By Omar Mohsen LinkdotNet Chairman Khaled Bichara is confident that OT’s new search engine can hold its own against giants like Microsoft and Google. News Focus Syria Thinks Small Damascus turns to microfinance to combat poverty An Industry Unraveling Once a symbol of national pride, cotton’s prospects are coming apart at the seams A New Way of Doing Business Non-profit group promotes economic development by giving companies a helping hand The Science of Buying Marketers examine the brain to find out what makes consumers tick Digital Booty With electronic piracy plaguing the music business,legitimate media companies scramble for a business model that pays A Rocky Start Theft, corruption and a little chaos mark the launch of a new property levy meant to haul the country’s tax system into the modern era Highway Robbery Reputation of white taxi program takes a hit as drivers caught rigging meters Onkosh.com is now live

By Tom Gara

Ask any musician, comedian, actor or athlete — timing is everything. And although it was unlikely to have been intentional, when Orascom Telecom (OT, bt100 number 1) announced on September 9 the launch of Onkosh, a new, specialist Arabic-language search engine, the timing couldn’t have been much better.

The central importance of search engines in the internet economy was driven home just a week later in a highly publicized announcement by The New York Times. Since September 2005, the paper had been offering the TimesSelect service, a subscription-only, $49.95 per-year section of NYTimes.com with exclusive content such as opinion columns and special internet-only news features.

TimesSelect was an attempt by The Times to monetize their online content, crucial for newspaper businesses, which are struggling financially amid shrinking advertising revenues and declining circulation. With more and more people turning to the internet for news, analysis and entertainment, print businesses across the world are scratching their heads and crunching the numbers in attempts to answer a simple question: How do you make money running a print media business in the internet age?

Until August, TimesSelect was one such possible answer. The service had attracted over 227,000 paying subscribers in 18 months of operation, contributing $10 million per year in revenues to the company. It had, however, attracted considerable criticism from industry insiders and analysts, who believed that such a ‘walled garden’ business model was not compatible with the open, conversational nature of the internet. With factors like search engine referrals and links from other websites and blogs becoming the key to growing your online audience, was locking your best content behind an impenetrable, credit-card-only barrier really the best long-term move?

The Times answered that question on September 16, announcing that the TimesSelect service was to be axed. All content, every last bit, was to become free, including the newspaper’s archives from 1987 to today.

“Since we launched TimesSelect in 2005, the online landscape has altered significantly,” said the company in an open letter published both in print and online. “Readers increasingly find news through search, as well as through social networks, blogs and other online sources. In light of this shift, we believe offering unfettered access to New York Times reporting and analysis best serves the interest of our readers, our brand and the long-term vitality of our journalism.”

This announcement, by one of the most powerful media organizations on the planet, signals the victory of the search business, and particularly the dominant Google, in the battle for online primacy. Users no longer go to The New York Times website, or BBC.com, or businesstodayegypt.com for that matter, and then search for what they want to find. They go to a search engine.

In an interview with paidContent.org, Vivian Schiller, general manager of NYTimes.com, the paper’s online business, explained that TimesSelect had hit both the subscriber and revenue targets set upon its launch. However, the explosive growth in online readers, particularly those coming to the site from search engine referrals, had changed the fundamental business model of the site.

With online readers growing by 130% during the two years of TimesSelect, it became obvious that the real potential for revenue growth was in selling advertising to the massive reader base (approximately 44 million visitors in May 2007). According to Schiller, “the scale and the power of the revenue that would come from that over time” would far outweigh incremental growth in paid subscribers. Much like the economics of traditional printed media, the business of web content now seems to hinge not on selling your content to readers, but in selling the eyeballs of your readers to advertisers.

With search engines now the dominant force in directing online traffic, and with online traffic booming across the world, the entry of OT and its LinkdotNet subsidiary into the search business is both risky and clever. Risky in that the company is placing itself into competition with some of the biggest and smartest online players in the world, with budgets that dwarf anything that OT can put forward. Clever in that OT may be able to capture a profitable Arab-world niche in much the same way it has in other areas of its business. As profiled in a Business Today Egypt feature this August (“The Next Big Thing?,” page 38) opportunities for early-movers still abound in the Arabic internet, as opposed to the more mature English-language market.

In an interview with bt to discuss the launch of Onkosh, OT board member and LinkdotNet Chairman Khaled Bichara made it clear that his company is more than comfortable entering a market currently dominated by billion-dollar behemoths like Microsoft and Google.

“Yes, if you look at it on the overall level, they [competitors like Google] are spending billions. But I don’t think any of them are spending billions on the Arabic part of the business,” says Bichara, speaking from his base in Rome, where he currently runs the fixed-line side of OT’s ¤12.5 billion Italian telecommunications business. “If you are looking at it from a total figure, yes, they are outspending us. But the Arabic part, the Arabic language has its own peculiarities, and if you compare their investments on Arabic versus ours, I don’t think it will be that much bigger.”

Bichara declines to put a figure on OT’s investment into Onkosh, so it is difficult to compare with that of their competitors, who also keep such information tightly guarded. It is known that OT acquired much of the underlying technology behind the search engine in their 2005 acquisition of Wind, the Italian telecoms business. OT management sent the source code back to Cairo, where a team at Link Development, the web and applications development arm of LinkdotNet, adapted it into a fully functional Arabic search service.

Onkosh has been live in beta preview form for just over a year, giving the Link Development team plenty of time to iron out the bugs and quirks inherent to such an ambitious project. One new feature that Bichara is especially proud of is the “Bel3araby” (In Arabic) option, where users can type an Arabic search query in Latin letters, including the numerals commonly used by Arabic speakers to represent Arabic letters with no direct Latin equivalent.

As the bulk of Arabic-speaking web users are accustomed to transliterating Arabic script into Latin text for chatting, forums and text messaging, the feature is likely to resonate with web users who want to search the Arabic internet without needing to type in Arabic script.

“We feel that it is features like Bel3araby that will give us the edge, that will differentiate us from the big players,” says Bichara. “Our advantage will be that we have more relevance in local customization than the big players.”

The site also features the typical bells and whistles associated with a search portal, all customized for Arabic usage. Onkosh News is an Arabic adaptation of the highly successful Google News services, aggregating and categorizing Arab-language news stories from across the web. Onkosh File Search lets users search for downloadable files such as music and video, whether attached to forum postings or available on specialty download websites. As such forums and download services account for an estimated 70% of Arab-world web traffic, the feature is well suited to its market.

According to details given to bt by LinkdotNet management, traffic to Onkosh.com has taken off (up by 500%) since the official mid-September launch — although without absolute before and after numbers, it is difficult to establish how significant that figure is. Website ranking service Alexa.com puts current Onkosh.com traffic at levels 130% above their three-month average, with the majority of users coming from Egypt (33%) and Saudi Arabia (29%).

As the Arabic internet market is still in a relatively early stage of development, it will still be some time before serious money is to be made from operating high-profile Arabic internet sites. This doesn’t concern Bichara: LinkdotNet is in it for the long run, and is willing to stake its position now and watch the market grow around their online properties.

LinkdotNet intends to build an advertising-based business model surrounding their service similar to what has been successfully done by the established search engines, with some tweaking based on the needs of the local market.

“I think when it comes to search’s business model, the book has more or less been written,” says Bichara. “In terms of revenue, we will be selling advertising and sponsored links and so on — both on our own site and then also on other sites. The difference is that we might not be selling all of our advertising online like the other multinationals; we have our sales people on the ground doing more face-to-face type of selling. The implementation of the business model will be customized in terms of how to sell, but the advertising model is more or less the same.”

Throughout the beta period, advertising was not sold for Onkosh. Since the launch of the service, officially announced at GITEX Technology Week in Dubai in early September, LinkdotNet has been building awareness of the product and preparing advertising packages. However, according to Bichara, advertising will not be sold until the final release of the system in early 2008. This gives LinkdotNet and OT time to build traffic and create a user base — a must-have for a website looking to attract advertisers.

A huge competitive advantage that Bichara intends to leverage to the fullest is that LinkdotNet’s online advertising wing, Connect Ads, is already a leading player in the region’s online advertising business. Connect Ads sells advertising for the LinkdotNet family of websites including MSN Arabia, Masrawy.com and Yallabina.com, all top-rating websites in Egypt and the region.

By already having an internet-savvy sales force on the ground and in contact with key advertising buyers, as well as a team that offers media planning and buying services as well as creative consultancy, LinkdotNet has a powerful head start over their competitors. They may also be one step ahead of Google, whose sales force is yet to make its mark here.

According to Bichara, Connect Ads delivered consecutive triple-digit growth in advertising revenues in recent years, making each member of the LinkdotNet family of websites profitable. Advertising sales have been focused on Egypt and the Gulf, but the company is looking into opportunities in other high-growth emerging markets such as Algeria and Pakistan, where OT has existing operations.

In an announcement given exclusively to bt, Bichara shared details of what looks to be an exciting future for Connect Ads: The unit will be expanded into a full service online advertising agency, offering advertising sales not just for LinkdotNet sites, but to additional external websites that choose to partner with the agency. By broadening the scope of both its sales efforts and its online affiliates, Connect Ads is set to become one of the regions major online players.

It is a position that Bichara believes few others in the region can compete with. “In terms of size, I don’t think there is anyone that can compare [to Connect Ads], if you look at the network of sites, the LinkdotNet data centers and ad servers, the sales force, the millions of dollars in existing revenues — that is all something that only we can offer right now, and we think a lot of websites will be very interested in working with us.”

The development of such an agency will have a knock-on effect, not just on the size of the online advertising market — it will play a vital role in the development of Arabic language websites. This, in Bichara’s mind, is where his company will have the greatest impact on the broader internet in the region. “We can empower other sites by generating revenue for them, which will let them focus on their strengths and develop their presence. And obviously they can also optimize their site for Onkosh, which will help grow their popularity and find new users.”

Since founding LinkdotNet in 1995, Khaled Bichara has grown from a 23-year-old entrepreneur with a right place, right time business model to one of Egypt’s most successful international businessmen and certainly the most successful under the age of forty.

After overseeing the growth of LinkdotNet from a fledgling ISP to a fully formed regional IT services business, integrated into Naguib Sawiris’ Orascom Telecom empire, Bichara received a new challenge. Sawiris initially had Bichara assist in the due diligence process for the ¤12.5 billion acquisition of Wind, an ailing Italian telecoms company with fixed-line, mobile and data operations.

When the acquisition was completed, Sawiris appointed Bichara as head of Wind’s fixed-line and portals business, which was in decline and needed serious intervention, losing up to half a million customers each year. The turnaround has been remarkable, with the unit now both profitable and growing in subscribers — a rare feat in the stagnant and well-matured European fixed-line telecoms business.

Mission accomplished? That’s what we thought, when last speaking to Bichara for our April 2007 issue (“The Italian Job, page 86). “I should leave in September 2007,” he told us, “but I will probably stay an extra few months to close out the year.”

So is Bichara coming home? We’ll have to wait a little longer than months. In an exclusive revelation to bt, Bichara says he has been promoted within Wind, becoming the company’s chief operating officer. This means responsibility not just for the fixed-line and internet businesses, but also mobile operations, managing the network, information technology and regulatory affairs.

The job will see Bichara responsible for a mobile network with a subscriber base of 15.2 million and growing in the high single digits. Mobile operations bring in over ¤3.2 billion in annual revenue, which, to put things in perspective, is more than quadruple the total annual revenue of Mobinil, and larger than the entire market capitalization of Telecom Egypt.

As part of the change in roles, Bichara will also spend 3-4 days per month in Cairo working on LinkdotNet’s online business, as well as new Orascom Telecom initiatives. So yes, Bichara is coming home, and no, Bichara is not coming home. It’s simple, really.  bt