A special right to be a monopoly?

Listening to the major media players cry foul, whinge and moan leading up to the new media ownership laws, you would think that they had a born right to be a monopoly. Self interest was always at the forefront of their arguments, and why not – they are protecting billions of dollars worth of profits.

Can anyone tell me how TV networks can claim Australia is not a big enough market for more TV networks when combined these companies rake in well over one billion dollars in profit each year. (yes that is one thousand million)

With those kinds of profits there is enough room for 10 TV stations…or is one hundred million in annual profits each not enough?

Yes some will fail and others will rise, but isn’t that the purpose of our capitalism in a free and open society?

I consider a monopoly to be a company or organisation that dominates any industry where consumers and business have no choice to use their products or services and pay whatever they charge and agree to whatever terms and conditions they see fit to implement.

When I say choice, I mean choice, not one, two, three or four companies that dominate a particular market. They will all tell you they welcome any competition, but in the backrooms they all look at ways to crush them to maintain the status-quo.

In Australia we have many monopolies, betting, banking, newspapers, television, telephony, airports, transport, health insurance etc….the list goes on…..but it is the media industry that sees problems coming from technology and they don’t like it….

Newspapers are finding their ‘rivers of gold” (classifieds such as cars, houses and jobs) are drying up far quicker than they first thought, the result has seen a buying spree of online sites such as RSVP.com.au, Realestate.com.au (total buyout unsuccessful thus far), Commercialrealestate.com.au, Seek.com.au and many others in an attempt to control the spending habits of their traditional clients from television and newspapers to the Internet.

So who are the competitors?
Well there are many fine Internet companies out there, but you will not read about them in newspapers or see them on TV, particularly if they are competing for the same advertising dollars. These companies slowly build there businesses from word of mouth, primarily because they have great systems and must adapt to the needs of not only their clients but also consumers.

In Australia realestate.com.au has become a monopoly in residential real estate. An agent can simply not compete unless they advertise their properties on this site. At the moment, in my opinion pricing is fair and reasonable, but I am worried that the more powerful a company becomes the more they will charge their clients and each year we are seeing pricing go up by between 7 and 10%.

Some people will say this is reasonable, but I say not. Prices should be coming down – not going up. I now have around 125 clients across Australia and New Zealand and I have not risen prices once in the last 5 years. The reason? I know technology. As an example, realestate.com.au already has a great portal and systems implemented. They only need to continue improving these systems. Also the cost of running this operation (servers, systems etc) goes down each year. Data costs tumble, servers get cheaper, telephony costs have plummeted and this will continue each and every year. In fact the only costs that rise each year are wages, advertising, office space – traditional business costs.

The only thing that will stop continued price increases are Google, Yahoo and MSN entering the real estate market. This will be a time when they monopolies will be truly challenged.

So when portals come to you with any kind of price increases, fight it and ask why, don’t just accept it.

Being a monopoly one day does not and should never garauntee that you will continue to be a monopoly, no matter how much influence you may have, and thankfully the Internet takes control away from monopolies and back to the consumer who can then dictate who remains a power.

Time will tell but if real estate agents support new portals then they will help themsleves by creating competition.

Competition, Monopoly

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About Peter J Ricci

Peter Ricci is the Director of Agentpoint.com.au, Business2.com.au, Ginga.com.au and ZooProperty.com and has been involved in designing and developing real estate systems and websites since 1997. In July 2001 Peter founded Business2.com.au to help real estate agents better understand the power of the Internet and the real estate landscape in Australia and New Zealand. Since then he has penned over 300 articles on a variety of subjects in the real estate technology industry. Business2.com.au is now the leading real estate technology site in Australasia.

3 Responses to A special right to be a monopoly?

  1. Paul August 10, 2006 at 6:13 pm #

    This is one thing that irks me heavily. These big companies are getting greedy. I came across a company today that was selling websites with unique address .com’s. Very basic really for what you get not even what I would consider a professional design. They are designed for prestige homes and are charging about $1500 – $2000 depending on the content. Now I know exactly what it would cost for them to put that together, to register the domain, to hosting it to building the site and paying for bandwidth and it doesn’t even come close to that. I guess the question is what is reasonable profit increase and can we actually put a price on it.

  2. Peter Ricci August 11, 2006 at 10:24 am #

    Hi Paul, thanks for your continued comments. As you may or may not know, I am a developer of agents websites and I can tell you that I cannot do websites for less than $3,300 inc GST. Most websites are in the 7-10k mark and some a whole lot more.

    Today agent websites have to have so many features and they also have to communicate with impending RSS feeds, Mapping etc. In the future we will see videos (taking over from VR Tours) so I cannot see how anyone could do an agents website for less than 2k.

    Well I suppose I can, many people still consider nephew Johnny to be a wizard but these are now in the minority.

    There is an old saying – you get what you pay for and with agents websites, words cannot be more true!

    Aside from design and development/maintenance, the biggest thing is agents want somone they can pick up a phone and speak to at any time, so in my opinion support is so important.

  3. Paul August 11, 2006 at 10:55 am #

    That is true Peter, but these sites are not agency websites they are a short term property display pages on their own domain, maybe 2 or 3 pages at most in a very bog standard template. Someone of your experience could knock these up in 30 mins flat and I’m not kidding. They are preying on agents who don’t know any better.

    I’d say your very competitive price wise. I’d expect 20K+ minimum for a complete agency website and maybe even 100K+ for the fancy ones with crm backends etc. Maybe I’m out of touch though.

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