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. Last Updated: 07/27/2016

Local Internet Firms Look for Road to Riches

Despite the various hurdles in the way, there is money to be made in cyberspace and Russian companies are going to find it, said attendees at an Internet conference being held in Moscow this week.

Some 300 Internet entrepreneurs are putting their heads together and networking - in the literal sense of the word - at the second annual Internet Marketing conference, running until Thursday at the Soviet-era Molodyozhnaya Hotel.

"The main problem here is that people don't have enough money to buy things," said Andrei Mamykin of St. Petersburg-based Reksoft, which offers Internet billing services to Western companies in Russia and sells Russian-language books and videocassettes to Russian speakers living abroad.

Mamykin said only 150,000 Russians have credit cards that can be used to order goods and services over the Internet, limiting the moneymaking possibilities in Russia.

"That's a very small number," he said. "But on the other hand, these people are the same people who own computers and use the Internet."

The best estimates put the number of Internet users in Russia at 1.7 million, tiny for a country of almost 150 million.

Nobody knows the actual size of the market, but many conference attendees said they believe it is still growing despite Russia's ongoing financial crisis.

"Everybody knows how much they make, and how much their competitors make, but there is no data on how much it all adds up to," said Alexei Salnikov, the brainchild of the conference and the director of Moscow State University's Center for Information Technologies.

A few of the larger Russian Internet companies represented at the conference claimed gross incomes of about $1 million per year, but they were clearly exceptional cases.

Participants said the Internet gave them the ability to leap over Russia's financial woes and tap into foreign wallets, something that several of the most successful firms represented at the conference have already done.

Reksoft is clearly doing that with its billing service and sales to immigrants, which Mamykin says pulls in $30,000 a month. "Foreigners have more money, and it's less trouble working with them," he said.