The Australian Classifieds Driven Web 2.0

Given Australia doesn't have multi-billion dollar cap search engines, it would make sense the large cap publishers and pure play Internet companies would be Web 2.0 proxies. The below 'summarised' article does not have 'Web 2.0' in the header but I'm sure it won't be long till Australian Financial Journalists, while not understanding the real dynamics of each player (why did Yahoo sell out, what is Carsales exit strategy, 9MSN carve-up value) will start to cover the search, online display, e-classifieds, 2.0au start-up, rich media/streaming, blogging, ecommerce, RSS and podcasting spaces in Australia : esp. now that the 'public company' growth stakes are big enough - with Seek.com.au worth $696M yesterday (probably more today.. it is a boom), Realestate.com.au nudging $200M on the NewsCorp offer - Carsales (acc'g to article) valued the same - which makes me 'snarck' (as Dentonites will get)... I launched Carpoint.com.au for MSN's local joint venture with Australia's major media player PBL/Channel 9 + MSN. So I know personally 8/10 people mentioned below (Hi Greg + Wally), most I have worked with directly. As I posted yesterday - JBWereSachs what is the standalone value of ninemsn ? (can anyone say LibertyOne - which Were's passed on smartly)

If Alan Kohler was blogging, he would have mentioned New York Times.com bought a major minority stake YESTERDAY (with del.icio.us investor - Union Square - A VC blog) in Indeed.com, who have more jobs listed than anyone (3m + new jobs in last 30 days) than dwarfing - careerbuilder and monster : They scrape all major job sites, then place contextual search ad to pay bills, but so on they will launch free ads, but only pay for clicks and candidates. What is the implication for seek ? The indeed deal structure was based on a 'coopetition' investment model newspapers ready to 'cut their own lunch' started by Gannett group on the Topix.net deal, a leading aggregated news-site in America (bought for $60M + in discounted times within last 12 months) The people running indeed have sold jobboards companies before so they will beat or severly threaten careerbuilder and monster or sell to them, or as is the 2.0 trend, go straight to Google or Yahoo, as Oddpost, Picasa, Flickr, Dodgeball, blo.gs, Meetro (about2) - and many more have and will do. With Nasdaq beating the S+P and ASX, how media companies like Fairfax, News, Sensis, PBL, Ten, Seven and Telcos competing in the 2G-3G space will execute their strategies (and partner with O/S companies for competitive edge - email me). More to come on this. Let's take it OFFLINE !

Internet dominated by same old gang : Alan Kohler

It turns out that despite all the exciting possibilities, the internet is not much of an engine for media diversity. The same players who dominate print and television are battling for online classified advertising domination and will, as a group, succeed. What's more, three of them are partners in subscription TV, so they might not actually battle for very long. And as for online journalism, there is some but it's mostly niche players beavering away in Fitzroy garages (like crikey.com.au). As Stuart Simson, the chairman of online advertising firm emitch, told the ACCC's annual regulatory conference two weeks ago: "There has been low investment in terms of dedicated staff by media players in 'new' online news and current affairs. The argument that the new media has seriously fostered diversity is, in my view, a mirage." The only possible exceptions to the seamless transition of media concentration from the old to the new are three American multinationals: Google, eBay and Yahoo. How the battle between them and News Corp, Publishing & Broadcasting, Telstra and Fairfax plays out will have far more bearing on the future of media in this country than anything the Government does.

News Corp has launched its inevitable bid for the 60 per cent it doesn't own of the No.1 online real estate classified advertising site, realestate.com.au, and although $2 a share ($120 million) looks too low, it will eventually mop up the company. Yahoo has sold out of the top employment site, seek.com.au, and left it to PBL. Fairfax has paid $39 million for the leader in what it calls the "fourth category", match-making, RSVP.com.au having, amazingly, lost first mover advantage in the other categories. Fairfax also owns a 12 per cent stake (which it bought this year from Yahoo) in the leading motor vehicle advertising site, carsales.com.au, an unlisted public company largely owned by car dealers (its market leadership is disputed by Telstra's Sensis - more on that later). Fairfax is regarded by carsales.com.au as a hostile shareholder because it's also a competitor through drive.com.au but surely it won't be long before either Fairfax, News, PBL - or perhaps all three - attempt to take it over.

When asked if the business was for sale, managing director Greg Roebuck told me yesterday that "you never say never, but we're quite happy where we are". The largest shareholder in carsales is chairman Wal Pisciotta with a bit more than 20 per cent. Fairfax is next, so it is an open register and the right price will win control. The company earned $3 million profit in 2004 (2005 results are not yet available) which makes it roughly the same size as realestate.com.au.
Underlying all the recent action is this dawning realisation: any notion that low barriers to entry on the internet would mean dominance is not possible and profit margins would therefore be much lower than the print "rivers of gold" classifieds is wrong. The online leaders are operating on at least 30 per cent profit margins - the same as print.

The barrier to entry that produced John Fairfax's domination of print classifieds in Melbourne and Sydney is not simply the ownership of a big printing press; it's the possession of inventory. Buyers go where most of the houses, cars and jobs are advertised, and the advertisers go where the buyers are. A clear leader can therefore achieve a virtuous cycle, where success breeds further success and dominance is locked in. Over the years, News Corp's tabloids have periodically attempted to break Fairfax's stranglehold on classifieds but, despite ownership of similar presses and larger circulations, it never got there - beyond some limited success with cars. The same applies online. Seek has 65 per cent of the job ads market; three years ago it was 50 per cent. MD Paul Bassett says its market share continues to steadily increase. Simon Baker's realestate.com.au seems to be hitting a similar sweet spot. Carsales is now battling with Sensis's autotrader.com.au, a composite of various motor vehicle sites it picked up with the Trading Post group last year. Sensis's Thomas Arthur said yesterday that the Telstra site had the most unique users; carsales' Greg Roebuck says he prefers to look at "page views", by which measure his firm is leading.

Fairfax Digital has drive.com.au, as well as domain.com.au for real estate, and the very successful Age and SMH websites, while PBL's ninemsn - the website with the most traffic in Australia - has carpoint.com.au, plus links to Seek for jobs and realestate.com.au for property. I was quietly thinking about all this yesterday as I slurped some lamb shank soup and a light bulb went off above my head. News and PBL are partners - apparently happy partners - in Foxtel. They are now co-operating to some extent with online classifieds. One will soon own the leader in online real estate, the other the leader in online job ads. Lachlan Murdoch is returning to Australia and is looking for a job. He and James Packer, chairman of PBL, are close friends. So obviously that's the job for Lachlan: putting together, and running, a Packer-Murdoch online classified joint venture, starting with Seek and realestate.com.au, to attack both Fairfax and Telstra. Telstra, meanwhile, is also a shareholder in Foxtel but not in the Packer-Murdoch faction. Anyway, Thomas Arthur says the Sensis strategy at this stage is to be No.1 or No.2 in each of jobs, cars and real estate. Presumably they will give that idea up and join with Packer and Murdoch only when they have failed. It means a fascinating and important period is ahead for Australian media, but what it doesn't mean is media diversity."