There was a super interesting article in the New York Times yesterday about how internet users in developing countries are not profitable for advertising based websites. It was one of those stories that made me hit myself smack in the forehead and say, "Duh!" It makes so much sense and yet I had never thought of it before.

The gist is that companies like YouTube, MySpace, Facebook and hundreds of others, make money by showing ads on their sites. These sites have been working to grow internationally and by doing so have had to make investments in the infrastructure required to do so (more servers & bandwidth.) While their traffic around the world has indeed gone up, what has become apparent is that this doesn't translate into more advertising revenue.

As the article explained, "there may be 1.6 billion people in the world with Internet access, but fewer than half of them have incomes high enough to interest major advertisers." This means that while the internet companies are working to pull to world together online, they aren't making any money because the advertisers aren't interested in a significant portion of the world's population. Some of these sites have even stopped allowing access to their sites for people in developing nations.

While I am ever the capitalist and want these companies to make money and thrive, it bothers me that individuals in developing nations may have limited access because advertisers don't find them sexy. There seems to be something we haven't figured out about globalization if these companies cannot bring their services to those in less developed parts of the world. It also is one more argument for figuring out a way to monetize these sites that is not entirely based in advertising.

Image Credit: http://www.thestrategyweb.com

 Update: A new tool was released today that tracks the use of Facebook around the world. Check Facebook has some supercool displays of use around the globe which they update daily.