Australian Cybermalls News

The Australian online auction market will become slightly less crowded next month when the UBid auction site closes down. Troubled online media company LibertyOne, which opened the Australian version of UBid less than a year ago, confirmed to the Australian Stock Exchange today that it will begin winding down the site immediately and will close it by the end of October, as foreshadowed earlier this month. The announcement is the latest in a long string of expensive failures for the company. Other ventures the firm has has to set loose or close down this year include the Excite Asia-Pacific portals, music download business Satellite Music Australia, Greg Norman's shark.com, cooking site greatfood.com and Pat Rafter's oncourt.com. LibertyOne shares - which debuted at $A2.00 when the company first listed in December 1998 - are currently trading at $A0.08c.

In a study that may have strong parallels in Australia, Pew Internet and American Life (PIAL) have found that half the adult population in America do not have Internet access and 57% of current non-Internet users have no interest in using the Net anyway. PIAL report that the most Net-disadvantaged groups in the USA appear to be users aged 65 and over (87% do not go online); users aged between 54 and 64 (59%); ethnic minorities (50% to 64%); and people living in rural areas (57%). The costs of going online are a big issue with many, PIAL found, and 32% of those without Net access say that they "definitely will" go online when this is overcome - a figure which represents around 31 million Americans. However, 57% of current non-users believe that they won't access the Net whether cost and availability issues are solved or not. With more than 52% of the US population now online, this indicates that the growth of the Net in the USA is now approaching a maximum level and is likely to level off over the next few years. This will occur at a time when growth of the Net in non-US parts of the world (such as Asia) begins to accelerate.

The US Supreme Court today elected to send the long-running Microsoft anti-trust case to the Appeals Court rather than hear it directly itself. The action means that any final decision on the case is now likely to be several years away, although it could be settled in as little as six months. The US Justice Department, which took the global software giant to court along with 19 US states over its allegedly anti-competitive practices, had wanted the matter heard by the Supreme Court to bring a speedy end to the process and effect a break-up of the company, as ordered earlier this year by US District Judge Thomas Penfield Jackson when he handed down his ruling in the high-profile case. However, the Supreme Court voted 8-1 today to send the matter through the US Circuit Court of Appeals - a move widely seen as favourable to the software company and unfavorable to the Justice Department. Microsoft's shares rose on news of the decision, finishing the day $US1.44 higher at $US62.69. Microsoft now have until October 2nd to lodge their first submission with the Appeals Court, and the Justice Department must respond by October 5th, after which Microsoft may may make further submissions until October 10th.

Less than a week after announcing that it would axe the jobs of 40% of its call centre staff to "improve customer service", Telstra received a caning from the Australian Communications Authority (ACA) today for leading the pack in Australian telco customer service complaints. Releasing its quarterly 'Telecommunications Performance Monitoring Bulletin', the ACA reported that Telstra had received 65,041 complaints in the June quarter this year (compared to 53,310 for the same quarter in 1999). Of these, 31,477 related to customer service; 21,939 related to billing; and the balance were on other matters. By comparison, rival carriers Optus and AAPT received 430 and 1704 complaints respectively in the same period. However, the ACA noted that all carriers had shown a substantial rise in complaints over the last year and that while Telstra led the field by a significant margin, this was partly due to its size relative to its rivals. Further, the latest quarterly figures for the beleaguered telco were slightly down from the company's peak in the March 2000 quarter, when it received more than 71,000 complaints. The ACA also noted that Telstra appeared to be able to meet time frames set by the ACA's Customer Service Guarantee better than most other carriers during the last year, achieving better than 95% compliance in regional and rural areas.

The number of Australians shopping online is continuing to grow slowly but steadily, according to the Federal Government. Over the weekend Financial Services Minister Joe Hockey announced that 802,000 adults had been Net shoppers for goods and/or services at some time during the period between May 1999 and May 2000. This represented approximately 6% of the Australian adult population - and an increase of 152,000 over the previous 12 months. Books and magazines and still the most popular online purchases (36% of all buys), he said, followed by software (18%) and music (18%). And more than 4 in every 5 online shoppers (81%) paid for all or part of their purchases using a credit card. Minister Hockey also said that the research indicated that around a third of Internet shoppers spent $100 or less (35%), while 36% spent between $101 and $500. But a significant minority (11%) spent more than $1000. The figures are in line with the last official report on the subject from the Australian Bureau of Statistics issued earlier this year, which showed that the number of Australians shopping online had trebled between November 1998 and November 1999.

The average Internet user in the USA now spends 76.9 minutes online every usage day and views around 700 pages a month, according web ratings firm Media Metrix. Releasing their August viewing figures today, Media Metrix reported that the three top properties on the Net in the USA are still AOL, Yahoo and MSN. Last month AOL attracted 67.2 million unique visitors, followed by Yahoo with 52 million and MSN not far behind with 51.96 million. In July, AOL had logged 62.5 million unique visitors and Microsoft had seen 50.3 million, while Yahoo logged 49 million. Meanwhile - in Australia - Media Metrix reported that the average user spent 52.4 minutes online per usage day in August, up from 48 minutes in July. The three top properties in Australia were NineMSN with 5.2 million unique visitors, followed by AOL with 3.8 million and Yahoo with 3.7 million. However - out of the top 25 "Australian" sites - only 11 were actually owned (or partly owned) by Australian organisations. The rest were US-based.

A new study by Cap Gemini Ernst and Young (CG) has found that despite the proliferation of online car sites over the last years, the popularity of traditional car dealers is "surprisingly" strong and consumers in both the USA and Europe are slightly more satisfied with traditional showroom purchases than online purchases. In a study of 7,000 consumers on both continents, CG the found that 77% of Americans would prefer to buy a used car at a manufacturer approved dealership rather than online - and while 36% of US surfers have used automotive sites, the group of car buyers willing to actually purchase online is less than 1% of the total car-buying population. According to CG, the main reasons consumers avoid buying cars online are that they want face-to-face advice from a salesperson and they want to touch and drive the vehicle before they agree to buy it. Consumers also want to avoid the potential security risks associated with purchasing and financing online. Furthermore, the large number of online dealerships has also confused many consumers - and while they appreciate the services that many automotive sites provide (such as price comparisons, ratings, reviews and so forth), they feel reluctant to provide intimate financial data to an essentially anonymous and unknown dot.com site.

Australia's largest telco Telstra announced today that it will axe 4,000 jobs over the next 3 years as part of a AU$412 million cost-cutting strategy to move call centres from major cities to regional areas. The company said employees will be given the option of taking up a rural position or accepting a voluntary redundancy package, and that some of the job losses will occur through natural attrition. The job-shedding, involving more than 200 call centres, is part of the company's program to boost its margins Telstra said, and the job losses will be carried out in consultation with the Federal Government. In an amazing spin, a spokesman defended the move by saying that the downsizing would "improve customer service by reducing the transfer of calls between operators". However, this was roundly rebutted by the Communications, Electricity and Plumbing Union (which represents the call centre staff), who claim that service levels will fall dramatically instead. Less than 4 weeks ago Telstra announced that it had made one of the largest profits in Australian corporate history - $3.677 billion.

In another surprising new report that must cast doubt on the fundamental competence of some dot.com operators, the NOP Research Group report that an estimated 3.3 million Britons shopped online in the last 4 weeks and made an estimated 18.2 million purchases. According to NOP, the total number of online shoppers has more than doubled since last year, and 51% of those who'd bought goods online have purchased from a website they used previously. Over 94% of Internet shoppers said they hope to shop online in the future too - and less than 3% reported that they were dissatisfied with the experience. NOP's survey also found that credit cards were used confidently by most UK online shoppers despite the continuing concerns over the security of Internet transactions. NOP report that credit and debit card details were submitted by 90% of online shoppers. Furthermore, the average online shopper expects to spend more than twice as much money online by this time next year. The survey was conducted amongst 25,000 British adults between June and July this year.

The idea that most online retailers are losing money is wrong, according to the Boston Consulting Group (BCG). In a survey of 221 online retailers, BCG found that 38% overall are making a profit, and 50% of those who've been trading online for a year or more are already profitable. Instead, BCG believe the perception that online retailers are losing money is due to the narrow sample size of most online retailing studies to date. "Most efforts to gauge the health of online retailing focus on 60 or 70 companies - the publicly traded pure plays," they say. "Although these retailers accounted for 28% of total online revenues in 1999, they're far from representative of the overall market because they've been pursuing growth at all costs on the assumption that dominant market share will eventually translate into profitability." BCG found the most profitable online retailers in 1999 were actually catalog-based multichannel retailers: 72% of these achieved profit almost immediately. "These companies are making money online because they possess developed fulfillment and customer-service infrastructures," BCG say. "They also have existing customer bases that can be steered online, which makes for lower customer acquisition costs. And their existing marketing can be used to promote the online business for little incremental cost."

According to a new report by Internet researchers IDC, the anticipated growth of B2B 'emarketplaces' has been greatly exaggerated and predictions that there will be thousands of these in the next few years are - at best - 'overzealous'. Instead, IDC believe that only several hundred emarketplaces will exist by 2004. IDC also believe that many emarketplaces previously announced will not be built; many of those built will not survive; and of the markets that do survive, many will merge into super-emarketplaces. On the bright side, however, IDC believe that emarketplaces will control a total market worth up to $US10 billion by 2004 and that while they won't generate as many contracts as pundits currently predict, those contracts are likely to be quite large. The report is significant for Australians in the light of recent announcements that a number of major corporations plan to make sizable, speculative investments in forming emarketplaces in the hope of reducing their purchasing costs.

In what must come as a shock to luckless investors, it was revealed today that only a bare handful of Australia's listed dot.com companies have actually made a profit on the Internet to date. Last night all ASX-listed companies were obliged to report their latest half-yearly financial results. As a result, online retailer Jumbomall revealed it had lost $12.5 million on sales of $184,000; music retailer ChoasMusic disclosed it had lost $6.1 million on sales of $6.1 million; adult retailer AdultShop disclosed it lost $15 million on sales of $6.5 million; digital media company ehyou.com that it lost $6.1 million on revenues of $113,000; ISP Access1 that it lost $9.4 million on revenues of $322,000; telco services company Mintech-8 that it lost $2.5 million on revenues of $113,000; Max Multimedia that it lost $6 million on revenues of $359,000; Sausage Software that it lost $3.3 million despite an earnings growth of close to 600%; Kidz.Net that it lost $3.2 million on sales of $45,000; web developer Spike that it lost $27 million; and - most spectacularly - telecommunications company One.Tel that it lost $291 million. They joined the many other dot.coms who had earlier announced similar losses such as Travel.Com.Au, f2, ecorp, Channel E, eBet, Optecom, Pahth, Pie Networks, E*Trade, LibertyOne, eisa and Sharon Austen. However, several companies did record a slim profit. They included Intellect ($10.1 million), Powerlan ($9.8 million), Telco Australia ($6.2 million), Internet Travel Group ($3 million), Netcomm ($558,000) and MultiEmedia.com ($243,000). Unsurprisingly, most dot.com shares are now trading well below their initial listing prices.

Net-connected PCs are likely to still account for as much as 81% of all online sales by 2005 despite all the hype currently surround interactive digital TV, personal data assistants and WAP-enabled mobile phones according to Forrester Research. In a new study of the European market, Forrester forecast that iDTV is unlikely to account for more than 15% of all online sales in Europe by 2005; WAP-enabled mobiles 3%; and PDAs around 1%. This will be partly because of the limitations of the various devices and partly because PC-enabled Net browsing provides - and is likely to continue to provide - the most fully-resourced online buying media. "Just because a retail sale is possible on a device doesn't make it probable," said Carsten Schmidt, an associate analyst with the company. Experiences with WAP-enabled mobiles in the USA had already demonstrated they were only favorable to transactions that are timely, simple, and location-based - low-cost items like flowers and cinema tickets. As a result, Forrester suggest that retailers consider looking at alternate online devices to influence purchases rather than try to conclude them. They predict that sales influenced by WAP, PDAs and iDTV will outpace sales made through them by a ratio of 10 to 1.

Less than a week after a study by Greenfield Online suggested that US legislators were right to reject bans on online casinos because they're unattractive to most consumers, two Australian casino operators have confirmed as much by announcing major losses. Today MyCasino announced that it had lost $6.9 million on revenues of just $1.4 million in the 6 months to June 30th. The company said it had attracted $108 million in wagers since it opened an online casino in in Vanuatu in May, but had been hit by a high level of fraud - so high that it had to close down its gaming operations last month after its credit card facilities were knocked out. And yesterday eBet announced a $2 million loss on its own online gaming operations to date - a trend it hopes to reverse when it tries its hand with an online casino based in the Caribbean island of Antigua next month. Both companies report that most online gambling activity at present is coming from US customers - the same subjects polled by Greenfield - and hope to find a more profitable future by attracting European and Asian gamblers.

According to a new survey conducted amongst 343 CEOs from major corporations in the Asia-Pacific region released by PricewaterhouseCoopers (PWC) today, 60% are now concerned that the growth of ecommerce will widen the gap between rich and poor nations around the world. This is up from 52% less than 12 months ago, and may indicate growing unease at rapid spread of US-based ecommerce into the Asia-Pacific region. PWC's third annual Global CEO Survey polled opinions from CEOs in Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan, Thailand and India. It found that more than 94% of the surveyed corporations now use online tools in some fashion, and that at least 67% now believe that the Net has already had some form of impact on their businesses. However, 46% of respondents said that they believe the Net has only had a moderate impact to date, while only 20% said they felt the impact of the Net has been "significant". Interestingly, PWC's survey also found that at least 40% of Asia-Pacific CEO's now believe their company web sites are "behind the pack", while 53% believe their online presence is "middle of the road". Only a bare 4% view their web sites as "best of breed".

More than 110 web sites running on Windows NT were hacked today by a protester upset by yesterday's US court ruling that MP3.com had violated Universal Music's copyrights and could be liable for millions in damages. Foreseeing that US courts may bring down a similar finding against Napster next month when its own case resumes, the anonymous hacker posted pro-Napster material on the front of all the sites by exploiting a security hole in the software. According to C/Net, which broke the story, the hacker has promised an even bigger assault on NT-hosted sites in the near future. The attack is the latest in a long string of embarrassments for Microsoft's web technologies, which have suffered a seemingly unending string of high-profile security catastrophes over the last year. These have ranged from the "I Love You" virus in May that caused an estimated $17 billion in damages to Outlook users world-wide right through to an incident earlier this week when furniture manufacturer IKEA accidentally exposed its online customer database on its NT-hosted web site for several days before it was alerted by an honest visitor.

While the Australian Federal Government continues to anguish over the idea of introducing a one-year moratorium for issuing new online casino licences - and perhaps even attempting a total ban - a new study of 2,000 gamblers by Greenfield Online suggests that this may simply be wasted effort. According to its latest report "What Are The Odds?", up to 31% of gamblers aren't satisfied with online casinos and very few (15%) feel they're better than the real thing. More significantly, though, 60% of users feel that online casinos are "rigged"; 70% don't trust them or have other security concerns about them; and 89% of survey respondents won't use them at all unless they can gamble for free. Furthermore, of those that do lay down money, Greenfield found that the majority spent less than $US10 per visit and that most online gamblers tended to visit two sites, which indicates a lack of either loyalty or fixation. Greenfield believe their study suggests the US legislature was correct to throw out a similar ban proposal recently, even though 72% of survey respondents believe that the convenience of online gambling may tend to foster gambling addictions.

High-profile Australian dot.coms Liberty One and f2 have become the latest to announce major losses following eCorp's surprise disclosure last month that it had lost even more money this year than it had the year before. Yesterday LibertyOne announced that it will divest itself of almost all its online businesses except for web development company Zivo and and the joint health technology venture Monet Asia Pacific. Sites slated for divestiture or closure include online auction site uBid.com.au, music download business Satellite Music Australia, Greg Norman's shark.com, cooking site greatfood.com and Pat Rafter's oncourt.com - a $40 million write-off that will generate a $60 million half-year loss. Today, Fairfax's online arm f2 joined the fray with the announcement that it had also lost $40.7 million in the last 12 months on revenues of $55.4 million and didn't expect to see any profit for at least the next three to four years - and possibly longer if it pursued current plans to "keep investing". Shares in both Liberty One and Fairfax fell on news of the poor results.

In a new study that may be good news for etailers but bad news for TV networks, the Boston Consulting Group (BCG) report that 66 leading US online retailers it recently surveyed have managed to lower their new customer acquisition costs from $US71 to $US40 over the last six months - a staggering 77% reduction - principally by swapping TV advertising for Internet marketing, and ditching "brand awareness" campaigns in favour of customer retention strategies. Other key findings from the study were that the percentage of marketing budgets spent online had risen from 49% in Q1 to 59% in Q2 of this year, while returns as a percentage of revenue decreased from 7.6% to 5.7% percent. BCG say that profitability is now the major issue being addressed by most online retailers, with 86% of those surveyed saying they are now focussing on this area. Because of this, 29% had postponed site upgrades to cut costs, and 40% had either re-negotiated or cancelled contracts with portals. However, 59% of the companies' total marketing budgets were now being spent on online advertising, BCG said, since it was showing far better returns than their former TV spends.

Australia's controversial Internet censorship law - which came into effect on January 1st this year - appears to have been a gross over-reaction. According to the Australian Broadcasting Authority's (ABA) first report on the scheme due to be tabled in the Senate tomorrow, the first six months of regulation generated less than 201 complaints and resulted in fewer than 95 web sites being deemed to have either prohibited or potentially prohibited content. Worse, fully 53% of the sites complained about were located overseas. While the ABA says in its report that 80% of the prohibited content involved depictions of children in an offensive way, fewer than 44 of the sites were hosted in Australia and were referred to Australian state or territory police for follow-up - an action that could have occurred without the need for any censorship legislation at all. The miniscule results fly in the face of earlier Federal Government assertions (including those of Senator Brian Harradine, who first mooted the censorship bill, and Communications Senator Richard Alston, who vigorously supported it) that the Net was a haven for offensive content that Australians needed to be protected against. So far the ABA's enforcement of the law has cost Australian taxpayers more than $1 million - or approximately $5,000 for every complaint received.

Last month's news that 33% of Australians are now online appears to have fuelled a renewed push by many Australian businesses to open an online presence, according to our monthly Australian Internet Growth Index (AIGI). The three major eastern capitals and Canberra all recorded strong growth over the last month, offsetting slight falls in the other capital cities. The September 1st figures (with August 1st figures in brackets) are as follows:

Australian Internet Growth Index August 2000
(Figures Show Estimated Live Sites)

Brisbane - 5,822 (5,397) Sydney - 24,365 (20,986) Melbourne - 16,275 (13,092) Adelaide - 5,846 (6,150)	Perth - 5,613 (5,852) Hobart - 2,125 (2,394) Canberra - 6,486 (5,896) *Darwin - 5,211** (5,472)
NB: The Darwin figure includes rural Australian sites