Cheques amp; Balances

I met Rajesh Jain in 1993 when he was in the process of creating Indiaworld and looking for free content8217; which he hoped would attract the eyeballs8217; of Non-Resident Indians. Eyeballs those days did not mean internet viewers and Jain often had to start by explaining what the Net was. Our book on the Securities Scam has been published a few months earlier and Jain wanted to put it on the Net. He was completely charged up about his project and truly believed that the Net would someday begin to pay. But it was a chicken-and-egg situation. Unless he got good content first, he could not attract 8216;hits8217;. The securities scam was big news those days, but Jain was very clear about what would have a more continuous and steady market. What he was really after was R K Laxman8217;s cartoons, Khalid Mohammed8217;s film reviews and of course, cricket coverage. He seems to have succeeded at melting Laxman, but I am not sure whether he could get permission for the film reviews.

Indiaworld took off slowly, with news content picked up from various newspapers and grew with the help of several enthusiastic friends of his from the advertising and media world. He then came up with the idea of helping NRIs send flowers and chocolates to friends and family in India.

There was a time, when he and his wife had given up on their social life to upload information and keep the site upto date. The came trouble. All of a sudden the site had gone blank and we learnt that Jain8217;s Ravi Data Base was having trouble with a partner who had hosted the site from the USA. Worse was to follow when Jain found a new host, but his trouble with the former partner continued.

Today, if you type in Indiaworld.com, what you get on the Net is not Jain8217;s Rs 500 crore site but another one with an identical logo hosted by his former partner. Jain8217;s Indiaworld is at Indiaworld.co.in. At one time the problem was so bad that Indiaworld.com had created a mirror site, which simply copied every bit of the content on Jain8217;s Indiaworld. Worse still, it used the same articles and changed the names of the authors and put in fictitious ones. This was happening until less than a year ago. Even today the problem has not been sorted out. Though Indiaworld.com is no longer a mirror site, it has the same logo and some stroppy news content. Jain8217;s Indiaworld on the other hand is a much larger site which contains the popular Samachar.com, Khoj.com, Khel.com and Dhan.com segments, chats, e-mail, gift shops, news, views and more.

In fact, a portal which Satyam Infoway thought is worth a mind-boggling Rs 500 crores. What does it say for Satyam8217;s savvy or that of its advisors? Frankly, were I shareholder of Satyam I would worry about its propensity to pay so much more when it could have paid far less. It is difficult to say what should have been the right price for an Rs 1.3 crore turnover outfit with 20 people when the savviest investors around the world are buying into internet companies at incredible valuations with no profits in sight. But there are so many questions that the Indiaworld acquisition raises, which Satyam can probably answer. For instance, the tale of the two Indiaworlds makes it clear that Satyam has not paid for the brand name. Even today, new users tend to log on to the wrong site. As things stand, analysts say that Rediff-on-the-net attracts more eyeballs than Indiaworld. Also Stayam itself has a portal 8211; so one assumes that it paid real big money for the content.

Again the valuation is perplexing. As I said before Indiaworld8217;s content was being replicated in a mirror site with few consequences. Also, with just 20 people on its rolls, Indiaworld8217;s new content is nothing but a reproduction of all the big news stories in the Indian press. For instance its business section, gives a viewer the top 15 stories from all the five business newspapers in one easy to access section. This is wonderful for a viewer but what about those who provide the content? So far, none of the newspapers have allowed their stories to be used without any payment, but with Indiaworld being valued at Rs 500 crore will it remain that way? After all each major newspaper group has set up smart portal sites and the Indiaworld8217;s valuation is bound to see many newspapers off their Internet sites into separate companies and using them to raise big money.

Now that Jain has established that there is big money to be made on the Net, media companies will either want him to pay for the news items lifted from them or may refuse permission altogether. After all, newspapers do not employ armies of reporters across the country, to simply have somebody else spin big money by creating a site. Where does this leave Satyam? The valuation may have been perfect the way the business is today, but will remain the same if Satyam has to find a way to create new content and will have to pay big money to get it. Columnists and writers will have to be paid so will newspapers who allow their stuff to be used by internet sites. In other words Rajesh Jain8217;s sale has probably changed the Internet portal business forever and I think that it is Satyam which will keep paying all the new costs. This raises another question.

Why did Satyam not opt for the tougher path chosen by Rediff-on-the-net of creating new content by employing content creators? The cost would have been a fraction of the Rs 500 crore that Satyam has paid for Indiaworld and may have to fork out to retain the site the way it is. There is only one answer. If it had not raised big and easy money through the American Depository Share issue it would not have spent the money so easily.

Author8217;s email: suchetadalalyahoo.com