that popular. Sweden and the US stand out as the only two countries where over 15% of the population tunes into news podcasts. This limited reach might be because of people's approach to news: what's the point of spending 20-30 minutes listening to a podcast when I can skim the headlines in 5 minutes and be done with it?
In conclusion, people's interest in news has waned, and their trust in media is shaky. However, if they trust a source, they might just be willing to pay for it.
Social Commerce Troubles in Indonesia
According to some estimates, the social commerce market in Indonesia reached $8.67 billion in 2022 and is projected to 10x in just 6 years. But it's challenging for any industry to grow 2x, let alone 10x, if that industry gets banned. And that's exactly what's happened in Indonesia. In September, the Indonesian government announced a ban on companies selling goods through social platforms.
The rationale behind the ban is that social commerce threatens traditional small retail sellers. Indonesia boasts 3.98 million grocery outlets. Compare that to 150,000 in the United States. The ban aims to draw people back to physical stores after offline businesses took hits during the pandemic. Aside from that, I believe there are three main arguments supporting this ban:
1. Social commerce reduces tax contributions. Social commerce in Indonesia is not heavily regulated, leading to improper taxation, especially exemption from VAT. Social sellers, paying fewer taxes, can offer more competitive prices.
2. Other businesses become collateral damage. Consider a scenario where you need broccoli. In a physical store, you might pick up the broccoli and then, on impulse, grab milk, bread, etc. On your way home, you might stop at a newly opened smoothie bar. Shopping online, you'd likely be more focused and less prone to spontaneous buys. This focus reduces potential revenue for local businesses.
3. Offline supply is not aggregated. Each small store operates independently, ensuring healthy competition. The internet, as previously discussed, often favors aggregators. By banning social platforms, it's as if the power is being returned to the people.
But I fear that the opposite will be true, and these measures will only harm businesses.
Firstly, consider this: social media sales are mainly driven by small businesses. 64% of medium- and small-sized businesses in Indonesia sell directly through social media. There are 6 million sellers on TikTok alone.
Higher taxes may be beneficial to the government, which might suggest that they're beneficial to the people who use services provided by the government. But you know what might be even more beneficial to the people? Lower prices.
The next issue involves barriers to entry. Given the 4 million grocery retail outlets, I suppose opening a store might not be too challenging. Yet, it's even simpler to create a social media account and start selling without navigating permits and registrations.
Furthermore, consider business stability. For offline sellers, a local disturbance can spell disaster. Online, sellers can tap into a nation-wide market, diversifying risks.
Lastly, social commerce has its ripple effects. Sellers can use the platform's advertising solutions or collaborate with creators – of which there are 7 million.
In conclusion, while the Indonesian government might be genuinely concerned about traditional sellers, the move may be counterproductive. Is it a genuine concern, or is it an aversion to platforms like TikTok? Whatever the case, severing a major sales channel for millions seems drastic.
The geography of democracy VPNs
There are studies upon studies examining how democratic various countries are. These studies use a plethora of indicators, develop comprehensive indices, and likely have a large team behind them. However, there might be a simpler way to figure out if you're fortunate enough to live in a democracy.
Enter VPNs.
VPNs are multifunctional. They range from innocent activities like streaming international Netflix shows to some pretty sketchy stuff. One key use of VPNs is to ensure your privacy and access popular websites blocked in certain countries. A telling sign of VPN popularity is search data. With Google Trends, we can track a keyword's popularity over time and compare its popularity with other countries. Let's break down what 'interest by region' means:
See in which location your term was most popular during the specified time frame. Values are calculated on a scale from 0 to 100, where 100 is the location with the most popularity as a fraction of total searches in that location, a value of 50 indicates a location which is half as popular. A value of 0 indicates a location where there was not enough data for this term.
For VPNs, search interest in Germany or France is low, scoring 6 and 4 respectively. However, in some places, it's notably higher, and you can likely guess the common thread among the countries listed below. But in some countries, it's obviously much higher, and you can probably guess what unites the countries on the chart below.
What we have here are the who’s who of democratic values and personal freedom:
Turkmenistan — I might be wrong, but I think it's the only country that requires a Letter of Invitation to enter.
Myanmar — a nation grappling with ethnic conflicts, opposition arrests, and currently a civil war.
Syria, South Sudan, Somalia — these are three of the failed states on our list. Actually, there are five if you consider that Somalia is practically three countries in one.
Eritrea — gained independence in 1993 and still hasn't held an election.
Senegal — the government went ahead and dissolved the opposition party and, as a bonus, cut off internet access.
Great for VPN providers, but just them.
And I really should try and finish on a more positive note.