Europe set to shape online economy

Europe is set to forge ahead of the US as a leader in the internet economy. This is the view of Paul Ayres, who was once employed by web pioneer Jim Clark to build up Netscape's North European operation from startup mode.

After Netscape, Ayres became managing director of RealNetworks, which delivers real-time video and audio to users over the internet. He has now joined Business Europe, a content and services provider for small to medium-sized enterprises (SMEs), as executive vice-president and advisory board member.

Business Europe's chairman is media mogul Andrew Neil and its chief executive is venture capitalist Damien Gilbert, so its management team is not short of heavy hitters.

Just before the company's website went live, however, Ayres took time to speak to uk.internet.com, a sister website of vnunet.com, about the European internet economy.

Your background is as a British conduit for 'born in the USA' internet companies (Netscape and RealNetworks). How would you compare and contrast the US and European internet markets?
It's very important for our American cousins to understand that we are not the 51st state, and that the United States of Europe bears no resemblance to the homogeneous market that exists in North America. There is a growing awareness of that, to be fair, and a few US companies are looking to localise here in ways they have not done before.

The US is still 12 to 18 months ahead in terms of internet penetration, but if you look at the vista beyond basic browsing then Scandinavia, say, is at least as, if not more, active than the US.

We are in catch-up mode in Europe, there is no doubt about that, but we also tend to engage more profoundly with technology than Americans, in the main, do. In terms of true technology adoption, Europe is stronger than the US. For example, Europe is leading in the wireless space - much to the shock of the Americans!

You don't think Wap technology is overrated then?
Wap is just a protocol. Wireless internet is a great space to be in, and people who don't recognise that need to get with the program because they are wildly missing a business opportunity. Likewise with broadband.

Nicholas Negroponte [US technology guru and industry analyst] made the very important remark that the true interactive internet device won't be the PC, it'll be a mobile phone or a TV. That is the way the market is going.

So your sense is that Microsoft, for example, is on the right track with its .Net initiative?
Yes. It is in every right space - broadband, wireless, PDA [personal digital assistant] - but it won't lead innovation. European companies like Symbian and Ericsson will do the leading. It's tremendous that, after years of having American propaganda shovelled at us, Europe leads the market in technology innovation.

Who guides your thinking?
I've got a virtual board of advisers who are among the leading lights of the internet - people like Jim Clark and Marc Andreesen. I'm interested in 'bleeding-edge' marketing, and less so in reports around established technologies. And so the technology and brokerage analysts tend not to be so relevant for me.

Turning to your latest activity, why do you think Business Europe is different to other online business information outfits?
The company's prime mover, Damien Gilbert, put a lot of thought and market research into the business in a way which is just not true of many internet startups. And then there is the market gap, the SME space. Most of the businesses that exist there are annexes to financial services organisations or service provision organisations, whereas we are independent.

What's the extent and depth of Andrew Neil's involvement?
He's the chairman. He is the senior guiding hand on the tiller of the business, and was inextricably involved in the establishment of the business via the Scottish Media Group. He got involved because he has a vision of feeding content into the SME space.

How big is the SME market for online information and services?
In Europe, there are 18 to 22 million businesses that employ five to 50 employees. It's similar in size to the consumer space in 1996. Now, the consumer model has always been driven by advertising and connectivity, whereas the SME model will be driven not just by those things, but by sales of products and services, and sales of membership.

It's a more varied and interesting business model, and it's also much less prone to the competitive service degradation that exists in the corporate space - which, these days, is just a blur of competing vendors.

Who's the competition for you? Is Dun & Bradstreet's Do-Business.net a threat?
Well, if you want to know about the referencability and accountability of a company then D&B's a good place to go, but if you want to get detailed documentation about trends in ecommerce for SMEs, you won't find that there. It's a fairly content-light service.

Who are you looking to co-operate with?
In generic terms, we will look at any organisation with a value proposition for the SME market.

What's the nature of your editorial content? Is it just an ad magnet, or will it be paid for?
Long term, we will have a subscription-based model. Content is fundamental to this business. We've Jonathan Fenby - former editor of Reuters World Service, The Observer and The South China Morning Post - as editor.

We've got a full-time editorial team in London, and we're aiming for a pan-European team. We're about providing quality content and charging for it.

When you worked at Netscape, no one had really worked out any revenue models for the internet. That must have been an intellectual and commercial challenge. Where's the intellectual challenge in today's internet economy?
Today, revenue models are finite - it's just specialisation of core revenue models. Internet2, with the strong emergence of broadband, will be a whole new cool thing.

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