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We all like to be where the action is—especially online

We all like to be where the action is—especially online

Matt Cooney

[New Media]

How funny that the Internet—the wild, unpredictable, never-will-be-tamed network designed not to have a centre—should turn out to be such a natural home for monopolies. Weren’t we told that nobody could own the ’Net? That browsers are fickle, that we’d spend our time surfing until we find the Next New Thing? That the smallest David could neatly unseat the meanest Goliath by virtue of being smarter, faster, cheaper—or even just smaller and friendlier?

It didn’t take long before some of those Davids became Goliaths themselves. Today, Amazon is worth almost five times as much as Barnes & Noble. Google continues to thumb its nose at Microsoft, making all the moves as it rakes in the revenues for its search and advertising businesses and regularly rolls out new services like webmail and maps.

But where are the new upstarts that will reinvent the online business? These days, netizens seem quite content with a single dominant player. We search on Google, buy books from Amazon, share photos on Flickr.com, find music on iTunes and—most of all—we buy and sell stuff on eBay.

Except we don’t. Kiwis buy and sell stuff on Trade Me, but we buy on Trade Me for the same reason that the Japanese buy from Yahoo and the Aussies and Americans from eBay. We want to be where all the other buyers and sellers are. A few envious wannabe competitors have tried to unseat Trade Me by offering free listings and seeding auctions with cheap and desirable goods, but it’s hard to argue with scale. Trade Me—and eBay and Yahoo Japan—would need to really mess things up to lose their market advantage.

It’s not quite as cut-and-dried for other Web businesses: Amazon’s book collection probably isn’t any bigger than you’ll find on Barnes & Noble’s website, but Amazon takes advantage of its huge customer base to offer customer reviews, book lists, and allows specialist and second-hand bookshops to sell direct to Amazon customers. The iTunes store offers similar features. More customers add more value, and that’s why those customers keep returning.

Auctions, dating and employment sites are great examples of natural monopolies. Are there other Web businesses where an early mover can corner an entire market? You betcha.

These days, netizens seem quite content with a single dominant player.

Take maps. Google Maps has made a big splash but it’s not available here. Several companies offer good local maps, including Wises, but the first local operator to offer good interactive maps that visitors can ‘tag’ with information about restaurants, roads, bars, playgrounds, surfing spots, weather stats, shops, their friends—whatever—might hit that sweet spot where customers make the site truly useful and so they loyally return. Check out zoomin.co.nz for a work-in-progress with great promise.

Take bookmarks. Sites like del.icio.us share bookmarks across the globe, but a local bookmarking site would be more relevant to Kiwis.

Take searching. Let the big guns fight over search websites; smart companies like Christchurch’s Eurekster are working on community searches, allowing website owners to form clusters and search within each other’s sites. Websites will want to be where the best clusters are.

Take classifieds—the nightmare that keeps newspaper publishers awake at night. It’s not eBay that is seen as the biggest threat to American newspapers’ classified sections. It’s Craigslist, an online classifieds site that claims to run more than eight million classified ads each month—more than all US newspapers combined. Like eBay and Trade Me, the bigger Craigslist gets, the more useful it becomes.

Craigslist is already here: it set up an Auckland site early last year. It’s pretty empty now but Fairfax and Herald publisher APN will need to act if they see signs of life in Craigslist.

Or will someone else beat them to it?

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