[LAST MINUTE NOTE: I wrote this article a couple days ago and scheduled to post it today. Just this morning, the Korean edition of the Jungang Daily (interestingly, this one doesn't seem to have been translated to the English edition) published an article that makes nearly the same point as I do below. Here is the link to the Korean article: 불법복제 미-일 2배, IT경쟁력 8단계 추락, 한국은 SW 후진국. I may expand on it later in a follow-up post.]
Two events in the past week have conspired to sharpen my perspective on an issue of Korean business that's been on my mind for awhile. It is the question of why Korea seems somewhat isolated from the mainstream of global online trends even though the country was first out of the block for high-speed and wireless Internet a decade ago and development of the Korean IT industry is a top national priority.
A recent article in the Jungang Ilbo (Nov. 14, 2009 – 세계적 온라인 서비스, 한국선 왜 고전하나) explains how US-based online services such as Second Life, MySpace, Facebook, Google, YouTube and Twitter are all finding their results in the Korean market disappointing. In my opinion, this is not because the Korean competition is superior. Also, the Korean media is all abuzz about the vast sums being invested by the government into the Korean IT industry. Here is one of many articles about this: 차-조선-건설-로봇에 IT를 입힌다.
Event #1: An Insight Worth Following Up On
To bring my point into focus, I'd like to share about a conversation I had with a fellow graduate student at Hanyang University. He had seen me using a new software program (The Brain – www.thebrain.com) on my computer and grasped immediately that the powerful linking features could be useful for organizing his thoughts and materials for a doctoral dissertation that he'll be starting on soon. I had given him the link a week before and he came to class this week to tell me that he'd played around with it and really liked the program… But one thing bothered him… The trial period only lasts for 30 days and he wanted to know if he really had to actually purchase the software after that. "Well, sure, of course", was my reply…
After class he came up to me and explained that my reply got him to thinking about a curious difference between Korean and American perspectives. Whereas I only thought it natural to pay for a program I find valuable, he was at first unable to understand how a program couldn't be free. It wasn't that he was trying to be sneaky; it just didn't occur to him that paying was part of the deal.
This thinking comes from an environment where all the major software programs (and music and movies, too) circulate online in ways that the licensing can be circumvented. Sure, we have that in the US, but it's not the mainstream anymore like it is in Korea (and much of the world).
I should point out that my associate is a Korean professional, about my age, and my equal or superior in many ways. I was impressed with his desire to confront this difference honestly and respect him for doing so.
Event #2: Wondering About the Problems
Chang W. Kim is an evangelist of web trends in Asia through his blog Web 2.0 Asia. As a full-time job, he works at Google's Seoul office, helping Korea's advanced blogging service technologies and features find worldwide users through Google's global reach. Previously he worked with Samsung's mobile division and TNC, a blogging service startup that he headed jointly, and which was purchased by Google.
Chang shared on Saturday at TEDxSeoul about how the "golden age" for online services in Korea was 1997-2001 and about how innovative services were often introduced and gained a following in Korea long before they reached the US market. For example, Dialpad.com was a forerunner of Skype and Koreans were putting up personal pages on Cyworld while Facebook and MySpace were still in the concept stage. But each of these Korean services failed to grow successfully in the global market.
(As an additional note here, Yeonho Oh, the founder of OhMyNews.com which brought personal news publishing to the masses in Korea back in 2000 long before blogging took off, was another speaker at TEDxSeoul. His presentation reflected on the lack of sustainable development achieved for the site after its initial explosion onto the scene.)
Chang W. Kim gave a number of reasons why the Korean online service environment has lost its excitement and several suggestions for improvement and reasons for hope. For example, he pointed out that government regulations require a ridiculous degree of security for online transactions. I can personally vouch for this fact, as we have often given up purchasing something online when we couldn't figure out how to get through the security steps. This has prevented us from making online purchasing a way of life here in Korea like we do with Amazon back in the US.
Kim also pointed to a number of young entrepreneurs who are pioneering new online concepts. And the Korean government is never far behind in trying to promote good ideas (or to get in the way).
But I think he may have left out one important point… In a market where intellectual property in software is not respected within the mainstream, new ideas (though they may get off the ground thanks to Korean creativity and hard work) often get snuffed out early because the path to market is too long and the ultimate payoff uncertain. In other words, if the consumer market is used to getting stuff (really good stuff, sometimes!) for free, why would they start paying early on for a new service that is still rough around the edges? And without that early revenue stream, how can new services invest and develop?
I might point out that this applies not just to Korea. But as President Lee Myeong-bak explained so well in his two-hour TV discussion last Friday evening, even though Korea has become an advanced country in many areas, there are still other ways in which Korea needs to improve (Don't we all!?). He didn't mention this area specifically (his comments came in the context of Korean foreign aid) but the point remains valid for online businesses, too.
Sure, the US market is bigger and that makes for an easier playing field for start-ups in the US, but the Korean market shouldn't be small, and it got a big head start thanks to the spread of high-speed Internet long before other countries. Korean innovations would surely get a boost from a populace ready to pay for good ideas at an easily stage.
Interestingly, Korean gaming companies, such as NCsoft are world beaters. This surely has a lot to do with the fact that they found a way to protect their intellectual property and monetize traffic early.
The next stage of Korean online development, in my view, will require changes in this area if Korea is become an online leader again.