August 3, 2007 — Music industry bible Billboard is changing the formula it uses to define hit songs to include tunes listened to and videos watched online at Yahoo! and AOL.

A revamped version of the magazine’s Hot 100 singles chart now will reflect plays, or streams, of audio and music videos from the two online giants.

The first retooled Hot 100 chart hits newsstands Saturday. Sean Kingston’s summer anthem “Beautiful Girls” tops the list.

The addition of online music streaming into the mix of factors that Billboard uses to define the most popular songs in the country each week signals the entrenched popularity of Web music portals. These services offer ad-supported music programming, a la radio or MTV, allowing users to listen to songs and watch videos without payment required.

AOL and Yahoo! rank as two of the most popular such online music destinations. But data from additional online services, including Real Network’s Rhapsody, is expected to be added by Billboard later.

“Record companies absolutely know we are in a new era,” says Geoff Mayfield, Billboard’s director of charts. “For a lot of kids, the computer screen is what the record store used to be for me when I was a kid.”

Streaming will account for 5 percent of Billboard’s hit calculation at the outset.

The bulk of the Hot 100’s weighting is still radio airplay (55 percent) and music downloads purchased through the likes of Apple’s iTunes (40 percent).

Billboard associate director of charts Silvio Pietroluongo said 50 streams of a song from AOL and Yahoo! is the equivalent of one download or 1,000 radio plays.

The addition of online streaming numbers likely will have the biggest impact on tight chart races.

WHEN the three directors of Revolution IT set up their company four years ago, they started operating out of a spare bedroom.

“We then thought it was not the professional image we were looking for,” said Hamish Leighton, 32. A move to swisher premises in the city followed, and Revolution IT was away.

A revolution it has been. The company, which tests a company’s IT operation to ensure it functions correctly, was soon catapulted into being the sixth-fastest growing IT company in Australia, according to BRW.And this week, the new kid on the block took out The Age/D&B Business Award for IT. The awards, which began in 1993, seek to promote, acknowledge and reward outstanding business achievement by Victorian companies. Criteria include credit-worthiness, business risk, research and development, and employment growth.

The idea for Revolution IT came when the three directors Mr Leighton, Mike Quill, now 40, and Jamie Duffield, now 36 and chief executive were working together in London.

Britain was more advanced in IT, and the three brought a few ideas home with them. “We wanted to be a specialist software tests company,” Mr Leighton said. “The idea was that every organisation looking to ensure the software they were developing or installing was ready to be used would come and talk to us.

“We didn’t want to position ourselves as a ‘body shop’ there are plenty of those out there we wanted to be the consultative organisation.”

Mr Quill said businesses got software developers to build a product or application for them.

“For example, Sensis gets a lot of hits on its website, so part of our job is to make sure the website will cope with the load and be functional.”

Clients are mainly blue-chip companies such as Alinta, ANZ, Cadbury, Coles, Ericsson, Goldman Sachs, Myer, NAB and Toyota, but Mr Leighton said as much attention was lavished on smaller companies.

Revolution IT’s sales have grown from $1.2 million in 2005 to $5.6 million last financial year.

Mr Quill is confident sales will go much higher this financial year. “We’ll smash $15 million,” he said.

Profits have gone up accordingly, with the directors pouring them back into the business.

“We’ve got to give the company a chance to grow,” Mr Leighton said. “We’ve never issued a dividend to the directors, and have had no need to go to external finance.”

What led the growth? “We don’t do much advertising and marketing. The focus is on customer delivery, ensuring a good outcome,” Mr Leighton said. The “bush telegraph” does the rest.

It is great while the market is booming, but relying on service is risky if there is a downturn, so the company is diversifying into IT governance, application monitoring and training, and annuity revenue.

A shortage of labour became an issue, so Revolution IT bought a competitor in Sydney. Then, unexpectedly, another competitor, in Brisbane, went into receivership.

“We swooped and grabbed their key staff,” Mr Leighton said. “So we’re now operating in Brisbane, Sydney and Melbourne, and have about 100 employees.”

«www.revolutionit.com.au»

TOLL Holdings still has pallet king Brambles on its radar, and is keen to buy parts of defence contractor Tenix and Queensland Rail.

The transport giant has also foreshadowed a “green logistics” strategy early next year.

Managing director Paul Little said Toll remained interested in pallet supplier Brambles, in which Toll has a 0.5 per cent stake, because pallets played a key role in the supply chain.

But Brambles was just one opportunity, he said, speaking after the annual meeting in Melbourne. Toll was not in talks with Brambles.

“There are other pallet operators we will look at,” he said. “We have been chatting to a number of people.” These included Loscam, the second-biggest pallet operator after Brambles, with 20 per cent of the domestic market and a huge presence in Asia.

Mr Little said Toll’s ability to make big acquisitions in Australia was limited by competition concerns. But Toll would closely monitor QR’s proposed corporate restructure.

“We can greatly assist QR in developing and optimising its freight operations, particularly in Queensland,” he said. “Some break-up will occur, and there may well be bits we want Toll has extensive operations in north Queensland.”

Mr Little said this did not mean Toll would neglect Pacific National, the rail giant now owned by Toll spin-off Asciano. “We have contracts with PN that we must ship through that business,” he said.

Mr Little said Toll was a big user of rail and the ports, and would participate directly in these areas to support its customers.

Toll was not prevented by the competition regulator from being involved in bulk cargo in the ports, or starting up a rail business. “But we don’t intend to do that,” he said.

Mr Little said Toll was interested in buying some of Tenix’s assets if the company was broken up.

“There are some parts that we think may be suited to our defence logistics operations,” he said. “Defence logistics is a big part of what we do today, both in Australia and in Asia.”

Mr Little said the company’s proposed “green logistics” strategy would encourage customers to use more fuel-efficient train and sea services over longer line-haul routes.

“Toll is also working with vehicle manufacturers in the US and Japan, who are developing new vehicle technologies to promote the use of alternative fuels such as biodiesel,” he said.

Toll had also set up a web-based information system, GEMS, to measure more accurately the company’s carbon use, and to determine the effectiveness of abatement initiatives, he said.

Chairman Ray Horsburgh told shareholders that earnings to date in fiscal 2008 were well ahead of this time last year. “The outlook for the full year and beyond remains very positive,” he said.

Mr Little reiterated that Asia, particularly China and India, were huge growth markets, with joint ventures the preferred way of expanding in both markets.

Toll was still evaluating its investment in Virgin Blue, whose share price did not reflect its true value. Options were being evaluated to maximise this, he said.

Toll’s shares gained 7 to $13.72. Brambles fell 8 to $13.95 and Asciano fell 13 to $8.22.

«www.toll.com.au»