eBay makes fundamental changes – enough?

Massive changes today announced for eBay’s economic model, in response, I take, to the increasing power of Amazon and Google.

  • Listing fees down 25 to 50%, especially for bigger sellers

  • Gallery is free

  • final value fees (commissions) are up – 8.25% under $25, which is up from 5.25% and huge. Most sales are in this range, and it forms part of the commison for sales greater than $25. For the next range, $25 to $1000, commission rises from 3.25% to 3.5% – a very big increase in revenue terms for eBay. (US figures)

  • Big sellers that have high buyer feedback ratios get 5 to 15% commission fee discount.

Those four changes take apart the existing economic model and put it back together. Reducing listing fees increases items listed (Trade me already has zero listing fees).

Zero Gallery cost means every item can have a photo displayed in search, and this will natualy increase sell through rate anyway.

Final value fees are where the bulk of revenue should come from – after all when you’ve just sold something you are more likely to understand the value of paying a fee. Increasing these can make eBay a fortune, and they have covered concerns of big sellers (who look hard at these fees) by offering discounts.

These changes aim, therefore, at increasing listing numbers, sell through rates and final value fees. I’d expect eBay are anticipating a decent overall lift in revenue from this.

They have also played with the feedback system:

  • Sellers can’t make negative  comments about buyers

  • Buyers that are suspended/kicked out have their negative comments removed

  • Time to write feedback reduced to 60 days from 90

  • Sellers can block certain members  from buying

  • Order in search results is adjusted for buyer feedback ratio

  • Feedback percentages will include repeat buyers –  currently only one from each unique buyer counts.

Overall this helps big sellers (they don’t leave negative feedback anyway) and should makes eBay a friendlier place – i.e. a higher positive/negative feedback ratio. Again, these are fundamental changes to a foundation of eBay’s success.

Overall? Send as much money as you can to the USA and buy eBay stock. It is stupidly low right now, they have a globaly diversified income stream and these changes should do it well.

Choose your adventure – DVD

If you have kids you may want to give this a go.

choosemovie

The DVD is based on the Choose Your Adventure books, and asks viewers to make decisions – the results of which give 11 different endings. It’s all run by a friend from Washington DC days, who now has a startup in LA called Lean Forward Media.

A lot of kids like watching the same DVD time and time again – so I wonder what this would do to viewing time, and to how the kid engages with the content.

Good bye Renaissance dependance

What can you say about a company that just didn’t make hay from what now are the most sought after  products in the world?

Finally it appears that Renaissance has lost exclusive Apple distributorship in NZ, and I have to say that I’m glad. Their service was really not up to scratch, and they lost my business to the online store the day it opened. Now we can see a better distributor, or perhaps a tangble entry by Apple themselves.

Perhaps I should have backed myself and shorted Renaissance a while ago, but it was hard to bet against Apple’s expansion in NZ.

Looking at this price chart, I really should have:

yahoo finance

US Prisons are out of control

So bullets from an article in The Atlantic, (link is to a free site as The Atlantic is behind a paywall) and via No Right Turn.

70% of US prison inmates are illiterate.

two thirds didn’t commit a violent crime

60 to 80% have a history of substance abuse

black men are 5 times more likely to be locked up for drug use than white men, though usage rates are about the same

One in 14 black men in the USA is behind bars right now.

25% of black men in the USA will be locked up at some point in their life

75% of women imprisoned have children

Prisoners in the USA generate a billion dollars in revenue for telephone companies from pay phone calls

In California there are 2.6m outstanding arrest warrants –  because there is no room for more people in the jails.

eur 50 billion? Off with their heads

If you are the boss of a financial institution that holds a position of 50 billion euros from a ‘rogue trader’, then you do not deserve to be there.

Neither do the senior and relevant junior people responsible for risk management and auditing and the line staff above said trader.

Neither does the board of directors.

There is no way this situation should ever be able to happen, and especially not in a bank of the size, history and responsibility of Societe Generale.

Credit to SG investment banking boss, Jean-Pierre Mustier, who did tender his resignation, but it was rejected by the Board Chairman.  Mustier then gave up his bonus and halved his (clearly considerable) salary, which was the next best thing to do.

That sword should remain out, for others to fall on.

WSJ will not be free, and could even be more expensive

Bad news.

Rupert Murdoch has said that wsj.com will ‘greatly expand and improve’, but that fees will still apply for full site access, and may even go up.  There will be some free access for non-paying subscibers, along with a “strong offering” for paying subscribers. Let’s hope that are not copying AFR.com.au, and let’s hope that this latest in a series of pondering statements  from Murdoch will change.

The WSJ.com has 1 million subscribers now, which is great income for Murdoch at $99 per year for online only, and $49 for those that already get the print edition. It’s hard to argue against a price increase for those locked-in million, as they’ll largely pay whatever they have to. However, a free model will allow the readership to greatly expand globally, and advertising pays pretty well these days.

The decision on what to put into the paid and what into the unpaid buckets is everything, and one that is all too easy to get wrong.

Infratil, Bogoievski and real estate

Interesting. Lloyd Morrison gets a COO for Infratil, and Bogoievski gets to stay in Wellington, stay in a job where political influence is important and work for a growing company that shares the spoils.

Meanwhile Infratil have landed the ex-NZ boss of Lang LaSalle to boss Infratil Property. It looks like Infratil will try their hand at vulture capitalism, and try to snap up some bargains as the market falls.

Could we even see an Infratil tilt at some parts of Telecom? Infratil may be a wee bit small for that, but there is plenty of value to be unlocked in the beleaguered giant.

Bond and NZ Cricket

Shane Bond is absolutely right to fight the cartel that is NZ Cricket and the ICC. The ‘loss’ of his talent should be a rude reminder to the NZ Cricket authorities that they have drifted from their mission.

NZ Cricket are there to ensure we have the best cricket team, along with a great state and development program, and ever-increasing participation in the game.

Instead their website is a homage to several sponsors,

blackcaps

and they seem more interested in clothing sponsorships than retaining one of their greatest players:

NZ Cricket
Right now there are just under 100,000 players and yet just 200,000 match attendees each year. Losing Shane Bond isn’t going to help with either building participation, or with that RFP for clothing.

It’s obvious – there is not need to lose Bond. Let Bond have his very reasonable and ethically pure goal of playing in India only when it does not interfere with NZ commitments. Not only is there no harm in that, but the Indians will be paying Bond money that you can’t.

Qtrax launches. Yawn.

Qtrax wants to give away songs via Peer to Peer networks and pay RIAA member companies royalties from revenue earned from ads. Their layer will be avaliable to download shortly – which means that someone is running a decent PR campaign behind the scenes.

qtrax\

They are making a big deal about the being Mozilla based, which means it may even work on OSX.

qtrax

This Stuff Article says that you only need to view ads while searching or downloading songs, but the same article also states that the DRM will count the number of plays for each song. That smells of lock-in to their music player to me – so I can’t see much hope for this service. Most people already have their music stash loaded on to their PC, and have selected a player long  ago.

This service may work if songs can be shifted straight to iTunes, but that makes the revenue model challenging.

Overall, the time for this was immediately post-Kazaa,  and these folk have been in gestation for far too long. Their press-release page shows a deal signed was with Sony back in April last year, and you have to feel almost sorry for a company that requires an EVP of DRM.

Blocking Sky is bad for everyone

Sky may be forced to not bid for exclusive access to big events of “national significance”. Well, it’s one of several proposals apparently, so let’s not jump up and down yet.

The result would be less incentve for sky to bid for those events, and therefore a lower final price. That means less money to the organisers of those big events, and therefore less big events. Do we want that? (arguably yes, what with all the big matches from a multitude of sports that we are expected to keep up with.)
It would also mean that whatever free-to-air channel wins the rights to those events will insert lots of ads, rather than the relatively ad-free Sky environment.

As with the world cup over here in Australia, I’d vote with my feet and watch the event later on Sky, ad free, rather than the HD yet ad-filled version on the free to air broadcaster.

How to deplane 13 passengers

There’s a right way and a wrong way to get 13 people off your flight and on to another one.

The right way is to have an auction, where  you gradually increase the incentives to deplane, starting with an additional free flight (which was the end offer by Clueless Pacific Blue), and adding flights, cash and hotel rooms until the next passengers take the bait. Then you pay everyone that chose to deplane the same amount – which is whatever the last person to accept an offer got.

It’s mments like these that define the difference between lousy and great companies. If the staf had got it right, it would mean not just that they were well trained, but that they were allowed to use common sense and to do ‘the right thing’. Any CEO worth his or her salt would immediately back up those staff, as long as customer satisfaction came first. As it is, I’ll never fly Pacific Blue now unless I am forced to.

Simply put – if you screw up you put it right, and “it’s the putting right that counts”. I have recurring nightmares about that last phrase after years of LV Martin ads across different media.