Less than a week after picking up a prize for its news website in
the Netguide Awards, Wilson & Horton has announced that it's laying
off 10 workers from the online division.
And of course we still remember the NBR's prestigious online version which
crowed at regular intervals about the number of hits it was getting and
how well things were going -- only to admit defeat and fold up when it
ultimately proved to be economically unsustainable.
Then there's Flying Pig which found itself having to cut back staff and
eventually being sold when the business plan obviously went off the rails.
Look a little further afield and we see that right around the world there are
bucketloads of Internet businesses folding through an apparent inability to
spin a profit from an audience of more than 300 million Net users.
So what's going on?
How can so many people have gotten the Internet marketplace so very wrong?
If all these businesses were started and run by non-business-savvy geeks or
idiots then maybe we could understand -- but in far too many cases, the people
behind these failed ventures are just as likely to be seasoned and skilled
The oft-touted goldmine of online retail has flopped so badly that some 75 percent
of all dot-com failures in the USA during the 12 months have come from this
sector. Another area which seems unable to spin a dollar's profit is that
of online publishing which still seems to be struggling to find a magic potion
which will allow it to turn an audience into cash.
If we look closely at what's going on here, I think the reason why nobody's
able to make any money out of the Net is a very simple one -- it's just the
law of supply and demand.
With every Ma and Pa retailer putting up their own cyberstore, and every
print publisher and broadcaster in the world all pouring content on the
Web then we have an unnaturally high level of supply -- and this means
that the 300 million Net surfers are spoilt for choice.
When supply outstrips demand then it becomes very difficult (if not impossible)
to make a profit -- and that's exactly the situation we have on the Internet
So -- how do wannabe Net-millionaires get around this problem?
Simple -- don't enter markets that are already saturated with supply.
Yes, there are still billions of dollars in profit to be made out there on the
Net -- but to earn this money the smart businessman will have to come up with
something new, something valuable, something the market wants, something for
which they are the only source of supply.
Does it sound impossible? It's not.
Remember, as far as the online world goes,
we're only looking at the tip of the iceberg. Over the next five years we will
see more new products and services appear than you can possibly imagine right
now. The secret to making money out of the Net is to be first to bat with one
of these and you must back it up with an effective marketing, support, supply
and operational infrastructure.
(For details on how to do this, just send your cheque to... :-)
Yes, I know the first edition of the weekly has yet to appear -- but I'm
still working on it.
Hopefully (if current leads pan out) it will include a very interesting expose'
into the astoundingly bad behaviour of a group of local "new economy" company
directors (some of who are also on the board of a public company). Just how
competent and ethical are the managers of some of our hi-tech public companies?
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