Netco newsletter May/June 2006

Welcome to the Web

For more than a decade, politicians have talked about an information super highway, technologists have declared the start of the information age and smart Kiwis have made fortunes for stumbling across and marketing a single, good idea.

It may be difficult to deduce this from a bland little PC monitor beaming out the latest from Yahoo or bean curd recipes from a health site but, already, there's no going back. We are as caught-up in this as the rest of the developed world. It holds big implications for us.

This is serious homework time for small business operators. They'll need to understand just a little of what's happening at the end of their phone line if they are not to wake up one morning and find their particular services are now being handled by a teenager in Vladivostok or Dallas at a tenth the previous price. It bites big businesses too.

A few years ago, a 19-year-old American kid wrote Napster, an on-line, shared database that allowed Internet users to steal music. The beauty of Napster and its imitators was that, to the participants, it didn't feel like stealing. They just clicked on a link and downloaded their favourite music and burnt their own CDs. Napster went legitimate after the music industry pounced and then Apple turned the industry on its ear when it fired up its on-line ITunes music store. Record industry executive were so busy trying to smother the sparks they missed the fire.

Apple has a 70% market share of the UK and US on-line music sales according to American magazine, Business Week. Now record companies complain that Apple won't let them set the on-line selling price of songs - Apple sells all tracks for $US99c regardless of popularity. Record companies appear to have lost control of their markets. How could such highly paid people have been so stupid?

When the speed of the Internet increases, look for movie databases where you'll download (steal) whatever title you want. How do copyright owners pursue and sue 50 million thieves?

Owners of businesses dealing in products that are currently being distributed through the Internet will need to think where this will head in 5 years. Do you sell out now and hope the new buyer is not well informed or do you meet it head on and adapt?

On-line bookshops lose their owners fortunes, but they deliver titles cheaper and faster than traditional post. In a few days pretty much any book published anywhere can arrive at your letterbox, months before it's available in shops here.

The great thing for a small New Zealand company is that its Web page can occupy the same amount of real estate as IBM or General Motors. As far as any visitor is concerned, you might well have a head office in downtown Manhattan or Kowloon or even both because all they see is your Web site and your products. In reality, you can be working from a garage in backstreet Naenae or from a launch moored at Stewart Island. Your customers are as close as their keyboard to you.

Shop for luxury goods at www.ashford.com and decide whether anyone would know (or care) whether it was based in New Zealand.

So, you say, you deal only in wholesale to other businesses and you're immune from all this? The American, Gartner Group predicted that business to business e-commerce would reach US$8.5 trillion annually by 2005. No one seems to have done the sums to see whether we made it but the figure's so big that even if they're 20% out it's still a vast market.

Like it or not, the Internet will affect your business if it hasn't already. Can you kick start a country to catch up on its rich northern neighbours? In the Beehive and the Ministry of Economic Development they're trying to talk it up but ultimately, it's the business owners who have to decide that they want a piece of all this.