Sponsor's Message

Well if you were to ask Sam Morgan you'd probably get a resounding "yes" as an answer.

You see, according to reports, Sam has just signed a deal with Fairfax that sees him selling Trademe for a cool $700m in cash.

Yes, that's $700 million dollars -- or to put that in perspective: if you were to spend $1,000 per day it would take you nearly two thousand years to run out of cash if you started with that much.

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In fact you'd never run out of money -- because if you stuck it in a regular savings account paying just 5% per annum, you'd actually be accruing cash at the rate of $95,000 per DAY.

Yes, $700m is a *lot* of money!

So why has Fairfax spent such a gobsmackingly large amount of dosh on Sam's website?

Well that's an easy one...

For a long time, newspapers (Fairfax's core business) have made a great deal of their money from classified advertising. Regular folks like you and I would pay $30-$40 to advertise our redundant lawnmowers, cars, houses and just about any other items of value we wanted to sell. Go back a decade or two and you'd find that most of the major dailies dedicated many, many pages to these classified ads -- earning publishers like fairfax *lots* of money.

But then the Internet came along and ruined all that.

Why pay cash up-front to list your wares in the classifieds (with no guarantee of selling) when you could now throw it on a site like Trademe and only pay (a much lower amount) if/when it actually sold?

Thus began the end of the newspaper classified.

Seeing this trend, and the huge loss of revenues, newspaper publishers like Fairfax have had no option but to join the trend to online selling or suffer the consequences.

Of course most newspapers tried the silly idea of simply putting their classifieds online -- but that didn't work. Why would it? Customers still had to pay up-front and had no guarantee of success.

Now, given that Trademe has that all-important critical-mas, those other would-be pretenders to the title of "NZ's online auction site" have also failed to have any impact -- so Sam's little business became *very* valuable.

No doubt there'll be those who knock this deal, claiming that it's a ridiculous price and that Sam was "just lucky" -- but I reckon he's done a damned good job of leveraging his position. Let's actually hope that NZ's tall-poppy syndrome doesn't strike this time and that people give him the credit he deserves -- after all, if it was easy to build a $700m online business, everyone would be doing it, right?

So Sam, now that you've got all this cash, how about sponsoring Aardvark :-)

What do you reckon? Did Fairfax get a good deal?

Are there other opportunities for Kiwi entrepreneurs to strike it rich by building valuable bits of real estate on the Net?

Tell us all and see what others have to say in The Aardvark Forums

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