30/01/2007 - 22:00

Web world MkII worth a look

30/01/2007 - 22:00

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Web world MkII worth a look

If you can buy a big bottle of multi-vitamins for $20 why do some people still pay $30?

There is a one-word answer: ignorance.

Quite simply, the people paying the $30 were not aware of the same product being available at a 33 per cent discount, but soon they will be, which is why the phenomena known as Web 2.0 is keeping business owners around the world awake at night.

Web 2.0, which even found its way onto the agenda at the Davos business leaders conference in Switzerland earlier this month, is why Time magazine voted the people of the world as its “person” of the year.

Time’s rant about Web 2.0, was largely about the way the internet revolution had deepened and spread across society, creating curious, and ridiculous, new means of communicating such as blogging and shared video clips – the so-called people’s media.

From where Briefcase sits, personal blogs, which generally involve people of little consequence sharing their shallow lives with the wider world, are one of Web 2.0’s less attractive features. Like so much of what we saw in Web 1.0 – also known as the dot.com boom – it will blossom and fade to eventually become a footnote in internet history.

But on the other side of the equation there are great events unfolding, and this time around it would be a most unwise person who did not take the internet very seriously because right now is a time when new businesses will be created and old businesses will die.

Take the multi-vitamin bottle as a small example of how retail will be effected.

As more people become aware they are paying 33 per cent too much for what they want, they will migrate to on-line purchasing; because the delivery systems are in place this time around, on-line payment is becoming more secure, and the internet retailer still makes a profit due to dramatically lower costs, such as minimal rent and staff wages.

True, there are glitches to be overcome and holes to be plugged, but a 33 per cent saving is a whopping enticement for shoppers – and it’s not just vitamins, as anyone buying knives and other kitchen utensils from Sydney-based Peters of Kensington have noticed. It’s latest marketing campaign offers a set of pots and pans for $359 compared with a standard retail price of $1,000 – a 64 per cent discount.

Just for fun, Briefcase let its fingers do the walking through the Yellow Pages asking the same question of different industries – what does Web 2.0 do to it.

Accountants and actuaries, for example, will be deeply affected because they will be able to work from the back of their boats, or from an Eagle Bay holiday home, because Web 2.0 will deliver the Web 1.0 promise of high-speed, instantaneous contact (verbal and visual) with data, clients and the Tax Office.

Advertising agents will struggle to find the best place to market a client’s message. Amusement machines (coin operated) are dead in the water. Auctioneers can display their products for sale via a website rather than pay for a catalogue, and clients can bid via the internet.

The point about naming names is that Web 2.0 is a genuine revolution that has been slow in arriving; but it now has. 

The challenge for anyone trying to understand the revolution is to understand that it’s happening at both ends of the spectrum – there is silly and awful stuff at one end, and the dangers and opportunities at the other.

Silly includes a lot of the blogging that takes place today. This is an example of how the internet, delivered by high-speed broadband, needs a jolly-good filter. Awful includes the flood of pornography and offensive video clips uploaded onto the new mass communication tools, such as YouTube.

In time, ‘silly’ might also include the prices being paid for some of the latest Web 2.0 platforms, such as the $580 million Rupert Murdoch paid for MySpace, and Google’s $US1.6 billion for YouTube. These are classic ‘wagon race’ products where the fastest (but perhaps not the best) wins the race for eyeballs, with the problem being once you get to the end of the race there’s the small problem of profit, just as there was with Web 1.0.

The media is an example of an industry being shaken up by Web 2.0, but the point Briefcase wants to get over is that many of the promises made in the first flush of the internet (which failed to arrive) are now being delivered.

•••

Speaking of revolutions, and opportunities missed or forfeited, it is possible (just possible) that Briefcase has spotted a truly alarming trend in WA’s most important industry – mining.

Two events triggered a thought that, perhaps we are seeing the peak of the boom, and a downward slide lies ahead.

First, WA Business News readers will racall that, last year, spending on mineral exploration in WA declined. That’s right, in the middle of the greatest commodities boom the world has known, explorers spent 3 per cent less here than last year, knocking WA’s share of the national exploration budget down from 59 per cent to 48 per cent – it’s lowest share in more than 20 years.

Why did this happen? The government spin is that WA is operating at full tilt and no-one can find a drilling rig to expand exploration.

The awful truth is that WA has become less attractive relative to other places. Red tape, green tape, black tape – and just plain bureaucratic incompetence and delays – are causing an exodus to more attractive places, such as South Australia, or even further afield to Africa.

In Namibia, for example, there is an Australian-led uranium boom under way; and what a joke that is.

While the WA government maintains its unbelievable stupid no-uranium policy, business is simply doing it elsewhere. In other words, the chaps in West Perth and Subiaco are producing and exploring for uranium, just not inside our precious borders.

Paladin Resources, a resident of Hay Street, Subiaco, produced its first uranium yellowcake just before Christmas (in Namibia); Bannerman Resources, of Oxford Close, Leederville, was the top performing stock on the ASX in 2006 thanks to its uranium work in Namibia; Western Metals, of Colin Street, West Perth, has been a flyer on the ASX over the past month or so, – also because of its work in Namibia; Reefton Mining, of Ord Street, West Perth, has been uranium news maker (though not always for the right reasons) in Namibia; and the list goes on-and-on to include other players from Perth in the Namibian desert, such as Deep Yellow and Extract Resources.

The point is that the money has been raised here but is being spent there, along with creating jobs there, and building an industry of the 21st century there.

Boil it all down and the world will get its uranium, Western Australians will play a leading role, but there will be no job creation here – just a warm and politically correct feeling that will have achieved absolutely zilch.

•••

“Nothing is so firmly believed as that which we least know.” Michel de Montaigne, 1595

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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