Boomin’s Michael Bruce pens open letter – ‘Rightmove is an example of market failure’

Purplebricks founder Michael Bruce has launched a stinging attack on Rightmove, which released its annual results this morning.

Michael Bruce

Bruce is hoping to provoke a dispute between his new venture, the still-to-launch Boomin portal, and Rightmove, in an attempt to generate publicity and win over more agents.

Bruce, who is still building towards the delayed launch of Boomin, has penned an open letter to agents about why he believes Rightmove’s results highlight market failure.

Property Industry Eye has offered Rightmove an opportunity to respond.

 

Michael Bruce’s open letter reads:

Today Rightmove announces its financial results for 2020. Shareholders will doubtless be delighted by the return to business as usual message, after an unprecedented Covid related first half dent in their upward only profits record which has run unbroken since at least 2007. The bad news of price hikes has been delivered to agents in good time for Rightmove to tally up the growth, turn it into tens of millions of pounds and announce it today to the excitement of investors. Meanwhile Rightmove’s estate agent customers are fighting on two fronts, facing the end of the stamp duty holiday and the resumption of double digit annual hikes in portal costs.

Lack of competition = Market failure

The property portal market has been broken for the last decade, lacking meaningful competition. Rightmove is an example of market failure. By its own admission Rightmove has a market share, approaching 90%. Impressive? The consequences for now and into the future are anything but.

Rightmove pockets some 75p in profit for every pound it takes from agents – this is a higher profit margin than any other company in the FTSE 100 Index of the UK’s leading companies. The best run agents in the country in a good year would be happy with a margin in the teens. And Rightmove’s profits don’t reflect the housing market. Between 2008 and 2019 the volume of annual housing transactions has fallen 27% – while their average estate agent customer has been hit with fee hikes totalling some 350%3.

It’s not as if the money is getting pumped back into the service. Since 2010 Rightmove has made £1.3bn in profits and invested just £14m in capital expenditure. I can think of no large company, operating in a competitive market, that could survive and thrive on investing a paltry £1m per year or 1% of profits. Real technology companies continue to innovate, investing in their platform and infrastructure to improve customer experience. By way of example Ocado and ASOS invest over £100m per year in their technology. In contrast Rightmove pays its two executive directors more than it spends on capex4.

2024 – an unsustainable future

Without a change in the market dynamics, without the injection of fresh and meaningful competition, the status quo is likely to continue indefinitely. For the majority of agents, this is likely to mean the continuation of annual, double digit price hikes. Based on the average annual fee hike of the last ten years, agents could be paying some 60% more than their recently increased prices by 2024. On the same methodology Rightmove would be coining in some £385m in annual profits. Unrealistic? Scaremongering? Well consider that in 2010

Rightmove’s average revenue per advertiser (ARPA) per month was £379 and their profits £57m. By 2019 this had increased to average agent fees of £1,088 per month and profits spiked nearly fourfold to £220m.

Being very successful and highly profitable is justifiable when you are creating the very best innovation for agents and visitors to the site. I just don’t see how things have advanced. Rightmove quotes record traffic of 4.1m a day but actually there are less than 10,000 sales and lettings transactions a day in the UK. Increases in traffic and increases in leads has not improved the overall experience, the quality of introductions or increased overall transaction numbers for agents.

Choose a happier future

The bleak future I paint above is not a given it is a choice. Agents need to make a choice to embrace new competition if they are to secure a future, better than their past. It is not that the property market hasn’t had its fair share of ambitious young start-ups looking to take on Goliath. Rather it is that the barriers to success are so high in this industry that start-ups have lacked the marketing and technology armoury that is necessary to turn the tide.

Portals also need to play their part. All portals should embrace a new model of transparency and fairness and evolve their models from upward only pricing. Continuous innovation and fair competition are essential for any properly functioning market and for the good of the estate agency industry that we all serve. We should all give a commitment to avoid unfair, inequitable pricing and the giving of financial incentives to restrict competition for the few and agree to do what is in the best interests of all agents and consumers.

We are doing our bit. For the last two years we have been building a world class team of 160 technology and marketing experts with the mission to bring real competition, into the property portal space for the first time, underpinned with the values of transparency and fair pricing. Boomin, will launch shortly, embracing the latest technology to deliver a completely new, more powerful search experience with a host of new features and a broader product offering that looks to build relationships between agents and customers that lasts far beyond the property transaction itself. This will be supported by a marketing budget that will establish Boomin as a household name in near record time.

2021 will be a defining year for the industry and will determine the competitive landscape for the next ten years. I urge everyone to get on board and reset the balance of power in the industry between portals and agents.

 

Michael Bruce

Executive Chairman and Founder of Boomin

 

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47 Comments

  1. Robert_May

    In my usual, curious style I wanted to  find out why despite all Mr. Bruce  has said above and my own analysis of numbers 12 months ago Rightmove has succesfully defended its position against Aviva, DMGT, The Guardian, Radar Homes,  On the market, ZPG. Facebook, Google, say No to Rightmove and the mad economics for some agents of being on Rightmove
     
    Despite being  utterly despised by  most agents and housebuilders who the reps treat with utter arrogant contempt that borders on bullying which gets worse for the smaller agent…. something makes Rightmove sticky with  agents.
     
    I reckon I’ve got that figured out and I don’t  believe beating them is possible. I do believe they can be changed and they have to change their attitude to agents because that is their biggest vulnerability.
     
    Boomin  is a good thing,  not just because it is a  belly to belly. toe to toe competitor to Rightmove but because  it reinforces the permanent fracture of the  duopoly  (the reason subscriptions grew 8% above RPI since the CMA allowed the duopoly to stand)
     
     
     

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    1. Hillofwad71

      “Whether it’s Google or Apple or free software, we’ve got some fantastic competitors and it keeps us on our toes. ”
      Bill Gates
       
      “No man ever got very high by pulling other people down.The intelligent merchant does not knock his competitors.The sensible worker does not knock those who work with him. Don’t knock your friends. Don’t knock your enemies. Don’t knock yourself. ”
       
      Alfred Lord Tennyson
       
      Oh dear,the record seems to have got stuck slagging off the competition before you start .That approach hasn’t worked out well at Purplebricks  where investors were suckered in with optimistic forecasts which haven’t stood the test of time.
       
         The Hardmans Report  accompanying Bricks stock market listing forecasted by FY 2020  Bricks would have a sales inventory of 100k ,Revenues of £130m and a gross profit of £78m  Zero dividends recived by shareholders from the get go .
       
      Not only missing that by a country mile but dissipated tens of millons of investors money in an ill- fated jaunt overseas
       
        So it does take some neck to classify Rightmove as  a “market failure”.Nothing further from the truth
       
      Love them or loathe them they have enjoyed an increasing  profits record  until this year when they still whacked in £135m operating profit and shareholder dividends of 4.5p .
       
      Despite the poor handling of the pandemic retained  the majority of its agents  losing  only 3% since 2019 of membership numbers,425 branches
      This comment takes the biscuit
       
      “In contrast Rightmove pays its two executive directors more than it spends on capex”
       
      Speaks somone who left Bricks cashing in his chips trousering tens of millions whilst shareholders have not received one penny piece in dividends and the share price today is below launch
        Ironic that MB used RM as a comparative success story in launching Bricks and applying a market valuation   Not only that featured very highly in Bricks  marketing blurb with this slogan
       
      MAKING THE RIGHTMOVE  
       
      “We all know that almost everyone starts their search online these days, so once you’ve made the decision to sell your home we’ll make sure that we get your home seen in all the right places. We work with many of the leading property portals, including the UK’s most popular, Rightmove. Standard listing on Rightmove is included in your fee of selling your home with us.”        

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      1. Robert_May

        As  I said to Sam Hunter  about this time last year when he told me Homesearch were going to build a portal.  That’s great, the more competition there is the better it is for the industry, the more ideas and innovation there is the greater the pressure on Rightmove  to innovate.  
         
        Rightmove is a good company who charges too much, that’s not their fault  it is purely down to the CMA who allowed the duopoly to be created and the belief by agents that Rightmove can’t be beaten or killed as some would wish.  
         
        Agents need to have faith and show support for the projects brave enough to try.  
         
        Rightmove is vulnerable, it hasn’t innovated, it is a full year or more behind our PWA stuff and they don’t have hearts and minds.  80% of Rightmove  sales traffic could evaporate in a heartbeat, that would devastate their sales pitch and destroy the FOMO they trade on

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        1. Typhoon

          So l t’s do it then. But we won’t because we are scared, as there is no one else out there at the minute who delivers the traffic RM do. But when someone does they will be toast  I hate them I think here should be always against making such obscene profits (ok I’m jealous!)

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          1. biffabear

            Disagree.

            RM is not the go-to place for tenants. Hasn’t been for years.

            Buyers go wherever the property is.

            When the property is not on RM, then OnTheMarket becomes the go-to place.

            I’m with zoopla and OTM.  90% of the leads come from OTM.

            Before I left RM, the leads had really started to dry up.

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    2. Neil Robinson

      Rightmove’s success has nothing to do with agents, and everything to do with the fact it’s successfully marketed itself to buyers as being the default place to do a property search, and to vendors as being the place where all the buyers are.

      You can have all the agents in the world on your portal, but if buyers’ eyes aren’t on it, and the vendors don’t believe that buyers’ eyes are on it, you won’t get anywhere.

      That’s why I think Boomin will do well, because the Bruces recognise that.

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      1. AgentQ73

        Rightmove got and gets the agents to do a massive amount of its marketing for them. Just drive past any office and have a look at the window, have a look at the marketing material of the majority of agents “We will get you on Rightmove”. Agents helped create the perception from vendors that they need to be on Rightmove.

        From a buyers view they will go where the stock is, if they logged onto Rightmove and all of a sudden found there was hardly anything available they would soon find where the stock was.

         

        Boomin will fail because it wont get enough stock therefore not enough traffic. In my opinion this is down to the founders, with another set of founders they may have had a fighting chance.

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  2. smile please

    Bruce is basically trying to replicate Rightmove with Boomin.

    Given his past sustained attacks on High Street agents in my opinion he is not to be trusted.

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    1. Robert_May

      If that’s the case Rightmove can wait til Boomin hits the web, see which bits are good, which bits are better and copy them.
       
      Raising ARPA from £1088  to £1200 when the most recent subs hike goes through  adds  another £120 of  profit on their bottom line, most all of that extra profit  is paid for by the smaller agents. If Rightmove want to see off Boomin all they need to do is replicate  the cash for ancillary services income ( FS, insurance, services and chintz) of Onedome and Boomin and let that pay for a permanent reduduction in subs.

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    2. James Christchurch

      You might not trust him SmilePlease … yet can I ask you a question.. who do you trust the least? Rightmove or Michael Bruce. and as a follow up to that… The Bruce Brothers cause a lot of angst to some in the industry- if Boomin was set up by someone else – would that change your opinion to the Boomin model?    

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      1. smile please

        I trust neither.
        But given in 12 months we will all have to pay circa ANOTHER £400 per month to advertise on Boomin after the free period. All we are doing is increasing our monthly spend on portals.
         

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      2. jennyotblock

        Better the devil you know.

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      3. AgentQ73

        I know you didn’t ask me but I trust the Bruce Brothers least. It’s beyond me why any agent would want to get involved with them.

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  3. mattfaizey

    His biggest problem will be getting the public to give a toss.

    Rightmove has become de-facto.

    Like Royal Mail if you want to post something. Amongst the public the knowledge is common and relied upon that Rightmove is where the houses are.

    Why would anybody need a second app to see the same pictures and information on a property as the app or webpage they’re already familiar with?

    Agents control what gets uploaded.

    Even if Boomin comes up with innovative content possibilities Rightmove will copy it. Besides which agents will have a standard ‘procedure’ for content. They won’t differ it between platforms.

    If Mr Bruce is launching this type of attack then something is wrong at his end.

    Moreover whilst a great name in theory ‘Boomin’ will have negative vibes in an economic downturn.

    I wish Boomin well. It sounds for all the commentary like Rightmove needs putting down for an 8 count for the good of agents.

    It’s long been known through that if you have to openly slag off competitors then something is amiss at your end.

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    1. IheartRE

      Hear Hear!

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    2. debbiedoesalot

      “Rightmove has become de-facto.
      Like Royal Mail if you want to post something. Amongst the public the knowledge is common and relied upon that Rightmove is where the houses are.”
      That is only because you are allowing it to be. We left Rightmove last March and it’s made no real difference to the number of properties we have sold/appraised. If you want to prop up the beast and allow it to keep coming back for more and more then you are the very reason it has become ‘de-facto’. Without its agents Rightmove wouldn’t exist – you have the power in your hands to take away its power but you choose not to. Sorry but you’re pathetic.

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      1. JamesDB

        Hi Debbie,

         

        Like you, we too left Rightmove last year and we can honestly say we have not missed it one bit.   Each to their own and all that, but there is life outside Rightmove if agents want it enough.

         

         

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    3. forwardthinker

      Well done Matt *applause We’ve been off Rightmove for six months last year. Didn’t affect our ability to sell, but certainly is a factor when vendors are considering listing with you even if you can demonstrate selling without it. Public perception reigns they don’t give a toss about agents and our struggles. It will take years to undo.
      When you have the so called leader of the campaign’s agents using not being on RM against you there is no choice but to return.  Don’t want to feed the beast any longer, but it really isn’t a bad ROI. Three vals in a week lost totalling £12,000 commission, due to not being on RM. I despise RM and don’t think Boomin is the answer having been in the early Zoom meetings with the wolves dressed in grandmother’s clothing.

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  4. jennyotblock

    I’m not sure Michael should be throwing stones with his soon-to-launch Portal? We all know he’s failed to bully the CRMs to integrate. Buyers be warned, this is a data play. Make sure to read the fine print when handing over your API keys.

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  5. MarkRowe

    Make no mistake.
    that wasn’t an open letter to Rightmove.

    It’s a letter to agents.

    Think PR. He knows the trust needs to be rebuilt with agents. He knows agents don’t enjoy Rightmove.

    It will always be for the benefit of them financially. Nothing wrong with that when it’s their business of course. Just remember though, Boomin is no different from Rightmove, it’s all PR guff.

    Just go out and sell houses like you did before Boomin even came along 🙂

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  6. Dick Value

    So where are we at on the desperation scale here? I’d say a comfortable 8 out of 10.

     

    Until Mr Bruce announces exactly why there are consistent delays to his well-funded project, any remaining trust and belief will be evaporating fast. Is it CRM integration issues or that the corporates are showing little interest, both, or are there more reasons?

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  7. jimboglos8261

    We don’t need another portal and surely, none of us need to make the Bruce brothers another few million quid!

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    1. KW

      We need more portals for choice and competition, but agree not them!

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  8. WatchingwithInterest

    I don’t care about RM I just don’t like him, his former businesses and the way they tricked cumsumers and investors alike with his business model.
    How can we trust this guy again????

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  9. Seller0169

    Michael Bruce only has one thing in mind, making money!

     

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  10. Ron Mexico

    Boomin has a lot of staff on high wages, someone is eventually going to have to pay for that.

    Rightmove fees seem bad enough as it is without having to pay Boomin fees on top of them.

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  11. AgencyInsider

    “This will be supported by a marketing budget that will establish Boomin as a household name in near record time.”

    Hmmmm.

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  12. watchdog13

    Boomin is not a charity, it’s planning to make as much money out of agents as possible. Nothing wrong with that in itself.
    After the abuse agents got from PB it seems like going with Boomin is like moving back in with a wife beater.

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  13. Gonzo38

    Why is there no mention of Zoopla in either the article or the comments? Brittain’s No 2 portal by visitor numbers (just) and 66% less expensive to advertise on than Rightmove?  
    New portals seem to be an answer to a question that no consumer has ever asked. And ultimately, it’s consumers like you and I who decide who will be successful and who won’t. Consumers already have the established portal equivalents of ‘Apple and Android’, do we really believe that they want an alternative?

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    1. Robert_May

      Zoopla will struggle to ever recover from  giving Connells £250,000 to fight  On the Market.  The OTM gold members are rightly resentful that Zoopla was so aggressive anti OTM from day 1 and then chipped in  to a fighting fund against them.

       

      The OOPR was always a daft idea, that did set the temperature in the room but an OTM / ZPG tag team  would have been more effective in controlling Rightmove’s subscription hikes.

      ZPG have a set of legacy CRM systems that won’t ever be successfully migrate onto a system that is already legacy itself and being  a billy no mates portal that facilitated Rightmove  subs increase it’s hard to see what they can do.

       

      Good effort trying to stand their corner though.

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      1. Gonzo38

        Not so much fighting Zoopla’s corner as merely stating fact; there is a No 2 portal and a direct competitor to Rightmove. An alternative chosen and put in that position by both estate agents and their customers alike.

         

        At this late stage of the game exactly what benefit will another portal bring to anyone? Consumers (you & I again) may dislike Apple but still use their products. Why? Because they’re established and work.

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  14. Auther Sleep

    Wonder what will happen first, Boomin launching or the ex Purplebricks staff that jumped ship leave after realising the grass isnt always greener and the abuse and working conditions Michael Bruce puts his staff through isnt worth it.

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    1. AgentQ73

      Wonder how many Ex PB TO and LPEs that have set up on their own have signed up ? If its any I haven’t heard the Bruce’s trumpeting it. PB not joined either.

      Kind of tells a tale.

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  15. KW

    Michael Bruce: “I urge everyone to get on board and reset the balance of power in the industry between portals and agents.”

    It didn’t need them to invent a new portal to reset the balance. This could be done without them by using the challengers like Openbrix and all the others. I am sure investing in the challengers and giving them a chance we would have greater innovation. Any agent who falls for this “we care and are here to help” nonsense has only themselves to blame if it backfires down the line.

    They don’t care, never have, never will. They are business men who have seen an opportunity and switched tactic from being the agent’s no. 1 enemy to now trying be best friends. Sorry it just doesn’t wash with me.

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  16. Woodentop

    RM not a success. Give me a break. They have been a resounding success. What many do not like about RM is the hike in fee’s.

     

    Sound like desperation by Bruce and talk about the pot calling the kettle black.

     

    The public have no need for another portal. The public do not need another war created by Bruce’s = Commissary. I haven’t forgotten what they said about the high street agents and tried to do. RM in the public mind is established and THEY are not going to drop them just like that. People need to remember who the main supporters of RM are and the chances of them moving to Boomin, lol, so RM is here to stay.

     

    I do not trust Boomin that once established by the’ high street agents’, the same people they called Commissary, they will then turn and use the platform as a private sellers site and ditch agents altogether. I have been asking for months for confirmation that this is in the contract. I have yet to see any public confirmation to this effect.

     

    I do not need Boomin in any event but ….

     

    Come on Bruce we all know you read these comments. What protection do you offer agents?

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    1. AgentQ73

      In my opinion in the unlikely event it does gain traction the Bruces will float and sell up leaving the Agents who have signed up at the mercy of a Board responsible to Shareholders. Those shareholders will have an eye on the fees Rightmove charge.

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    2. Robert_May

      two posters who can be trusted and respected   to represent  agent sentiment honestly and objectively are Smile Please ( who is that? do you know?) and Woodentop.  
       
      We sometimes have to wait a while but here it is!  
       
      Having  Russell Quirk denigrate their and every others’ comment to ‘thick people moaning’ undermines the value and standing of Eye. The reads and comments and the feedback from agents on stories and products is invaluable.

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  17. OverHalfWay

    I prefer a possessional devil to a un-trust worthy devil any day

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  18. Gangsta Agent

    you can call me a cynic, but me thinks all the Bruce brothers are interested in is the amount of shares they will give themselves, the number of investor they can get involved and how soon they can sell them to make massive profits, the rest is all BS.

    And if anyone thinks they know differently, they are mistaken and time as always, will tell.

     

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  19. Estate_Agent_Memes

    Looks like he’s used some of those old PB up front, non refundable fees to get his teeth done. Very nice x

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  20. Elliot Ness

    To paraphrase James Carville; “It’s the data, stupid”!

    Purplebricks sits on hod loads of data but built a platform that was so poor they still can’t do anything with it. After his train set was taken away by the board, he went away to sulk and think, he’s now realised that he can do better and get other agents to give him all of their data for free.

    Clive Humby (a British mathematician) said back in 2006, “data is the new oil”. Clive Humby also set up Tesco’s Clubcard.

    With Boomin, Michael has created a Clubcard for agents and customers where they give Boomin all of their data – for free. Great idea… For Boomin!

    Google “data is the new oil”, there’s great article from The Economist in 2017 and one from Wired in 2014.

    The same CIO that built the atrocious Purplebricks platform, is building Boomin; it will be built as a minimal viable proposition, it will not be good tech.

    Your most valuable asset is your database, please don’t give it away for free.

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  21. Dick Value

    Surprised not to see Ian White on this thread, isn’t he a consultant to them now?

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    1. forwardthinker

      Ahh right….Okay

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  22. Ostrich17

    I cannot understand how the Bruce brothers thought they could get everyone onboard with this idea.

    Yes, money talks and they have lured a number of people in – but it is going to cost a lot more to persuade enough to gain critical mass.

    They have only committed to giving away 20% of equity to founder agents. Clearly they can afford to give away a lot more to persuade some of the Corporates to join – and they may have to.

    But will it be enough?

    Or will RM step in and buy up Boomin’ and rebrand before it even gets off the ground ?

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    1. Robert_May

      I can neither confirm nor deny….

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  23. DB999

    When this all goes horribly wrong and all the promises made are broken, the management team will simply quote the parable of the scorpion and the frog, ask what did you expect and skip off down the road with their swag, again.

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  24. propertyguru11

    If you park for a second the Bruce’s reputation (if possible at all), Michael Bruce is not wrong.

    Rightmove acts as a monopoly, and it is beyond me how the competition authority is not pursuing it as an abuse of power. Surely one brave agent will be willing to lead such charge (we know the Acorn Group won’t be ‘it’).

     

    If I had to choose between a known evil (RM) and an unknown evil (Bruces, in a new model), I’d go with the latter option.

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