A Little Lobbying Music, Please

Did you catch that study that came out this week claiming that “e-commerce
barriers will cost consumers $32 billion in 2002 and $200 billion over the
next five years?”

That was the headline, and it certainly got my attention. The report,
entitled “The State of eCommerce 2002: Beyond the Bubble, Beware the
Barriers,” went on to say that “anti-competitive efforts by middlemen could
threaten the future of e-commerce.”

The report was released by an outfit called NetChoice in Washington, D.C., which
perhaps not surprisingly turns out to be a lobbying group that calls itself
“a coalition of trade associations, e-commerce businesses and online
consumers, all of whom share the goal of promoting convenience, choice and
commerce on the Net.”

In fact, they say on the site that “the future of e-commerce is threatened
by restrictions sought by off-line companies, discriminatory laws and
regulation, and misinformation about the Net.”

E-commerce barriers include “any law, regulation, rule, or business practice
that significantly impedes more cost-effective, more efficient, and more
direct delivery of goods and services to the consumer,” NetChoice says.

I was curious about which e-commerce businesses are members of this outfit,
and it turns out they include eBay,
eRealty.com and
1-800-Contacts. That probably explains
why this study is focused specifically on the airline travel, automotive
sales, residential real estate and contact lens markets.

Other members include The Association for Competitive Technology, the
Information Technology Association of America (ITAA), the Electronic
Commerce Association, the Electronic Retailing Association, the Wine
Institute, and the American Vintners Association.

Well, I guess everybody has a right to lobby in Washington. Remember,
however, that these dollar figures on how much consumers will “lose” are
merely estimates.

What exactly is NetChoice?

It is “a coalition of businesses, not necessarily a trade association,” eBay
spokesman Kevin Pursglove told me. “Much more ad hoc in its nature …
currently, no fee schedule to join.”

NetChoice says that “with online retail sales growing 10 times faster than
overall retail sales, many traditional middlemen (car dealers, alcohol
distributors, real estate agents, etc.) are trying to preserve existing
barriers and create new ones as a way to prevent online competition.”

Actually I think that many of these folks are struggling to incorporate
e-commerce into their businesses, not prevent it from developing.

But eBay feels that it’s a problem worth addressing.

“One example that poses a challenge to eBay’s growth,” Pursglove said, “is
auctioneering laws that were enacted before the creation of the Internet.
Many states regulate auctioneers or auction houses and want existing laws to
cover eBay.”

Pursglove said “requiring … sellers to register as a traditional auction
house or auctioneer may accomplish nothing more than to exclude them…”

According to the report, barriers to direct sales of automotives will cost
consumers nearly $25 billion this year and an estimated $150 billion over
the next five years. In the residential realty market, anti-competitive
efforts by off-line Realtors and laws preventing commission rebates will
cost consumers $7 billion this year and nearly $46 billion over the next
five. Efforts to prevent patients from buying contact lenses online and laws
prohibiting multi-channel sales will cost consumers $470 million this year
and $3 billion over the next five. The anti-competitive tactics of travel
agents and green-screen computer reservation systems have slowed the
implementation of newer, faster and less expensive technologies that would
save consumers more than $1 billion over the next five years.

“We found that the greatest threats to e-commerce are old-economy middlemen
and their lobbyists,” said Steve DelBianco, executive director of NetChoice.
“… it’s time for governments and consumers to start fighting back.”

Of course, by fighting back, one benefits eBay, Orbitz, eRealty, etc. My
take on this is that it’s largely part of a war of words and public
relations positioning. Orbitz, for example, which is a travel site operated
by a consortium of airlines, has been fighting a rear-guard action almost
since it was founded.

The company felt so hard-pressed at one point that it sent an open
letter to President Bush
after execs from rivals Expedia.com and
Travelocity.com spent a day in Washington trying to persuade the
Administration to curb the venture. So I guess it’s no wonder that lobbying
efforts are under way.

eBay clearly is big enough to worry about any legislative efforts that might
pose a threat.

NetChoice says it wants state governments “to dismantle vertical
restrictions and re-examine rules that prevent direct sales. Congress can
preempt state restrictions and help businesses and consumers avoid the costs
of a patchwork of state laws.”

The complete report — including the methodology for coming up with the
financial estimates — is available as a PDF here.

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