Australian Cybermalls News

The stockbroking community needs to brace itself for massive retrenchments over the next few years, according to an Italian expert. Mr. Patrick Young, the author of "Capital Market Revolution" and editor of "Applied Derivatives Trading", told a conference yesterday that the Net will create the greatest opportunities for financial markets ever seen - but at the expense of massive job losses in the traditional full-service stockbroking community. He predicted that within 5 years, full-service broking will virtually cease to exist and routine trades - now principally handled by humans - will be taken over by automated online systems operating through the Net. "The brokers that survive will be the ones who add value to what they do," Mr Young said. "Brokers who are simply order-takers are going to start to see the end of their road in as little as 6-12 months," he said, adding that because of the way the financial system had treated ordinary people over the last decade - particularly the banks - he expected that there would also be very little public sympathy when the cuts came. As a result, brokers shouldn't hope for any Government intervention to rescue them.

In what may come as a surprise to many investors who believe that the business-to-business market on the Net is stronger and more lucrative than the consumer market, a new study by ActiveMedia has found that only 42% of 3-year-old US business-to-business sites are even profitable. Furthermore - in stark contrast to the glowing prospectuses and revenue forecasts that Australian and US investors have been treated to over the last 2 years - ActiveMedia found that the bottom line for most Internet b-to-b sites is considerably more humdrum. Their study disclosed that less than 27% of b-to-b sites generate a profit within their first year of operation, and barely 32% see profit within the first 2 years, rising to 42% by year 3. While the study did find that the percentage of profitable sites tends to increase with age, it also found that true "overnight successes" are rarities. In what may be a further disappointment to investors hopeful of rapid returns, ActiveMedia found that the average income for first year USA b-to-b sites was only $US94,000, while the average profitability for 3-year-old b-to-b sites was around $US30,000.

Modem sales will be almost nil by 2004 as ADSL and cable take their place in Australian homes and offices over the next few years, according to modem manufacturer Sirius. Unveiling a new range of ADSL modems designed to work with Telstra's national ADSL service to be launched in late 2000, Sirius managing director David Stewart said that it was inevitable that ADSL, which could deliver the Internet into most Australian households at an average speed of 1Mb per second, would supersede 56K modems. In an ironic twist, Mr Stewart also announced that the company is considering changing its name to NetComm Limited after research had shown that the brand name has better recognition than the company name. Sirius was formed two years ago from the merger of Australian modem manufacturers NetComm and Banksia, and still manufactures modems under both brands. The proposed name change is set to be put to shareholders at the company's October AGM.

The Fairfax media group launched their new city portal Melbourne Today this morning. The new portal bundles several existing Fairfax online properties together, including The Age, Drive, Sold.com.au, MyCareer, Trading Room and CitySearch, with additional services and content from LookSmart, Excite, the Bureau of Meteorology and Optus. The new site will also offer visitors web-based email, task lists, am email reminder service and personalised email alerts. The project is the first major undertaking for Fairfax's F2 group, formed out of what was formerly Fairfax Online and CitySearch. If successful, the group hope to unveil a similar portal for Sydney at some time before year's end, with possible additional portals for other cities in 2000. The combined Fairfax online properties currently generate around 1.4 million page impressions per day.

Microsoft is set to revamp its tiring MSN service over the coming quarter by revamping its search and directory services and opening a new small business site called bCentral. A spokesman said that new search engine technology from Direct Hit, RealNames and AltaVista was being added to the U.S. site, with users of MSN's international sites (including Australia) scheduled to get the upgrade later. bCentral will aggregate Microsoft's small business Internet properties include advertising network LinkExchange, travel Web site Expedia, and news headlines from MSNBC. in November, Microsoft will launch a user interface upgrade to MSN which will include personalization based on zip codes, a more prominently placed search bar, and sign-in to MSN's Passport system for universal log-in and shopping services like credit card information. MSN's shopping channel is also slated for a November upgrade, improving its comparison shopping technology and its soon-to-be-launched Passport Wallet service.

Australian and US government authorities announced today that they've ended a scam which saw millions of innocent surfers cunningly redirected to adult sites over the last year. The Australian Competition and Consumer Commission (ACCC) and the US Federal Trade Commission (FTC) found that two Australians were behind the scheme, which involved copying legitimate web sites and registering them with search engines. Unwitting victims would then believe they were about to enter a site of interest to them - but once accessed, victims found that they were actually on an adult site with their browser's "Exit" and "Back" buttons disabled, caught in an unending chain of site popups and redirections to yet further adult sites. The ACCC and FTC found that men behind the scheme had copied up to 25 million web pages to execute the scam, affecting millions of people world-wide almost every day. The FTC has now terminated all .COM domains owned by the fraudsters, while the ACCC will handle their domestic prosecution. Footnote: Australian Cybermalls has had at least two site links affected by this scam itself over the last year. Loyal readers advised us of this of almost as soon as these events occurred, though, and the links were immediately cut.

Market research firm ACNielsen announced today that it will buy 10% of NetRatings for $US12.5 million. The two will form a new joint venture company called eRatings.Com which will attempt to measure online audiences in Europe, Asia/Pacific, Latin America, the Middle East and Africa. The new company is an attempt to duplicate ACNielsen's popular terrestrial ratings service, which measures TV viewing audiences in countries outside the USA and Canada. ACNielsen said that they expect to take 2 years to fully develop the service, and hope to introduce it in the UK, Ireland, Australia, New Zealand and Singapore by 2000. Ultimately, ACNielsen said that they hope eRatings will expand to more than 30 countries and will log the visits of up to 90% of the Net audience by the end of 2001. eRatings is ACNielsen's second attempt to make money from providing an objective ratings service for the Net. In 1996, the company tried to offer a similar service, but soon retired it after receiving an underwhelming response to the idea.

The Internet is composed of 3.6 million web sites - and 39% of them (over 1.4 million) are private intranets and extranets, according to a new study by OCLC Research. OCLC, who undertook a mass study of the Net in June this year, estimate that the largest 25,000 sites now account for a much as 50% of the content available on the Net. Furthermore, OCLC estimate that the 2.2 million publicly accessible sites contain in excess of 300 million pages of content. OCLC also found that the size of the web has almost tripled in the last two years (in 1997, OCLC estimated there were 800,000 public sites) and that content depth has also risen slightly, with an average "serious" web site now holding 129 pages of content, up from 114 less than a year ago. Despite the controversy they've caused, OCLC also estimate that there are only about 42,000 adult sites on the Net (less than 2% of all sites). However, the group found that as many as 1 million sites - almost a third - could be classed as "provisional". Either because they're under construction, hold meaningless or trivial content, or are placeholders for a domain.

Over a year after being publicly challenged by NEC to introduce it - and almost a year after its own secret trials showed that it was feasible - Telstra announced today that it will introduce ADSL services in Australia by August 2000. Telstra said today that a public trial of ADSL will be held in Melbourne with 100 volunteers, before being extended to Sydney and Brisbane. ADSL allows subscribers who have a special ADSL modem who live near an ADSL-modified telephone exchange to download the Net a speeds of up to 1.5Mb/sec. This is approximately 50 to 70 times faster than ISDN. Telstra officials said that they hope to have ADSL equipment installed in 10 urban exchanges by the end of this year, though they do not expect to officially launch the new service until August 2000. In July last year, Japanese electronics giant NEC publicly challenged Telstra to introduce ADSL, saying that the company was resisting it simply to protect its heavily-overpriced ISDN businesss. Telstra hope to have ADSL services available nationally by 2002.

In an announcement that parallels studies carried out by Australian scientists last year, a UK scientist has found that there is more to mobile phone "heating" than may have previously been thought and that the microwaves responsible for making users' heads "warm up" may in fact be destroying brain cells. Speaking yesterday at a conference in Gothenburg, Sweden geneticist Dr. David de Pomeral said that experiments carried out by his UK team indicated that as little as an hour's exposure to mobile phone emissions could double the level of heat shock proteins in cells, which can eventually damage or even kill them. "The radiation generated by mobile phones can have significant biological effects," Dr de Pomeral said, "and we don't think they can be dismissed merely as heating effects. If the microwave-induced reaction is left unchecked, it could gum up cells with proteins and become lethal to those (brain) cells"

Australian Attorney-General Daryl Williams has urged other governments to avoid heavy-handed Internet regulation. Speaking at the the World Summit on Internet Content Regulation in Munich yesterday, Williams said that "as a broad proposition, the Australian Government believes that direct government regulation - as distinct from legislating for private intellectual property rights - should be kept to a minimum". He went on to add that he felt it would be "short sighted" to apply comprehensive regulation to a system that was still evolving. Earlier, the conference had reacted favourably to a uniform global site rating standard proposed by one of the sponsors, the German Bertlesmann company, which would be similar in nature to the rating standards applied to movies and TV programs in most countries. This system, Bertlesmann suggested, would greatly simplify content filtering and merge the myriad "semi-standards" of the current Internet into a uniform, global site rating code.

Australian Internet stock investors saw no relief from red ink yesterday with two more high-profile local stocks either announcing losses or showing their first loss within hours of publicly trading. 131shop - literally, a Yellow Pages service for people too lazy to open a phone book - announced yesterday that it had lost $1.9 million last fiscal year on sales of $141,000. However, directors said they were "pleased" with the result, given that it derived from test marketing in South East Queensland and that they had projected an even bigger loss of $2.1 million - almost the same figure that 131Shop paid for its sponsorship of a leading football team. JumboMall, meanwhile, listed on the ASX yesterday with a bold plan to lose $2.5 million over the coming year, based on a web site with a few hundred links and what directors candidly admit in their prospectus is little more than a series of guesses, any of which could be wrong. The stock debut raised $2 million in 20c shares. However, the shares dropped to 18c less than a few hours later as investors realised that a plan to lose money is not as appealing as a plan to make some..

Investors in Australian Internet stocks are beginning to rue the day, following the latest round of losses from high-profile Net companies. LibertyOne yesterday advised the Australian Stock Exchange (ASX) that it is facing a preliminary estimated loss of $7.1 million for the year - and that at least $5 million of the loss could be attributed to payments to departing executives who left the young company relatively soon after it was listed in a dispute over stock options. E*Trade Australia, meanwhile, reported a $3.9 million loss for the year, despite claiming that they now account for 3.5% of all ASX daily trades and as much as 25% of all Australian online trades. Meanwhile, EISA - an ISP which recently listed on the ASX - also jolted both the Exchange and erstwhile investors yesterday by announcing a $1.44 million half-year loss on $4.4 million in revenues. The latest announcements, while dismal news for investors, preserve the status quo of Net stocks. To date, almost none of the Internet stocks which have listed on the ASX in the last 2 years have shown any profits.

Rupert Murdoch's News Corporation Ltd is rumoured to be considering a $1.5 billion acquisition of computer magazine publisher Ziff-Davis Inc, who also own the well-known ZD-Net internet property. Over the weekend, London's Observer newspaper reported that News executives were currently conducting due diligence activities on the company. This follows Ziff-Davis' retention of Morgan Stanley Dean Witter in July to "explore the possible sale of some or all of its businesses to maximise shareholder value". And this in turn, the paper reported, was the result of a decision taken earlier by Ziff-Davis' majority Japanese shareholder Softbank Corp earlier this year to concentrate on Internet properties. If the acquisition proceeds, ZDNet may have the dubious distinction of being the first major computing review site on the Net not actually backed by the research labs of a major public corporation.

Less than a fortnight after a slew of serious security flaws were unearthed in Internet Explorer 5, Hotmail and MS Messenger, Microsoft has been faced with another poor quality outcome following the discovery of a new security hole in Beta 3 of Windows 2000. The flaw - which the company claims is now fixed, but which security experts are less certain about - allows an automatic password log-in feature to be disabled in certain circumstances. In a networked or online environment, security experts say, this feature could be exploited by an unscrupulous hacker to gain access to a user's machine via telnet - possibly assisted by a telnet command embedded in a web page. The Beta 3 release of Windows 2000 is currently being used by 650,000 people world-wide. While Microsoft have now made a patch available, the company is unable to determine how many users may have an affected copy.

Australian retail music chain Sanity (formerly Brashes) announced yesterday that it intends to launch a new music site to answer the challenge of Chaos Music, who've stolen a considerable lead over the moribund retailer in the last year. The new site, which is expected to be open by October 15th at http://www.sanity.com, will be run in partnership with EMI. EMI have taken a 10% stake in the company and will supply the ecommerce back end for the new site. According to a company official, Sanity hope to use the new site to expand their current domestic market share from 27% to 50%, and are confident of writing more than $1 million in sales in their first year. Sanity are also currently considering entering the emerging "free" ISP market, a company official said, using their music downloads as a reason for intending users to join. No roll-out date for the proposed service has yet been announced, however.

According to a study by US-based Opinion Research (OR), the top 10 "Internet brands" for ecommerce at the present time are all based in the USA. OR found that the most recognised Internet brand at the moment is Amazon.Com (recognised by 60.1% of the US adult population), followed by Priceline.Com (55.4%) and eBay 46.4%). Others to score high in the recognition test included eTrade (43.8%), eToys (26.2%) and HotJobs (26%), with seventh to tenth positions occupied by Monster.com (24.1%), Autobytel (22.6%), CDNow (22.6%) and Reel.Com (19.4%). Meanwhile - in the world of search engines - a parallel study by WedbSideStory conducted during late August found that Yahoo still remains the most-used engine, generating 43.5% of all engine referrals. This is followed by Alta Vista (10.49%), Excite (9.85%), Infoseek (7.6%), AOL NetFind (4.33%), MSN (3.96%), GoTo (3.84%), Lycos (3.72%), HotBot (3.42%) and Webcrawler (2.94%). WebSideStory noted that Excite hast lost close to 60% of its traffic since AOL swapped from Excite to Inktomi's engine in March - possibly bad news for Australian investors who bought LibertyOne shares in December last year on the strength of its right to operate Excite! portals on the western Pacific rim.

The "corporatisation" of the Internet will take another step forward next week when The World Summit on Internet Content Regulation is held in Munich on September 14th-15th. The conference, partly sponsored by AOL and its European partner Bertlesmann, will attempt to define a global set of principles for Net content which are independent of different cultures and moral views. The conference also hopes to make progress on the development of a universal content rating system, following allegations in recent years that many existing "ratings" systems are flawed or subject to the biases of their owners. Australia's new Internet censorship law will also discussed at the meeting. Many Asian countries are reportedly keen to introduce similar legislation in their own jurisdictions following the easy acceptance of the law in Australia. Attendees will include Government and industry representatives from Australia, the USA and Canada, as well as European and Asian nations.

Australian insurance and motoring organisation NRMA announced over the weekend that it will spend as much as $100 million on an ambitious new e-commerce site over the next 6 months. NRMA's CEO Mr Eric Dodd, speaking to the media over the weekend, said that the company had fully committed to an online sales strategy, and hopes to turn itself into a fully-fledged "ebusiness" with the project. Mr Dodd told the media that he thought Net posed both the biggest single opportunity and the greatest single threat to the insurance industry, because it would allow insurance companies who have a substantial online presence to alter their cost base and undercut any insurance company which ignores the medium. "We'll make sure that doesn't happen here," Mr Dodd said.

The Australian Federal Government began debating the Copyright Amendment (Digital Agenda) 1999 Bill yesterday. The new legislation, if passed in its present form, is intended to extend existing media copyright protections that surround wireless broadcasts to cover works published on the Net. Proponents of the Bill hope it will not only provide some protection for artists, but will also clarify a potentially contentious area of the law (at present, copyright law in Australia does not explicitly cover the Net). The new Bill will also provide some protections for ISPs and telcos by placing responsibility for copyright breaches on the user of the material rather than the downstream broadcaster. However, the new Bill will also outlaw password cracking programs and some other types of security software. The Systems Administrators Guild of Australia believes that if the Bill is passed in its present form without having this aspect amended, potentially thousands of Australian systems administrators could be held liable for carrying out routine parts of their daily work, such as changing passwords or permissions.

According to a study by the Software & Information Industry Association (SIIA), software pirates are doing a brisk online trade through popular Internet auction sites. The SIIA surveyed 221 selected sales through eBay, Excite Auctions and ZDNet Auctions between August 15th and 20th. As a result of this spot check, the SIIA issued its first ever "buyer advisory" on August 31st, warning consumers that they believe up to 60% of all popular software titles being sold through these and similar online auction sites at the present time are pirated, fuelling debate about whether auction site promoters should take a more proactive stance towards policing software sales on their sites. The SIIA is the new name for a consortium formed between the Software Publishers Association and the IIA formed in the USA on January 1st this year. The SPA was itself a consortium of major software vendors which spearheaded and maintained the global anti-piracy campaign for the last decade

The number of Australian web sites expanded again last month according to our monthly Australian Internet Growth Index, which has been attempting to estimate the number of actual "live" Australian sites on the Net (rather than the number of registered domains) since 1996. All capitals recorded slight rises last month, with the most pronounced growth occurring in Melbourne. The September 1st figures (with August 1st figures in brackets) are as follows:

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

Brisbane - 2,517 (2,433)
Sydney - 7,316 (7,102)
Melbourne - 5,388 (5,026)
Adelaide - 2,315 (2,297)

Perth - 2,563 (2,488)
Hobart - 862 (835)
Canberra - 1,935 (1,933)
Darwin - 1,774 (1,768)