Did you hear the story of the estate agency boss who cancelled his Rightmove contract and awoke the next morning to find a horse’s head in his bed?
That didn’t really happen, not yet anyway. But read on because your favourite property portal has just issued a trading statement and it got me thinking.
We all know what ‘..an offer he can’t refuse’ means. It’s a proposition that you can’t say no to out of fear. In the gangster sense it’s a fait accompli whereby if you don’t toe the line you might end up without a leg to stand on. Literally.
One of the most lucrative tools in the gangster toolbox is the protection racket. A new shop or business opens in a neighbourhood and soon it is visited by someone very assertive in a suit. This ‘representative’ says to the new business that there is an unavoidable cost to operating and that if they wish to thrive, indeed to survive unhurt, that a levy must be paid.
You simply cannot do without them – not if you know what’s good for you.
The levy is collected regularly and then inevitably frequently increases in cost to the point that the business finds it more and more difficult to get by. But the men in suits are unfazed regardless of how tough it is to trade – they are offering you something that you cannot refuse. Payment for protection from a sudden loss of your ability to trade, so to speak.
On Monday this week Rightmove announced its latest trading update and for them at least it looks bellissimo.
Revenue this year is on track to increase by 10% over last year and operating profit has grown by a similar percentage. In 2023 revenues were £332m and profit was £245m. ARPA, the amount of money that it takes from agents and house builders, is on target to rise from £1,314 to £1,430 per month collected.
In contrast, sales transactions in the UK property market are down by about 20% on recent levels. HMRC states that September completions were 19% lower than in September 2022. In estate agency terms that’s a reduction of about £600 million in fees earned – or around £24,000 per UK branch office.
All the while, Rightmove are squeezing the blood from the stone ever harder and now make more profit each year than the top 10 largest estate agencies in Britain combined.
As a Rightmove customer this might shock and concern you. But wait, it gets worse. Much worse…
In this week’s trading update as published via the London Stock Exchange Johan Svanstrom, Rightmove’s CEO, also laid out plans that he says he’ll deliver by 2028.
Here are the numbers he presented to the City:
So that’s an increase in revenue of 81% and an increase in profit of 71% in just five years (already their net profit is 73% of turnover) which means, logically, that by 2028 Rightmove expect to be charging you an additional £1,158 each month, a total of £2,588 in order to hit target.
Can you afford this extortionate increase? And can Rightmove justify it other than to appeal to the mob mentality of their shareholders?
But the bigger question is this… if the answer to the above is ‘no’, will you have the cojones to stand up to the Milton Keynes Mafia or will you just continue to let them push you around?
I’m all for companies making profits in a free market. But every now and again along comes a powerful monopoly that abuses its position and holds people to ransom unfairly.
Note: At the end of most gangster movies the out of control bad guy normally gets whacked, replaced by a younger more sensible version that can be better tolerated.
Rightmove might seem invincible – but even Al Capone got caught eventually.
Russell Quirk is a frequent media commentator on the property market and politics and is co-founder of ProperPR, the specialist public relations agency.
Yet another reactive reckoning, failing to acknowledge the lessons learned from events like Northcliffe’s attempt to impose their annual increase in £/centimetre for advertising space in the autumn of 1990. Transaction volumes were at an all-time low, as were prices. The local manager, overestimating his bargaining power, attempted to force a price hike on us, indifferent to the consequences.
While we were still making a few sales, a series of conversations with Len, Richard, Keith, and Clive—surveyors responsible for collecting keys for valuations and surveys—changed the landscape swiftly. Before Mr. Boni realised it, not a single agent in North Devon advertised a property throughout December, January, or February. The impact was lasting; advertising in the Journal never fully recovered. Partly due to the influence of Proptech pioneers like Nick and James Lemming, who, a few years later at PCS, showcased at Grand Lodge in Queen Street how the internet would revolutionise property advertising.
If Mr. Quirk were more astute, he wouldn’t liken Rightmove to an extortion racket (brave a). Instead, he could emphasise that just as portals sealed the fate of print property advertising, AI has the potential to do the same to portals. With Jason on the brink of securing a fresh war chest for expenditures and transaction volumes hitting rock bottom, the ingredients for a paradigm shift in the industry are once again at the agents’ feet.
There was a wasted chance for change in 2020; let’s hope this time lessons have been learned, and the industry as a whole recognises that change has shifted from possible to probable to likely.
No one is going to kill Rightmove; they’re not running an extortion racket, but the value of their services is under pressure.
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Content writing…
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Well said Russell. But it’s not the horse Rightmove will kill, it’s their Golden Goose!
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in the voice of Michael Caine……
‘Well put yer bluddy fees up’
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Wait until you see what Costar are going to do. They aren’t a charity either.
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Interesting stuff. However, all is not lost. Google’s new product, championed by them only last week is a real threat to the Portals. Imagine as a buyer instead of having to search, let alone register for alerts, the property comes to you – because AI knows you are looking and precisely what you want. AI also knows your motives intimately and doesn’t send you property that doesn’t suit. It is coming down the track now……
Agents will soon switch to AI and Social Media as the preferred selling method – having been driven away from expensive portals!
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AI, whether is Google’s. Mal’s or My Aunt Frances’s needs somewhere to look and that is where the disruption is likely to come from
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I cant see the big deal, if you don’t like the fees just leave, SIMPLE! there are thousands of agents that don’t use RM.
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The annual brick through the window will be on its way soon.
Agents will just have to put their fees up or form a property portal of their own to combat RM ……. Oh hang on a minute !!!!!!
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Agency numbers at Rightmove have been static for last few years, tech has not really evolved and I do believe that open search platforms will make it far easier and accessible for consumers. Things like commute search, school catchment search, key features etc will all be made available IF the data is made readily accessible to the big search AI engines. Let us not forget Google tried to become a portal a number of years ago, but maybe this time it will be different with AI.
However, that aside Rightmove have such a great opportunity to give back to the sector, data sales, mortgage, insurance opportunities these all come from agents data so why not pay agents for it. The fees begin to drop for agents, but overall revenue grows and agents feel like they are getting more support. And wouldn’t it be nice if Rightmove offered some more tech to agents – an ecosystem to connect etc included in the fees AI and Automation tools that make it easier to manage leads and opportunities and what’s great is it benefits agents and Rightmove to see “actual ROI” and let’s not even start talking about digitising the sales process…
What is clear though from the capital markets day is that Rightmove will continue to grow in a similar way (no real surprises there as any innovation spend hits margin) I am surprised though that they don’t see the need to defend their position and quite dismissive of Co-Star who have some serious talent already in the UK and firepower. Will be a good time for some popcorn
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CoStar is seven times bigger than Rightmove and plans to invest more than £46 million in marketing its recent purchase this year alone.
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