Australian Cybermalls News

The Fairfax media group have become the latest entrants in the Australian online auctions market with the announcement that they intend to operate a new site called Sold.Com.Au in conjunction with US-based Classified Ventures, a company owned by a combine of US newspaper publishers including the Washington Post, LA Times, New York Times and Chicago Tribune. Classified Ventures already operate Auction Universe as an alternative to sector pioneer eBay, and the Australian operation will be jointly owned by both groups. Fairfax will retain control of 81% of the joint venture, while Auction Universe - which will supply the technology - will own the remainder. Fairfax said that although the site will initially be free to use, it expects to levy a 3.5% sales commission and other fees soon after launch.

Search engine giant Yahoo - which last year acquired the GeoCities free hosting service - now intends to claim ownership of everything posted on GeoCities (or any of Yahoo's other services) and to appropriate content royalty-free from its owners. In a quiet modification to its Terms of Service agreement over the weekend, Yahoo altered clause 8 to read that anyone making use of its services would "automatically grant... Yahoo the royalty-free, perpetual, irrevocable, non-exclusive and fully sublicensable right and license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content (in whole or part) worldwide and/or to incorporate it in other works in any form, media, or technology now known or later developed." In other words, to legally acquire the rights to any content posted on GeoCities or any other Yahoo! service and the ability to use that content for its own profit without having to pay the original authors a cent. Since the TOS was modified, anyone attempting to upgrade existing content on Yahoo! sites has been impelled to sign the new TOS before being allowed to do so. Most users who've done this in the last 72 hours - unaware of the implications of the change - have already unwittingly signed away the rights to their GeoCities site under the "new" rules of trade. Yahoo was approached for comment on the matter but had yet to respond at publication time.

Telstra announced late last week that it is looking into the feasibility of building a new international submarine cable between Australia and Japan. If the project receives the go-ahead later this year after Telstra and its two joint venture partners have conducted a feasibility study, the new cable 10,200km cable is expected to be operational by 2001. It would connect the east coast of Australia with Japan, then to the rest of Asia and the USA via existing northern hemisphere cable infrastructure. The new "super cable" would also have a capacity of 640Gb per second - more than 500 times the combined capacity of Telstra's current trans-Pacific Australia-US links. The announcement comes in response to Optus' anticipated opening of its rival trans-Pacific Southern Cross cable at the end of this year, and the company's recent introduction of high-speed data links to the UK.

According to a major new research study of 100,000 consumers to be released next Tuesday, investors in Net stocks who believe that they've bought equity in an "Internet brand" may be seriously mistaken. Harris Interactive, the online arm of polling firm Harris Black International, found that almost 40% of consumers couldn't name an online retailer in 12 out of 13 common categories. However, the same consumers could name an offline retailer in those categories. This surprising result has led Harris to suggest that offline retailers who've spent many years building up their brands still have a significant edge over Net-only companies like Yahoo! and Amazon in consumer recognition and acceptance, and that many of the current Net-only retail leaders are still vulnerable to being displaced by any competing offline retailers with strong brands who decide to seriously challenge them. On the flip-side, Harris also believe that the study indicates that there's still time for companies to get into the online market and make a name for themselves - an opportunity that will steadily decrease as the market becomes progressively more crowded.

The Australian Federal Government plans to establish a new organisation to oversee a national framework for online transaction authentication and the development of secure ecommerce. The new body - the National Electronic Authentication Council (NEAC) - will oversee the administration of national guidelines and handle liaison between Australia and international groups working in these areas. According to IT Minister Senator Richard Alston, who announced the decision to create the new organisation, NEAC "will play a key role in the development of electronic commerce in Australia" as well as enhancing business and consumer confidence about the security of online trading. NEAC will be responsible for determining technical and business guidelines for the development of online ecommerce security systems such as digital certificates.

According to a report by Nielsen Media Research, there are now 92 million adults online in the USA - and that almost half (46%) are now women. Nielsen's survey, which was conducted across 7,200 households in April this year, found that there had been a 40% increase in the number of people buying online over the preceding 9 months, with the number of women making online purchases increasing by 80%. At least part of this growth was fuelled by the increasing variety of products available online for purchase, Nielsen believe. The top 4 products purchased online were books, CDs, videos and computers, with some differences emerging in online shopping behaviour between the sexes. Nielsen found that the most popular products amongst men were autos and auto-parts (12.6 million shoppers) and computers (9.4 million). In contrast, the most popular shopping items for women were clothing (6.9 million) and computers (6.4 million).

The Australian Senate last night approved the sale of an additional one-sixth of Telstra by a margin of 37 to 35 with the support of Independent senators Mal Colston and Brian Harradine. The sale of a second tranche of shares in the telecommunications giant is expected to raise $16 billion for the Government, pushing the corporation into 49.9% private-sector ownership. Communications Minister Senator Richard Alston described the decision as "a significant victory for all Australians". However, his enthusiasm was not echoed by either the Opposition or Australia's state premiers, all of whom were critical of the privatisation of one of the country's most profitable public enterprises. The Government hopes to sell up to 35% of the 2.1 billion share issue to foreign investors, and anticipates the shares will debut between $8 and $9 when the issue occurs. Timing for the share issue has yet to be decided.

The USA may follow Australia down the same censorship path after the US Senate voted 287-139 on Friday to pass the Consequences for Juvenile Offenders Act. The Act includes an amendment which would require US schools and libraries to install technology to screen out material "harmful" to minors as a condition of receiving a federal Net access subsidy, known as an e-rate. Only the day before, the U.S. Senate Judiciary Committee voted 16-1 to ban sports and casino gambling over the Internet - a move that seems likely to drive online casinos offshore where US authorities will be unable to regulate them at all. The move came in advance of the results of a two-year study of gambling in the US by the committee, One of its recommendations will be to ban gambling over the Net. According to the study, the number of Internet gamblers more than doubled from 1997 to 1998 from 6 million to 14.5 million, and Internet gambling revenue is expected to reach $10 billion by 2001. If the committee's recommendations are made law, operators of online casinos in the USA will face fines of up to $20,000 and 4 years in gaol.

Online financial services provider E*Trade announced yesterday that it had formed a strategic alliance with the ANZ Bank. E*Trade will gain access to ANZ's 4 million customers and ANZ will receive an initial allocation of 6 million E*Trade shares, with the potential to take a stake of up to 40% in the online company in future, depending on the volume of business the bank's customers generate. The non-exclusive alliance, which involves co-branding on ANZ's site and a marketing campaign designed to help push the bank's customers into using E*Trade's services, would allow E*Trade to seek other marketing partners in the future. The move also helps bolster both E*Trade and the ANZ in their battle with the Commonwealth Bank's Commonwealth Securities site, which is currently the leader in the segment. The deal also marks the first time one of Australia's Big Four banks has abdicated a portion of its business to an outside firm that principally exists online. E*Trade currently claim to have gained 2.5% of the Australian financial services market after a little more than a year of operation.

The US Federal Appeals Court in San Francisco ruled yesterday that Diamond Multimedia Systems' Rio MP3 Player did not qualify as a "digital audio recording device" and that the Recording Industry Association of America (RIAA) did not have the power to stop the Walkman style player being sold. The Rio allows users to store and replay MP3 music files downloaded from the Internet. MP3 is a digital audio format that has become very popular since its introduction last year. Many independent musicians now release their latest recordings via MP3 files across the Net, and MP3s are also starting to appear in some online music retailers, who traditionally use RealAudio to deliver content samples. However, because of the ease with which MP3 recordings can be made, it is also being used by some consumers to create pirate copies of copyrighted recordings. Many of these have begun to appear on the Net, prompting the RIAA's concern that the introduction of the Rio will only make the problem much worse, to the ultimate detriment of recording artists. This led to them filing suit against the Rio last October.

A study by the University of Texas estimates that the US Internet economy was worth $US301 billion last year and created jobs for over 1.2 million people - about 40% of all new jobs created in the USA last year. This was up from an estimated $US5 billion less than 4 years earlier in 1994. The study, funded by Cisco Systems, also predicts that this rate of growth will continue, increasing the total value of the US online economy to $US1.3 trillion by July 1st, 2000. The University of Texas study concluded that that the value of ecommerce generated by US companies last year was $US102 billion, and that the top 20 companies included in the survey generated Net-based revenues lin 1998 with a market value of an estimated $US2.4 billion. The study's findings were based on interviews with over 3,000 US firms that generated part or all of their revenues from Internet products or services.

According to a one-day survey of 28 million unique daily visitors to 86,000 web sites undertaken by WebSideStory on June 6th, 44% of all Internet traffic is now being generated by non-US domains, indicating the increasing decentralisation of the Net outside the USA. WebSideStory found that .COM domains generated 29% of all Internet traffic on the survey day, followed by .NET domains with 25%. WebSideStory's Stat Market found that .EDU, .GOV, .ORG and .MIL domains accounted for less than 3% of traffic, while the remaining 44% went to "foreign" or non-US domains. WebSideStory also found that the top ten countries connecting to the Internet on the day of the survey (outside of the USA) were Japan (24%), Germany (16%), UK (7%), Canada (5%), Australia, Italy, Sweden, France and the Netherlands (4%), and Switzerland coming in 10th at 2%.

An article in US weekly financial publication Barrons has suggested that Amazon.com has lost any advantage it may once have had over traditional players because of its growing need to expand, and that the true value of Amazon shares may collapse to as little as $US10 or less when the stock market begins to realise this. The article speculated that Amazon's need for ever larger warehouse space for inventory along with real estate costs, inventory management, marketing expenses and increased competition mean that the online bookseller is rapidly losing its advantage over established companies. From this, the authors went on to suggest that Amazon did not represent a new business paradigm, but rather the company hadn't moved beyond the existing paradigm of middleman and distributor. According to the authors of the article, only those businesses who sell their own products directly to consumers will be successful online.

Anti-virus manufacturers are working on a cure for a new Israeli virus spread by email called Worm.ExploreZip, which automatically erases Microsoft Office files from single machines or across entire networks. Ironically, the worm propagates itself by using Microsoft MAPI commands to send itself attached to a reply to all messages stored in a user's inbox, with the following text: "Hi, I received your email and I shall send you a reply ASAP. Till then, take a look at the attached zipped docs. Bye." The virus activates if the recipient executes the zipped file attachment. Meanwhile, users of Microsoft Outlook have been warned to be on guard against the French PrettyPark worm, which spreads itself in a similar way to Worm.ExploreZip using a file called PrettyPark.exe or Prettyorg.exe. Once executed, the program will run the Windows pipes screen saver while it infects a system. Once unleashed, the virus then e-mails clones of itself to addresses in the victim's Outlook address book, then runs a routine that connects its victim to the custom IRC channel every 30 seconds while they're on the Internet - presumably so the virus originator can attempt to seize system passwords. Again, users can protect themselves by not opening e-mail attachments.

Australian media magnate Kerry Packer's Ecorp will debut on the Australian Stock Exchange (ASX) on Tuesday after raising $161 million through a 20% share issue, which closed today. Analysts expect that the stock will trade at least 60% above its $1.20 issue price when it debuts, and a few expect that demand could push the shares as high as $3 - making the remaining 80% stake owned by Packer's Publishing and Broadcasting Ltd (PBL) worth at least $1 billion. Ecorp's principal assets are PBL's interests in the nineMSN site it co-owns with Microsoft, the Australian HotMail site, and the deal it recently struck with online auction giant eBay to open an Australian version on the nineMSN site later this year. However, Ecorp's business only produces $12 million a year in online sales at the present time - so if analyst's predictions are fulfilled, ECorp will be valued at almost 110 times its gross sales, and almost 1000 times it current profits. Part of the reason for this optimism, analysts believe, is because of the synergy that many investors hope Mr Packer's other media interests can bring to Ecorp. These include his ownership of the Australian WebTV licence; 25% of Foxtel; and his recent acquisition of the Hoyts movie chain. This is in addition to nineMSN's existing 70 sites and PBL's extensive chain of traditional print media titles.

Fresh from ramming through its controversial Net censorship legislation last month, the Federal Government today began to promote its next initiative to "improve" online commerce: the introduction of a Goods and Services Tax (GST). In the speech in Canberra today, Senator Ian Campbell, parliamentary secretary to Communications Minister Sen. Richard Alston, claimed that the GST would be a good thing for the online economy because it would reduce hardware prices by as much as 22%. Senator Campbell claimed that cheaper computers would encourage Internet use to soar, and lowered taxes would foster consumer spending. "One of the biggest hurdles to Internet access for many Australian families is the cost of a PC," Sen. Campbell said. "Computer hardware prices are constantly decreasing and the effect of the new tax system should help lead to further price reductions. This should encourage further growth of ecommerce enabling Australia's digital economy to gain critical mass quicker."

US companies don't care about Internet censorship, according to Senator Richard Alston. In fact, some approve. That was the message that was issued today when Senator Alston returned empty-handed from a trade and investment mission to Silicon Valley. Before leaving, Sen. Alston had been advised by his staff that it was possible the Minister would face public protests during the tour. However, this didn't occur and - according to the Senator - the only company who raised the issue of Net censorship at all was Yahoo!, and he said that they largely approved of the new Australian laws (a claim that Yahoo! Australia was at pains to deny soon after the Minister's release was issued). Meanwhile, the co-founder of LookSmart, Mr Evan Thornley was quick to criticise the new law, saying that existing laws achieved the same results without impinging on human rights. He added that the filtering technology the new law was framed around was ineffective and simply wouldn't work as the Government envisaged.

After introducing controversial new laws last month which will give it the power to decide what Internet content Australians will or will not be allowed to see from January 1st next year, the Australian Federal Government has returned to "business as usual" mode this month with the launch of a new online awareness campaign to advise consumers about how to shop on the Net safely, and to counter some of the misinformation that has clouded the issue in the past. The National Office for the Information Economy (NOIE) has produced six 'Shopping on the Internet: Facts for Consumers' fact sheets which are specifically designed to assist both experienced and would-be shoppers make better-informed decisions when buying over the Net. The fact sheets provide authoritative answers to a number of the most important questions about shopping on the Internet, including the risks and benefits of shopping online; what to look for in a web site; credit card safety on the Internet; paying sales tax and duty; privacy concerns; and what to do and where to turn if things go wrong.

A landmark decision in the NSW Supreme Court this week has clarified the somewhat murky issue of Australian internet defamation law. Justice Carolyn Simpson, hearing a defamation case against former Macquarie Bank employee Mr. Charles Berg, ruled that while the material published on the Net at http://www.macquarieontrial.com is defamatory to senior bank executives, the court doesn't have any power to stop the site because it is physically hosted in the USA. Furthermore, Justice Simpson noted that while she was satisfied that - despite denials - Mr Berg had actually been involved in the creation of the site, state-based defamation law "was not designed to superimpose the law of New South Wales relating to defamation onto every other state, territory and country of the world." The decision implies that Australian Net publishers afraid of repression under the Federal Government's controversial new Net censorship bill will be able to relocate their sites off-shore and resist any defamation proceedings brought against them by claiming that US law applies to US-hosted sites regardless of whether any alleged defamers reside in Australia or not and regardless of whether the allegedly defamatory material was originally prepared in Australia and was uploaded to a US-hosted site from Australia.

A new war erupted amongst Australia's on line share trading sites today when Quicken announced that it intended to make live ASX stock quotes freely available on its site to anyone - becoming the first online broking site in Australia to do so without charging a fee. Quicken's new site, run in conjunction with broking firm Harvey Poynton, will also offer a Quick.Broker service which will charge similar fees to the current market leaders Commonwealth Securities and E*Trade. According to Quicken's marketing manager Wendy Kerr, the new service is deliberately aimed at boosting Quicken's traffic by raising the bar for the amount of free information available at an Australian online trading site, and to "knock Commonwealth Securities off its perch". In addition to live ASX prices, visitors to the new Quicken site can also obtain free company profiles, portfolio watchlists and news services, all of which are updated every hour.

Five Australian ISPs were publicly named by Australian Communications Authority today for refusing to join the compulsory Telecommunications Industry Ombudsman (TIO) scheme - then threatened with $10 million each in fines each if they continued to resist. The TIO scheme. established under the Government's Telecommunications Act, allows the public to complain to the TIO about an ISP. If the TIO finds in favour of the complainant, it can then force the ISP to act to redress a problem. At present, almost all of Australia's 700-plus ISPs have joined the scheme (though some have noted that they've done so more because of the $10 million fine they'd face for a refusal than any belief in the inherent correctness of the scheme). The 5 named ISPs who have continued to resist are Albury Local Internet, #1 Computer Services, Ideal Internet, Web Express and Viper.net.au. However, all named ISPs claim that they've raised serious concerns about the TIO scheme - including that it may be illegal, that there is no control over charging, that the TIO scheme appears to be inherently biased towards consumers and that joining the scheme is equivalent to "writing a blank cheque". They have pointed out that being named implies that they are bad companies when - in fact - they believe they have legitimate concerns that the ACA is refusing to address, and that the TIO scheme is simply another ploy by the Government designed to control Australia's online population.

The number of Australian web sites underwent a decline in all capitals last month as fallout from the Australian Government's new Net censorship law began to take effect, according to the search engines we monitor to construct our monthly Australian Internet Growth Index. Many webmasters relocated their sites offshore over the last 30 days as the Government rammed its ground-breaking legislation through the Senate, and more are expected to join the exodus over the coming month. The June 1st figures (with May 1st figures in brackets) are as follows:

Australian Internet Growth Index May 1999
(Figures Show Estimated Sites)

Brisbane - 2,102 (2,247)
Sydney - 7,016 (7,096)
Melbourne - 5,003 (5,172)
Adelaide - 1,919 (1,962)

Perth - 2,412 (2,502)
Hobart - 783 (827)
Canberra - 1,889 (1,925)
Darwin - 1,755 (1,898)