‘Freeconomics’ the future model for doing business

‘Freeconomics’ is being lauded as the way of the future for business. Based on the paradox of the more you give away, the more money you can make, for consumers, ‘freeconomics’ delivers something for nothing. Last week the music industry became the latest to join in with the launch of Qtrax, the first 100% free and legal music download service.

It adds to a growing stock of products and services being given away. Newspapers, telephones, flights, drinks and divorces are on offer free of charge. Games, bicycles, books and cars, WiFi, financial help and travel guides are also priced to go at absolutely nothing. No matter what you are looking for, there are few limits to what is being ‘freed’. Increasingly, money will become no object at all, changing the way we live, do business and play.

Continue reading this article from The Sunday Age, 22 June, 2008.

What’s Free and Easy?

Newspapers and Magazines: Free publications are now offered in 52 countries. MX which is distributed at Melbourne railway stations in the afternoon is one example.

Telecommunications: Skype is an established player. Blyk is a European free mobile phone service funded by ads. Pumbby in Belgian pays cash to users for recieving up to 10 ads a day on their phones. SMSPup in Australia offers free SMS in exchange for reading emailed ads.

Travel: Lauda-Motion lets German and Austrian customers rent an ad-plastered Smart car for less than $2 a day. In Australia, the same service is priced at $5 a day. European airline Ryanair now gives free fares to a quarter of its customers.

Food and Drink: A Japanese vending company gives free drinks in exchange for watching a 30 second advertisement.

Textbooks: US Publishers offer free PDF textbooks to college students who complete an online survey. In Europe students can get free textbooks with ads every four pages.

Wireless Internet: Several US cities have signed up to host ad-supported free wireless internet. Trials like this have also recently been carried out in Geelong in Victoria.

Navigation: Boomerang GPS, recently launched in the US, is an ad-supported system targeted at hotels, airlines and car rental agencies.

Paper: A US company offers free notepaper branded with horizontal ads to students.

Finance: A US company gives users free summaries of spending activities, along with warnings about low bank balances and upcoming bills.

Games: Electronic Arts will soon release a free online version of its Battlefield series, supported by ads.

Bicycles: Copenhagen, Paris and Lyon are among the cities boasting racks of bicycles for free or for as little as $1.50 a day.

Music: QTrax the world’s first 100% free legal download service. Other services such as We7 offer free songs tagged with 10 second ads.

Borders take over by Angus & Robertson

Borders has said that it expects to soon complete the sale of its Australasian operations to Angus & Robertson (A&R Whitcoulls) after more than a year of talks with the owner of Angus & Robertson, Australia’s oldest bookstore chain.

A&R Whitcoulls is owned by Pacific Equity Partners, the Australasian private equity firm whose stable includes cinema chain Hoyts Group, industrial services as well as Sizzler and KFC franchises in Australia.

Borders will receive about $95 million immediately for the assets and could get up to $15 million more depending on whether it meets performance targets.

The purchase brings A&R Whitcoulls’ 30 Borders bookstores in Australia, New Zealand and Singapore and also exclusive rights to use the Borders trademark in those three countries.

Continue reading the rest of this article from the Herald-Sun on 7 June, 2008.

Woolworths to offer paid maternity leave

 

 

 

The ongoing push for universal paid maternity leave has received another boost with one of Australia’s largest employers of women offering paid leave for the first time.

The decision by Woolworths, which has 85,000 female staff nationally, has been described as “very significant” by the retail union and welcomed by others who saw it as a step towards a universal government-mandated scheme.

There could be further moves afoot after another large employer, Coles, also said it would “be carefully watching developments as they unfold”. However, it said there was no current plan for a paid maternity leave scheme.

Read the full article from The Age on 6 June, 2008.

Can you own the colour Purple?

Cadbury says it will appeal a recent court decision to allow rival Darrell Lea to use the colour purple. The Federal Court dismissed an application by Cadbury Schweppes that the use of purple by Darrell Lea amounted to misleading and deceptive conduct. Justice Peter Heerey said he was not persuaded that Darrell Lea in using purple had passed off its business or products as those of Cadbury or had contravened the Trade Practices Act. Cadbury had claimed customers linked purple with their products and mistook Darrell Lea’s goods for Cadbury’s, and vice versa. But Darrell Lea said Cadbury’s knowledge was limited to inspection of goods on display and physical surroundings, and did not involve any observation of consumer behaviour. Cadbury Schweppes said it would appeal the decision. Read the full story in The Herald Sun, 0n 12 April, 2008. Consider the following questions:

1. Do you think Cadbury were justified in bring this action in the Federal Court?
2. If Cadbury had been successful with their case, what would the implications be for other similar cases?
3. Why is the outcome of this case important for Australian small businesses?

 

High rates here to stay

According to a BIS Shrapnel report released today, high interest rates could be here to stay. BIS Shrapnel have also warned that the Reserve Bank will struggle to control inflation over the next decade because of skilled worker shortages and higher food and fuel prices.

New economic data also shows another record trade deficit and further signs of slowing demand, with most economists and investors now tipping that rates will remain on hold for the time being, and possible rate cuts over the next year.

But the BIS Shrapnel report says despite growth slowing initially, inflation will remain above 3% for the next three years, and stay at about 3% for the next decade – meaning the Reserve Bank will be forced to increase interest rates.

The report says cheap Chinese imports and scarcity of goods will keep food and fuel prices high for the next decade. The Australian dollar will fall as commodity prices ease over the next few years, which will be positive for exporters but bad for inflation.

Business investment growth will also wind back, and construction will instead start to pick up, preventing inflation from dwindling.

Read the full article from The Age, Business Day, 8 April, 2008.

The last few posts have discussed Australia’s current economic climate and provided views from various commentators. What’s your view? What do you predict will happen to interest rates, consumer demand and fuel prices?

 

Reserve Bank hints next rates move probably down

Contrary to an earlier post made on interest rates, the Reserve Bank is now sending a strong hint that interest rates have probably peaked, and that the next move could be down. This is certainly welcome news to many Australians who have been feeling the recent pressure of successive interest rate rises.

According to the governor of the Reserve Bank, Glen Stevens, ”We have the biggest terms of trade boom in 50 years, at the same time as we have one of the most serious malfunctions in developed country capital markets in a long time.”

Mr. Stevens also said “the demand for credit by households has been weakening over recent months. Measures of confidence have declined. While those measures can provide false signals, our assessment is that a change is occurring, and we are hearing that from businesses that we talk to.”

Read the full article from The Age, Saturday 5 April, 2008.

Check out the Reserve Bank of Australia website for more information on monetary policy.

Grocery Industry Competition

A four-month inquiry by the Australian Competition and Consumer Commission (ACCC) into rising grocery prices began in Sydney on Tuesday and will travel to all capital cities as well as number of regional areas. The enquiry will examine the factors that influence the pricing of grocery items at the supply, wholesale and retail levels of the industry.

The ACCC will also consider the competitive positions of Woolworths (Safeway) and Coles, which together share 80 per cent of the retail packaged food business, and the effect of their market dominance on small and independent retailers.

According to consumer groups and smaller grocery cahins, Australia’s grocery market duopoly needs urgent reform to lower prices and reduce barriers to entry. What do you think? Read the full story on Yahoo7 News and then answer the following questions:

1. Identify the main stakeholders and their roles in this issue.
2. What is the ‘consumer price index’ and would separate index for food and groceries help consumers?
3. Outline some of the main findings already made by the ACCC enquiry.