Meteoric Internet companies are bought and sold on huge multiples, putting everyday household names in the shade, yet they make losses.
The vague qualification I claim for talking on the subject is that the E-trading world starts and ends with information. It is the fuel that primes the pump and lights the after-burner when the engines have got started. This gives me some confidence to dissect the principles involved.
Reuters operates in societies where even reporting the facts is not acceptable. Perhaps it is because these societies are so riven with dissent or consumed with their growth process that nobody can agree what the facts are. After a time this gives way to a social background in which the facts are fairly readily agreed though opinions about them may differ, and need to differ to give the citizen the chance to help form his individuality. In the next stage, information is consumed for entertainment, facts often being rather immaterial - after all, there is no state of emergency, no secret police, you can always learn the facts if you really want.
This could be characterised as a condition affecting many industrial democracies at the onset of the Internet age.
A classic example was a recent Internet website report that Hillary Clinton became so annoyed with her errant husband that she "lost it" and hit him so hard about the face that he had to wear make-up to cover up the bruise for a TV appearance. There was, as far as I know, no obvious reason to believe this, though the British newspapers published the report with glee. The information was there, it was free. Random information can be searched with the utmost facility across a whole range of websites which may have no particular track record or credentials. It's movement, it's action, it's modern, it's transatlantic.
It's also boring after a while. So we have to anticipate the emergence of a demand by the consumer to navigate his or her areas of interest in a more structured way, guided by preferred information brand names that can be brought together easily.
To summarise the way things may go, let us look at electronic share broking. This is probably the most advanced version of E-commerce that there is in the world today. Much attention is currently focused on E-brokers who offer minimal cost of execution - perhaps eight dollars per trade instead of several hundred.
But the price may fall further, and they will have to gear up their fixed costs to handle larger and larger volumes, only to be left stranded perhaps by a cyclical fall on market turnover. I prefer the idea of a broker offering a totally integrated customer experience.
The investor clicks on a headline to find details of the target company, and a second click takes him into the real-time market where he can choose to trade. The information output measures his success. Keeping a chequing account with the same broker becomes a useful convenience. If he has a complex trade he can still phone up a human being, in return for a larger commission and, ultimately, if he is really in need of detailed advice, he still has the chance to go into a red brick building somewhere and discuss the matter. It is not difficult to see that this more complex chain of value could lock in loyal and satisfied rather than just opportunistic customers.
Journalists usually know better than to forecast matters immediately since they may be proven wrong. But I agreed to do this lecture so I had better give some kind of prognosis.
World electronic trade will develop further because information will be available to support transactions in a very convenient way. The providers of the information will make good margins because they will to a large extent re-use assets they already have.
Aggregators will be there to guide people through a random Internet world to the right place. They will make money because the cost of performing this function is not huge and advertisers will pay them for offering new and popular means of access to defined audiences. They will not need to or be able to enslave anyone else to their interests along the way.
Advertisers will benefit because they will be able to offer their clients new techniques of pinpointing particular market segments without changing their current means of reaching consumers through broadcast TV. Broadcasters will not be hanged or crucified by the Internet.
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