Category Archives: Games

Amazon finally comes to Australia; local retailers still want government action on sales tax

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A short (and seasonal) post this week, as everyone starts easing off for the holidays.

It may just be coincidence, but about the same time Amazon launched their new Australian website local retailers renewed their campaign to lower the $1,000 sales-tax exemption for online purchases from overseas retailers. And both events came at the start of the Christmas shopping season….

Obviously too early to say which way this will go, but here are a few personal observations:

First, the local Amazon site is limited to e-books, games and Android apps. So, no access to music, television or film content (digital or physical), no sales of print books and no Amazon marketplace. For these products and services, customers are directed to the US site. (Previously, the dormant Amazon.com.au domain name referred customers to the UK site.)

[Note: neither the US nor the UK sites allow overseas customers to buy mp3 content, but they can download digital music via Amazon’s AutoRip service when purchasing physical goods – confused? Me too….]

Second, prices for e-books on Amazon’s Australian site appear to be comparable to the US store, and presumably include local sales tax (GST) to keep on-side of the local real world and online retailers (as well as the ATO, of course).

Third, the general consensus is that if the $1,000 threshold was lowered or even abolished, the amount of sales tax to be collected would be more than outweighed by the additional costs of processing, administration and remittance (which would likely be passed on to local consumers at a “cost-plus” rate by overseas online retailers).

Fourth, many local retailers who voice their opposition to the $1,000 tax-free exemption fail to understand some of the reasons why local shoppers prefer to buy from overseas online retailers:

1. Price – even if overseas sales attract the 10% GST, in some cases this would still be cheaper than buying locally (especially so when the A$ was above parity with the US$). For example, from time to time, Amazon’s UK store offers free shipping on physical goods to Australia….

2. Choice – many products available from overseas online stores just aren’t available in Australia. This is primarily due to geo-blocking, confusion over local distribution rights, and simple lack of interest in stocking some items for the local market

3. Service – from recent personal experience, buying from a local online retailer took much longer than buying the same product from an overseas site, because the supply chain logistics were woefully inept.

[Note: As a separate but related example, I recently ordered a new iPhone 5S direct from Apple’s local website, and received it within 3 days, including a weekend; whereas my telco provider – which prides itself on its on-line business model and customer service standards – took more than 2 weeks to send me a new nano SIM card….. I had also been told by a couple of local Apple re-sellers that it would take 3-4 weeks to order the new phone, unless I took out a new mobile plan with them – which may say more about Apple’s trading policies than the resellers’ business operations.]

My advice to local bricks and mortar and even some online retailers is to look at their own limitations before insisting that the government amend the GST-free threshold on overseas online purchases.

As for Amazon, I wish them well in developing their local service. Much has been made of the stated intention to focus on Australian titles, and the opportunity for local authors to self-publish via Amazon. But already there have been some rumblings that this new site may cannibalize Kindle sales made via some of Amazon’s local retail channel partners.

Why it’s important to make time for play

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Do we spend enough time playing? As adults, have we forgotten how to play? Have we in fact been conditioned to stop playing once we “grow up”?

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Most of us would probably recognise that a lack of play during our childhood can have serious consequences for our psychological development. Dr. Stuart Brown of the National Institute for Play makes the case that a lack of adult play has a negative impact both on our energy levels and on our mental well-being. Again, most people would appreciate that taking time out from our daily tasks and routine can lift our spirits and put us in a better frame of mind – it can also help us with problem-solving and creative thinking – but few of us make a conscious effort to schedule some dedicated and regular play activity into our day. (And I don’t mean simply spending an hour or two playing computer games.)

How we play is just as important as what we play with, and the type of play activity that engages us – in short, we are what we play. So the absence of any play may suggest something is missing in our lives.

When I was a child, some of my favourite toys enabled me to design and build things, to construct working models with clockwork and electric motors, to assemble, disassemble and re-assemble simple electronic circuits for radios, light-operated switches and walkie-talkies. I even built a rudimentary synthesizer using parts stripped from an old TV set, and a keyboard made from an ice cream tin. OK, so I wasn’t going to get a gig with Kraftwerk, but I did learn about capacitors, resistors, transistors, diodes, rheostats, transformers and relays, even if I couldn’t get a recognizable tune out of the instrument itself.

This avid curiosity about how things work once caused me to take apart a clockwork motor, which I was then unable to get to work again. My father, an engineer, simply said, “Never take something apart unless you know how to put it back together”, sage advice which is helpful even today in my role as a strategist, executive coach and business consultant.

I would suggest that there is a link between abandoning play in adulthood and a growing lack of curiosity about how things actually work once we get older, coupled with our increasing passivity towards new technology. For example, how many of us would know (or care) how to repair simple mechanical or electrical appliances in our homes?

While there has been an understandable effort aimed at encouraging children to learn how to write code, this emphasis on software comes at the expense of learning how machines work, how hardware is designed, how electronic and mechanical components combine together. This software bias has prompted a team of educationalists to launch the Bigshot digital camera kit designed to help children learn through play by making a real digital camera, and to understand the relationship between software and hardware. Others are teaching summer schools that combine software programming with engineering and robotics – but the broader goal is to develop problem-solving, logic, comprehension and reasoning skills.

Our pursuit of creative or constructive play in adulthood is not helped by the obsession designers and manufacturers have with producing “sealed units” – hardware that comes with “no user serviceable parts inside”*.  Even if we succeeded in taking the back off a gadget and having a look inside, it would probably invalidate the warranty and extinguish our consumer protection rights.

If we don’t understand how the things we use are designed to work, how can we tell if something is wrong, how can we learn to improve them, how can we find new ways of using them?

Smart companies and organizations understand the importance of learning through play and actively encourage their people to spend time “playing” – either through the pursuit of pet projects, or through creative, collaborative and social activities designed to instil innovation and fresh thinking.

As such, I’m very interested to hear from organizations that incorporate “play” into their regular activities, to understand why and how they do it, and to learn about the outcomes and benefits it delivers. I can be contacted via this blog, LinkedIn or Twitter.

*Note: Software is often just as bad with so-called “default” settings that get in the way of our ability to play around with and explore the programs we use.

6 Melbourne Graduates of Boot Camp for Start-Ups

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Another Monday night in Melbourne’s silicon laneway, another Monday night meeting of Lean Start-Up Melbourne. This month’s event, generously supported by inspire9, Kussowski Brothers, BlueChilli and Alphastation, featured 6 start-ups who have recently completed the AngelCube accelerator programme.

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In no particular order, here are Angelcube’s Class of 2013:

A couple of the presenting founders, Tablo and Coinjar, have both been mentioned previously in this blog. I’m still very impressed with the simplicity of Tablo, a self-publishing platform for ebooks, and if they can figure out a B2B or aggregation model, I think they will have a great future.

As for Coinjar, the idea is right (a trading and merchant platform for Bitcoins) but there are still too many regulatory uncertainties and other risks associated with virtual currencies. And as the good people of Hong Kong know only too well, even established voucher schemes such as cake coupons backed by real money and physical goods can have a detrimental effect on local markets…

OutTrippin is a cross between 99Designs, TripAdvisor and Airbnb – selling curated travel itineraries and booking facilities for FITs (free and independent travellers). My sense is that while there is an opportunity in this space, the trick will be to successfully match trip planners and holidaymakers. Given the initial focus on the niche honeymoon market, it will be interesting to see how much traction OutTrippin can generate in the next 12-18 months (given the long-term planning logistics of most wedding events….).

etaskr is an insourcing solution for larger companies – combining elements of Elance, Freelancer, oDesk, Yammer and LinkedIn. It aims to match employee skills (not job function or department) with specific tasks, to enable organisations to better utilise available resources to meet fluctuating workflow volumes. Based on audience questions raised on the night, etaskr may need to look at back-end solutions that facilitate intra-company cost allocation and revenue recognition – good luck with that one!

I will be the first to admit that I can’t really get my head around c8apps – a mobile gaming platform for fantasy sports. I’m probably the wrong demographic for this type of offering, so I can’t really express a view – but the fact that c8apps claim to have some significant media deals in the pipeline and are engaging with several major sporting codes probably means they are doing something right; unfortunately, I just don’t get it myself.

Finally, OziRig is bringing custom-designed professional rigging equipment to the global  film and photography industry. Essentially a component sourcing and assembly model, OziRig aims to undercut the competition on price and service – but several members of the Lean Start-Up audience wondered about the risks of copyright and design infringement.

These 6 graduates of the boot camp for start-ups are now embarking on a round of investor pitches in the USA. I wish them well and every success.

Footnote: Thanks to the sponsors for some much appreciated beer and pizza on the night. And for a couple of alternative perspectives on the evening’s events, please check out my fellow bloggers: Chris Chinchilla and Innerloop.

Australian MPs recommend a ban on geo-blocking

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In a recent blog about geo-blocking, I commented on the frustrations of Australian consumers in trying to access digital content. That blog was written in light of a parliamentary inquiry into IT price discrimination.

ImageA Report by the House of Representatives Infrastructure and Communications Committee has just been published, and makes for some fascinating reading.

The Report reveals a number of key themes:

  • There is strong evidence that Australian consumers pay between 50 and 100 per cent more for the same product than consumers in comparable markets.
  • Price differentials cannot be fully explained by the so-called “Australia tax” (i.e., the relatively higher costs of doing business locally, due to wages, taxes, market regulation, shipping costs, economies of scale, etc.).
  • Consumer complaints about price discrimination are not being taken seriously by the industry as a whole.
  • Industry participants either deflected responsibility for price discrimination to other parts of the supply chain, or blamed inconsistent market practices as justifying the need for different regional and national price policies.
  • Despite being given the opportunity by the Committee to defend their pricing practices in public, most industry participants declined to co-operate in full; this gave rise to Apple, Adobe and Microsoft each being compelled to give evidence.
  • A number of submissions made by industry participants appeared to be disingenuous, self-serving, evasive and even misleading.

The Committee accepts that IT vendors are entitled to run their businesses as they see fit, and there is nothing to stop them from charging whatever prices they like. There was also general acknowledgment that copyright holders must be able to protect their IP assets.

However, geo-blocking (especially of digital content) simply reinforces price disparity based on a customer’s geographical location, rather than protecting the interests of copyright holders. Further, although so-called “Technological Protection Measures” (TPM) or “Effective Technological Measures” (ETM) and “Digital Rights Management” systems (DRM) may have a legitimate role in controlling copyright (and as such they enjoy protection under the relevant Copyright Law), their net effect has been to limit competition and to lock consumers into “walled gardens” which places considerable power in the hands of IT vendors as to how, when and where consumers access content.

In short, the Committee made several recommendations designed to address price discrimination and restricted market access imposed on Australian consumers, including:

  • Remove any remaining restrictions on parallel imports (in a bid to increase market competition among distributors and retailers).
  • Clarify the legal circumvention of TPM/ETM/DRM barriers that are purely designed as geo-blocking tools (rather than copyright protection measures).
  • Educate Australian consumers about their ability to buy cheaper goods from overseas, or to legally circumvent geo-blocking (without compromising product warranties or infringing copyright).
  • As a last resort, place a ban on geo-blocking and outlaw contacts or terms of service that rely on and enforce geo-blocking.

Unfortunately, while this Report is of great significance to the Australian digital economy, and seeks to achieve a balance between the rights of copyright holders and the interests of consumers, it is likely to be overshadowed by concerns about tax avoidance in respect to multinational companies. No doubt Australian consumers will make a connection between global IT companies whose products they buy, and transnational tax minimization strategies linked to transfer pricing policies and the routing of content royalties and copyright licensing fees via low-tax jurisdictions.