Rediff-on-the-net is among the pioneers of the portal business in India. Ajit Balakrishnan, chairman, spoke to Charles Assisi on his perceptions about the industry.

What determines survival in the business?

Companies with superior management teams will survice. That is the number one criteria. Having knowledge of any other business will not help. The business is getting far too complex. The second criteria is the early mover advantage. The next guy has to be twice as good to get in. It gets tougher after that. But being the first is not enough. You got to be the first and good.

It is a myth that entry barriers to the industry are low and that one can survive on cheap investments. Amounts needed will be in excess of $100 million. About two years ago, newspapers needed to invest at least Rs. 25 crore to stay in the business. Over the next 3-4 years they will have to put in least Rs. 40-45 crore in the business.

Where does Rediff have access to such funds?

Rediff has access to funds because of investors like Warburg and Intel, etc. They are not just investors in the business, but partners as well.

Does Rediff have plans to go public?

Rediff will approach the public for funds. In the US, similar companies have been a big success. And investors have been rewarded stupendously. We would like to be part of the Indian market. We have a strong franchise among the 15-35 age group and intend to leverage on them. Over the next year or so, we will difinitely be tapping the markets.

How do you perceive competition from rivals in the traditional media?

Successful companies in the US have been ones like Lycos and Yahoo which have essentially had nothing to do with traditional business. I agree, content is a key ingredient. But the business of portals stands on three legs. Content, communication and e-commerce. As far as Express and Times are concerned, their attempts enter the business of portals are defensive strategies. I believe that it is schizophrenia. If you have brands like the Times or Express, don't create portals.

Are you suggesting that newspaper houses should not get into the business?

Oh no. Not at all. What I'm saying is that India needs at least 10 more sites like Rediff. If the market grows, that is when we can grow. It is just that I don't agree with the kind of strategies they are following.

Aren't these companies at an advantage as compared to Rediff?

All media companies depend on outsourced content to more than what they are aware of. Go to CNN on any given day. Or for that matter to the Times or Express. Any good media outfit should have its loyalties to its readers. To that extent, we are in the content business and it is news content. But the big portion of the Internet business is not necessarily news.

What kind of numbers are we talking?

By next year, if we are not able to cross the $10-12 million mark, we will not be economically viable. Right now, Rediff has managed around $3-4 million as turnover.

Where are your revenues coming in from?

In the US, over the last two years, about 2 percent of the total ad-spend has moved to the Internet. In India, it is the same trend. Rediff currently enjoys a 60 percent market share believe this market will grow to Rs. 12-15 crore over the next year In fact, we should see exponetial growth. And Rediff will maintain its first mover advantage.