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Business news, 31.05.2007 17:39

Exploiting Russian Backwardness

internet By Nikita Savoyarov

Russia lags behind most the developed world in Internet development but investsment opportunities in St. Petersburg in particular remain vast — these were the main conclusions at the Second St. Petersburg Internet Conference held May 18 at Motel Olgino. The conference, organized by Moscow’s Regional Public Center of Internet Technologies (ROCIT) and the companies1C-BITRIX and TRINET, gave voice to a number of strategies with which to exploit the backwardness of the Russian Internet market.

In terms of Internet development, St. Petersburg remains between two to three years behind Moscow, while for other Russian regions this figure is three to four years, said Alexander Aygistov, vice President of ROCIT. Given that Moscow itself is three to four years behind the average figure for the developed world, the situation requires serious attention, he said.

According to the Committee for State Statistics, there were 26 million Internet users officially registered on Russian Internet space (.ru) in 2007. Three million new users are expected this year. Other statistics show a total of 28 million Internet users in Russia over the age of 18, or 25 percent of the population. There were about 700,000 .ru domain names at the beginning of the year.

Internet advertising grew strongly last year, by 87 percent, and is now worth a total of $187 million, but it remains far behind traditional media, where advertising amounts to $6.49 billion.

The four main themes discussed at the conference were advertising, security, the use of Linux- and OpenSource based software, as well as the opportunities for earning money using the Internet.

The latter was addressed by Roman Yushko, Commercial Director of TRINET, who demonstrated the Online & Offline models of earning by way of the project “virtual trade complex PIK” ( Using a variety of different tools, the project aims to increase competitiveness, the number of visitors and the volume of sales for tenants.

Domain names are another means of earning money with the Internet. Generally this involves selling, either directly or by auction, registered names in the secondary market. According to Pavel Khramtsov from RUcenter, head of the project, the highest price paid for a .ru domain name ( was $19,000, paid at the beginning of this year.

A representative series of Internet success stories was evoked by Reksoft’s Dmitry Rudakov, alluding to the Internet-shop (1997), payment service (1999), and the online printing service for digital photos, (2004). Using these examples he named the vital ingredients for a successful investment, among which was experience, including the experience of unsuccessful projects, having a good team and keeping a watch on the market, new technologies and research.

The St. Petersburg market is attractive for many reasons — the multitude of niches, low competition and the generally low cost of projects. This will undoubtedly be aided by the 10-fold growth in the Internet market forecast by the Ministry of IT and communications of Russia for 2007.

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