Net developer WebMedia pulls the plug

By MICHAEL FOREMAN

WebMedia, one of New Zealand's best-known internet developers, has ceased trading, saying a client's failure to pay a $1.05 million debt was the last straw.

WebMedia chief executive officer Glenn Harding said Hong Kong-based music portal www.GoGo.com had defaulted on several payment schedules.

"They kept renegotiating and defaulting, but in the end we knew it was hopeless."

Mr Harding said WebMedia was not in a position to shoulder such a loss and he suspected it would now be put into liquidation.

Up to 10 developers had been engaged on the GoGo project since last October, when WebMedia won a contract worth $4 million. GoGo, which was largely aimed at the Asian market, allowed music fans to sample and buy songs online.

Mr Harding said the debt had been guaranteed by an unnamed, third-party company but efforts to obtain payment from the underwriter had been fruitless.

"There will be a legal battle ensuing but I can't really talk about that at the moment ... We pursued the underwriter but when it was obvious they were not going to honour the contract we took the action we did."

While WebMedia's website announced with ironic humour that it was "under deconstruction", GoGo's claimed it was "renovating" and would be "back in a few days".

WebMedia issued a statement saying that it had made arrangements to support its clients.

It added that staff were committed to continuing joint-venture initiatives in the Japanese market and other projects.

At its high point, WebMedia employed 50 people at offices in Auckland, Hong Kong, San Francisco and Melbourne. In April, the company flew its entire staff to Amsterdam to accept an award from the European Multimedia Association, which also put WebMedia in charge of its website.

But numbers had been pared to about 25 before closure.

Many of the company's remaining staff had assembled at WebMedia's Parnell premises on Friday evening to discuss their future.

"There are some pretty talented people here and we are confident there will be a demand for our skills," said one web developer. "Several of us are already talking about setting up splinter companies."

Although WebMedia has enjoyed a good reputation in the local internet industry - thanks to its work for such clients as Cuisine magazine, Industry New Zealand and the European Multimedia Association - the company's closure may add to what some are seeing as a glut of internet talent.

Paul Shannon, co-founder of internet development company The Servery, recently estimated there were as many as 500 web designers in Auckland alone.