Australian Cybermalls News

Telstra announced today that it intends to expand its stake in Sausage Software and may eventually own as much as 40% of the company. Telstra will acquire 14 million Sausage shares for $18.9 million, and will also have access to an additional 70 million options which - if all taken up - would see its stake in the company rise to 40% by the end of 2001. Sausage Software rose to prominence in 1996 when it unveiled HotDog, the world's first commercial HTML editor, and became one of the first Internet ventures to be listed on the Australian stock market. The company lost large amounts of capital the following year, though, when it dabbled with a wide variety of "snaglet" web applications which failed to excite consumer interest. In 1998 it changed direction and began concentrating on ecommerce applications, and has been able to effect a strong turnaround in its operations as a result. [NB: Our daily news has been interrupted by technical difficulties over the last few days. We apologise to all our readers for this, and regret that we may have some further difficulties in the coming week as we resolve the problem. Thankyou for your patience in the meantime].

The Queensland State Government may introduce legislation to revoke Gocorp's online casino licence following the disclosure earlier this week that three ALP identities stood to make million-dollar windfall profits from their 20% stake in the venture. Responding to statements by Ipswich City Councillor Paul Pisasale that he now wished to sell his shares for a quick $1.2 million profit following the exposure of his involvement earlier this week, Queensland Premier Peter Beattie said that he felt this was "obscene" and would move to strip all three of any benefits that might flow to them from the hitherto hidden deal. In other moves, Clr. Pisasale was forced to step aside from his chairmanship of Ipswich City Council's economic development committee and its ISP Global Info-Links, and ministerial adviser and former MP Don Livingstone was stood down from his position and invited to "consider his position" as community outrage at the disclosures widened. At present, Australia only has one Government-licensed Internet casino (in the Northern Territory).

One Nation webmaster and well-known Australian Internet identity Scott Balson may face charges after the name of a Queensland MP currently facing paedophilia charges was published on his Australian News Of The Day (ANOTD) web site, then later removed. Balson was one of the pioneers of the Internet in Australia before becoming closely associated with the far right during the Pauline Hanson phenomenon of 1997 and early 1998. He now publishes the more controversial portions of his site through the US-based Tripod free hosting service - allegedly to escape Australia's Internet censorship laws. The ANOTD site has been accused at various times of being a haven for extreme political sentiments since its inception, and earlier this year the South African-educated Balson was forced to defend allegations of anti-semitism and racism after articles critical of Jewish and asian groups published on the ANOTD site drew extensive Government and media attention.

The Queensland State Government became embroiled in controversy today when the Courier-Mail revealed that Treasurer David Hamill had secretly awarded the State's first online casino licence to a company partly owned by three ALP identities last October. Using ASIC records, the Courier-Mail showed that Ipswich City Councillor Paul Pisasale, former Labor MP Don Livingstone and millionaire Woodridge MP Bill D'Arcy owned a combined 20% of the online casino company Gocorp, and that each stood to make multi-million dollar windfall profits out of the deal when the company was partially floated, which was planned for later this year. The Courier-Mail also disclosed that one of the three ALP identities had prior criminal convictions for theft and assault dating back to 1979, but had failed to disclose these to Government officials when the Gocorp application had been made; and that another of the three had personally lobbied for the casino licence while acting as one of the Government's own ministerial advisers. Premier Peter Beattie said that he was "angry" about the revelations, and has ordered an immediate investigation by the State's Auditor-General.

More than 40% of US consumers who purchased a new car or truck earlier this year used the Net as part of their shopping process, according to a new study by J.D. Power and Associates. This compares to just 25% of new automobile consumers 12 months ago. Powers' study estimated that in the first quarter of 1999, more than 25,000 US new car or truck buyers a month used the Net when researching a new vehicle purchase (up from 12,500 per month in 1998). And as far as used car buyers go, a related study found that similar levels of growth have also occurred in this area: 26% of US car consumers who purchased a model in the 1994-1999 range early this year used the Net when making a decision (up from 14% in 1998). The JD Power report is based on a survey of 2,500 US consumers who purchased a new vehicle in either January or February 1999 while the findings of the used vehicle study were based on a survey of 10,000 consumers who purchased a used vehicle during the same time period.

A new study by Activemedia released this week suggests that the average value of an online transaction, across all industries, is now around $US4,600. In a comprehensive analysis of the online buying market, Activemedia's study identified two online revenue 'sweet spots' - transactions between $US100 and $US500 (the business to consumer market) and those between $US1,000 and $US10,000 (the business to business market). Activemedia found that approximately 60% of B-to-C transactions were for $US500 or less, with fully one third at $US100 or less. By contrast, almost 50 percent of B-to-B transactions were worth $US1,000, with a third worth between $US100-500 and only 10% less than $US100. The B-to-B market is also substantially bigger than the consumer market on the Net at the present time, with estimated revenues 10 to 12 times higher than the consumer arena.. Overall, though, Activemedia found that the volume of transactions at ecommerce sites remains fairly light, with only 1 in 7 sites reporting more than 100 transactions monthly, 75% reporting 50 or less transactions a month, and 40% reporting less than 10 transactions per month.

Telstra lost one of its few remaining monopolies today when the Australian Competition and Consumer Commission (ACCC) ordered it to open up its local call network to competitors within 12 months. ACCC Chairman Prof. Allan Fels said that the decision would open the door for affordable, high-speed Internet and broadband services such as video on demand and teleconferencing, and usher in a "golden age" of choice for Australian consumers where selecting a telco would be similar to selecting an insurance company or a bank. Competitors AAPT and Optus also welcomed the decision, predicting that local call prices in Australia would drop to 20c within a year, and steadily move even lower as competitive pressures took hold. Competing telcos have been highly critical of Telstra's local call monopoly, and had suggested that the company was being deliberately tardy in opening it up. The ACCC agreed. "The dead hand of monopoly control of local exchanges has meant that the development of (telecommunications) products has been held back," Prof. Fels said. Telstra also welcomed the decision, though it warned that a number of technical and management issues had yet to be resolved.

The future of Microsoft's Sydney and Melbourne Sidewalk entertainment sites appears to be in doubt after the company announced today that it had sold its US Sidewalk sites to its chief niche rival. Launched in a welter of publicity less than two years ago, Sidewalk was touted as one of Microsoft's key Internet properties and company executives at the time predicted a rosy future for the concept. However, revenues failed to meet expectations and last year the company underwent major staff shedding in most of its Sidewalk offices in an attempt to stem major losses. Microsoft said today that has now decided to sell the technology and content for the Sidewalk sites to its main rival, Citysearch. Under the terms of the sale, Microsoft will focus on ecommerce services while CitySearch's owners Ticketmaster Online-CitySearch will provide entertainment related content to Microsoft's main MSN.com site. In Australia, Sidewalk is produced as a joint venture between Kerry Packer's PBL and Microsoft, and appears on the NineMSN site. Chief rivals Fairfax are the Australian licencees of Citysearch.

The controversial Telecommunications Industry Ombudsman (TIO) scheme, designed to provide an independent complaint- handling authority for the ISP and telecommunications industry, has been revamped in the face of continuing criticism from ISPs and former board members. It was announced today that the TIO will no longer charge ISPs for calls from consumers to check if their ISP is a member of the compulsory scheme or to obtain the ISP's contact details. The TIO will also no longer charge ISPs for the first four minor complaints lodged against them each quarter. According to a TIO spokesperson, these changes will benefit the majority of ISPs - in the last quarter, 80% of Australian ISPs had no complaints lodged against them with the TIO at all. However, the TIO will not change one controversial regulation which prohibits members lodging complaints against other members. Many ISPs have said that if the TIO amended this regulation, they would lodge complaints themselves against many of the major telecommunications companies who supply ISPs with the necessary connections and bandwidth to run their businesses. The TIO maintains that its role (as defined in its charter) is to settle complaints between consumers and the telecoms industry - not competitive or commercial issues amongst industry players.

Many Australian consumers using online or phone banking services may have no legal protection if their accounts are hacked or their phone lines tapped. And some may also have no recourse if a security lapse in a bank's online banking service causes them a loss. A special working party set up by the Australian Securities and Investments Commission (ASIC) to look into the issue is expected to recommend by the end of the month that existing laws covering consumers using ATM or EFTPOS services be extended to online and phone banking services as well. The ASIC group found that at present, some Australian banks provide close to the ATM level of coverage for consumers, but - worryingly - that just as many others provide none at all. According to the Australian Bureau of Statistics, more than 217,000 Australians used the Net to pay bills or transfer funds in the three months to February 1999 - a 400% increase in less than a year. 5 million Australians also used phone banking services during the same quarter, up from 3.9 million a year earlier

Microsoft celebrated another milestone today when its shares hit a new record of $US98 on Wall Street, valuing the company at approximately $US500 billion - 32% more than the total economy of the Netherlands ($US378 billion). Further, chairman Bill Gates will be celebrating his own milestone - a personal net worth of more than $US100 billion - as soon as the stock breaks the $US100 barrier (which is expected to occur within the next few weeks). Gates was worth $US19 billion less than 3 years ago. Microsoft shares have risen by 41% in the last 12 months alone, and the total value of the company has increased more than 500-fold since it went public in 1986. Microsoft regularly post earnings growth and profit margins in excess of 30 percent and its fourth-quarter results - due on Monday - are expected to continue the company's trend with better than expected results largely as the result of growth in its Internet businesses. Microsoft is currently embroiled in a long-running suit with the US Department of Justice (DOJ) over its business practices. The DOJ has argued that the software company represents a new form of 21st century monopoly which existing anti-trust laws were not designed to handle.

LibertyOne, the owners of the Australian Excite! portal, have announced plans to open a branch of the uBid auction service on its site by October. If implemented, uBid would become the sixth auction site to be announced in the last 3 months following the launch or announcement of similar offerings by NineMSN (who hope to open an Australian eBay later this year), Yahoo, Stuff.Com.Au, I-Bid and Fairfax. Like most (but not all) of the other launched or mooted auction sites, uBID is US-based and profits will be repatriated offshore. However, unlike the other auction sites, UBid concentrates on business- to -consumer rather than consumer- to- consumer sales, allowing businesses to sell of excess or damaged stocks to the public at bargain prices. For these reasons, LibertyOne feel that the new service will complement and augment the current rash of auction sites, rather than compete with them.

According to a new study by APT Strategies (APT), the typical Australian online shopper at the present time is a 30-year-old male with an income of $US46,886 (about $A70,000) who spends about $US200 ($A300) a year making personal online purchases. APT, who surveyed 12,000 Australian surfers in June 199, found that about 66% of Australian Net shoppers are currently men, and that most of these could be described as "independent thinkers" with more than 50% in favour of an Australian republic. 43% of survey subjects had already made at least one online purchase - and of these, 75% plan to buy books or CDs online within the next half year. The report also found that 58% of those surveyed intend to buy adult products or services, while 42% are also expecting to do their grocery shopping online in the near future as well. The study also found a relationship between Net usage and buying. APT found that experienced users were most likely to buy online, and that 78 percent of consumers who'd been online for over 18 months had made more than ten online purchases.

A former director of the the Government's Telecommunication Industry Ombudsman (TIO) scheme has called for a member vote to change the TIO's articles of association. Mr Kevin Dinn, who stepped down from the TIO board after selling his interest in ISP Zip World, said that industry dissatisfaction with the TIO is set to boil over. ISPs are particularly dissatisfied with the TIO's complaint resolution process, he said, where ISPs are charged $15 for every complaint lodged against them and $1130 for a determination. Mr Dinn said that many ISPs and the Internet Industry Association (IIA) wanted to see the scheme changed so that when a complaint is found to be unmerited, charges aren't levied. Mr Dinn (who is also deputy chairman of the IIA) said that ISPs would also like to see the TIO rules changed so that they could lodge complaints against other TIO members - such as the telecommunications carriers who contribute the most money to the TIO's operations, and who have the most votes. Less than 6 weeks ago the TIO publicly named 5 "recalcitrant" ISPs who'd failed to join its compulsory ISP registration scheme after they'd raised concerns about the scheme's legality and method of operation.

The giant Coles Myer group - which currently pockets one in every five retail dollars spent in Australia - has announced ambitious plans to build its own giant online emporium. In a weekend statement, Coles Myer chief executive Mr Dennis Eck said that the retail giant is currently negotiating with several media and entertainment companies to provide content for its new site including Fairfax, PBL, News Limited, the Seven Network and Village Roadshow. If implemented, the new online strategy would see the retailing group attempt to expand beyond its traditional activities to include financial services, entertainment, sports ticketing and postal deliveries in its Internet offerings. Coles may also become involved in alliances with movie houses and through product licensing deals, Mr Eck said, and would probably also look at setting up third-party agreements with other ecommerce companies to allow it to be the supplier of goods ordered through another organisation's web site. The group already has these sort of arrangements in place with the Australian Football League, Sydney Olympics and cosmetics company Yves Rocher in its traditional offline activities, he said.

Former "spam king" Sanford Wallace is back in court once again, this time suing California online marketer March Welch for $50,000 in damages, Wallace claims that Welch unfairly harmed his new business by publicising Verio as its host, causing him to lose his Internet service soon afterwards. The lawsuit, filed in Pennsylvania, accuses Welch of defamation and unfair competition. In the suit, Wallace claims that his new SmartBot opt-in marketing mailing list service lost customers, potential revenue and profits after Welch allegedly bragged in a newsgroup that he could get Wallace's service cancelled by naming the host publicly. Welch has rejected the allegation, claiming that it's simply a publicity stunt designed to attract attention to Wallace's business. Wallace was one of the Net's first major spammers and has had a long and troubled career in the industry. After losing a $5 million lawsuit last year, he told the media that he had finally "seen the light" about spam and intended to get out of the segment he'd helped found.

Search engines may be overlooking as much as 98% of the Net, according to a new study published today in the scientific journal Nature. The report, by Dr Steven Lawrence of the NEC Research Institute at Princeton, tested 11 leading search engines to find out how comprehensive and up-to-date their databases were. Dr Lawrence reported that the best engine appeared to be Northern Light, but he estimated that it only catalogued 16% of the Net (which is now estimate to contain 2.8 million sites and 800 million web pages). This is a decline on the estimated 33% coverage that the best engine had in a smaller-scale study carried out two years ago, leading to the conclusion that the major search engines are failing to keep up with the Net's growth. The study also found that the combined coverage of all 11 engines in the test was 42% (with very little overlap); and that an average of one in every 20 answers now returned by engines is a dead link. The study found that waiting times for listing on search engines is also growing, and that it can now take as long as 6 months before a new site appears a major engine.

After 10 days of growing world-wide protests, the departure of thousands of former GeoCities "homesteaders", a threatened world-wide boycott of the company and possible global TV exposure, Yahoo today backed down on its attempt to steal its customers' content. Today it posted a revised Terms of Service (TOS) agreement on its GeoCities site which explicitly limits Yahoo's claims to the intellectual property of its customers. The problem first erupted late last month when Yahoo covertly altered its TOS to give it the right to appropriate any content posted on GeoCities for its own profit - in perpetuity - without paying the original authors a cent. Users attempting to upload or modify their sites were not allowed to do so until they had assented to the new TOS, and were not advised of the impact of the change. As a result - by the time the news became public - tens of thousands of GeoCities homesteaders found that they had unwittingly given the world's largest search engine the rights to their site. Over the last 10 days Yahoo tried to stem the growing wave of anger that the move produced, first saying that the intent of the new TOS was not to steal authors' rights (without altering the TOS at all); then modifying the TOS in a minor way (that did not remove its "land grab" rights); and then posting notice of the change to its TOS publicly. However, when the CNBC network approached Yahoo to run a story on the controversy and Yahoo representatives refused to appear and attempt to justify their position to protestors, the company finally backed down, ending what many opponents were beginning to describe as "the most blatant attempted corporate theft in history".

KPMG and Dun and Bradstreet officially launched their new digital certification service for Australian online merchants today after having a prototype available for several months. The new service - . called Enshrine - will allow merchants who can pass Dun and Bradstreet's background background checks (and who are willing to pay $1750 every 2 years) to be issued with a digital certificate that can be used on an SSL server to accept secure online orders, and an "Enshrine" badge they can post on their web site to help build consumer trust. The new service is designed to replace Australia Post's earlier venture in a similar area with its KeyPost digital certificates, which are closing down on August 1st after Australia Post found there was very little demand from either online merchants or Government for the certificates - even at the $500 p.a. price it had been selling them for. In the USA, Thawte and Verisign digital certificates fulfil much the same role at even lower prices.

The IT and ecommerce industries together accounted for one third of the USA's real economic growth between 1995 and 1998, according to a new study by the US Department of Commerce (DOC). While the technology sector accounted for just 8 percent of total economic output in 1998, the DOC found that in real terms this represented one third of the total growth once figures had been adjusted for inflation. Further, the report found that IT workers earned 78 percent more than the average US worker in 1997, averaging an income of $US52,920 against the average US wage of $US29,787. The DOC also admitted that ecommerce growth had rapidly outpaced previous projections, with online sales generating between $US7 billion and $US15 billion toward the close of 1998, compared to earlier DOC predictions that ecommerce would not generate $US7 billion until 2000. The report predicts that almost half of all US workers will work in industries that either produce or use IT products extensively by 2006.

Warner Brothers have become the first major free hosting site to capitalise on the growing wave of protest against GeoCities by urging upset netizens who don't wish to give Yahoo legal rights their web content to simply pack up and leave. Last weekend, Geocities owner Yahoo covertly altered its Terms of Service (TOS) in a way that effectively gave it ownership of all content hosted on GeoCities. It then refused users access to their sites until they had assented to the revised TOS without advising users of the effect of the change - leading to many thousands of unwitting subscribers signing away all rights to their site before news leaked out. Within a few days, however - after world-wide publicity had exposed the move - Yahoo publicly posted news about the TOS modification on the front of their site. Yahoo spokespeople have claimed during the week that the change in the TOS is innocuous, designed purely for the company's own internal convenience and that Yahoo never intended to steal the content provided by trusting GeoCities subscribers. However, it has refused to alter the TOS to reflect this stated intention. As a result, many angry "homesteaders" have now relocated to Tripod, Angelfire and other similar services - and a number of "Boycott Yahoo" sites have begun to appear on the web. Warners have now stepped up the heat another notch with a banner ad campaign that threatens to blow the issue even wider.

The number of Australian web sites remained relatively static over the last month, with only marginal growth in all capitals and the the most growth (around 3%) occurring in Sydney. Our monthly Australian Internet Growth Index showed that the anticipated decline in sites brought about by last month's passage of the Australian Government's new Net censorship law does not - so far- appear to have been as severe as anticipated. The July 1st figures (with June 1st figures in brackets) are as follows:

Australian Internet Growth Index June 1999
(Figures Show Estimated Live Sites)

Brisbane - 2,109 (2,102)
Sydney - 7,234 (7,016)
Melbourne - 5,054 (5,003)
Adelaide - 1,942 (1,919)

Perth - 2,419 (2,412)
Hobart - 787 (783)
Canberra - 1,891 (1,889)
Darwin - 1,758 (1,755)