Not sure about the whole underlying story, but this is incredibly ugly ... draw your own conclusions from this extended and startling footage.
David Stoughton of ValueKinetics writes:
There is a spat going on between the chancellor, Alistair Darling, and the governor of the Bank of England, Mervyn King, about banks and their regulation. King says that a bank that is 'too big to fail' is too big, full stop. Alistair Darling merely wants tighter regulation.
Meanwhile Lib Dem treasury spokesman, Vince Cable, has properly identified a much bigger problem, the systemic risk to retail customers - and given government guarantees, the general public - of mixing retail and investment banking in the same organisation.
There is yet another big issue not yet specifically identified by any of the parties to the current ding-dong, that of convergent business models. Banking in the West has become altogether too samey. There is a lack of diversity in the financial services sector that is in itself a huge risk, given the strong likelihood of disruptive change on top of recession. In short, as I have observed elsewhere, there is no longer sufficient variation in strategy and configuration for new business models adapted to changed circumstances to emerge - they, and we, all sink or swim together.
Alistair Darling is going to win on this round - government machismo is at stake almost as never before - but we should not be exposed to such systemic risk any more, and certainly not because a beleaguered government finds it impossible to back down.
Over to you
So here's the thing, vote with your money (or your overdraft). Move any accounts you have to institutions with alternative models. The only big UK bank that, perforce, has a different model is HSBC (given their extensive holdings in areas of the world that do business differently) but one alternative is not enough. Santander, which once looked as if it might offer another has now conformed to the norm. There are options though, retailers with banking facilities - the supermarkets and a growing range of others - offer a real alternative. They have high asset ratios based, often, on extensive property portfolios, and they have a mixed risk profile that is less likely to experience systemic failure.
There are real signs that the bankers are ready, and rarin', to get back on the roller-coaster; time for us to get canny and step off it. Think before you bank!
David Stoughton of ValueKinetics writes:
Back, after an enforced hiatus, to the main theme, the record companies and their struggle for survival. This time to the second of the big questions, would enforcing copyright restore the status quo?
Possibly a pivotal moment (or not...)
It's a timely question. The government, in the form of the communications minister, Lord Carter (why are so many ministers drawn from the house of Lords? Could it be ... no let's not get distracted by the clowns). Anyway this Lord Carter will publish his Digital Britain Report this coming week. It's slated for the 16th; in it he promises to 'tackle the issue of copyright'.
Previews suggest he will not endorse some of the loonier ideas that have been pitched. Pity about the levy on ISPs to be split amongst media publishers, I was looking forward to claiming my .0000001 pence stipend for publishing these blogs. More especially I was looking forward to the interesting battle when the kid who posted guitar, the 4th most popular video on YouTube which currently claims 60,134,640 views, seeks his share of the loot. Wait! Neither of us you say is a 'legitimate media business', so we don't deserve to share a portion of the pie. That was the good clean fight I was looking forward to, though in another, messier, form it's going to happen anyway.
It appears the industry itself is not that keen on another levy that is core to Lord Carter's proposal, the one to be collected by a 'pan-industry Digital Rights Agency' that would use it to 'help pay for enforcement'. UK Music, an industry pressure group, has - mirabile dictu - come out and said "It is not the ambition of rights holders to sue their own consumers" (all those court cases must have been about something else then).
ISPs will also be "required" to notify individuals using illegal content and to collect "anonymised" data which could be used against repeat infringers (however that is supposed to be reconciled with anonymity).
The issue of who is a legitimate rights holder remains difficult because the act of publishing - barring infringement in the content - confers rights on the publisher, whoever they are. All the proposals so far appear to suggest that 'legitimate' just means anyone with deep enough pockets to bring a court case.
But this all still begs the question, which is not really about the
mechanics but about whether even a successful, non-controversial
regime, would actually save the current business model of the record companies. (I return to record companies specifically here because I believe the issues are different for different media, and the outcomes will be too. It is a mistake for them, for legislators, and for us, to assume otherwise.)
Beware those who can vote with their feet
Let's imagine a time when copyright can once again successfully be collected by those who want to collect. In music, those most anxious to do so are record companies, they are, for the most part, the ones whose ability to do so has been impaired. Will restoring full collection really save them? My answer is no! Bear with me - I have reasons.
It is aspiring performers who will undermine the model. It is specifically not in their interests to charge directly for distribution that guarantees them exposure. The trade-off is clear, charges will deter and the audience will build more slowly or not at all. So the rule is equally simple, first build an audience then decide how to monetise it.
Record companies complicate the issues. Whereas signing to a record company was once the only viable way to reach a substantial audience, now it is just one option. The relatively small advances (loans) they make are in exchange for two things, ceasing to offer any recordings for free, and a majority of future income in recordings released by them. The company will then do most of the work of building an audience - though whether, in the age of the Internet, they can do it any more successfully than the performer can themselves is a moot point.
So the artist must make a complex calculation, essentially about the price of risk. It is this trade-off that will sooner or later undermine the hopes vested in copyright enforcement.
Time for a bit more self harming
I've already covered a lot of the ground about why the artist benefits from going it alone in previous posts and I'm not going to go over it again here. The key point is that the balance between taking the media giants' shilling and struggling through is a fine one at present. Many, perhaps most, still consider income now (though of course it's a loan and will be recouped) as preferable to a larger slice of, less predictable, future income. However, the balance will tip as alternative models are seen to work.
Whilst I'm clear that a rational being (remember classical economics) would now choose to take the risk themselves, real artists will mostly continue to prefer someone to mitigate the short term pain for them. For now that remains, primarily, the record companies, but the very act of enforcing copyright collection changes the balance.
Illegal downloading has, paradoxically, been the saviour of the record companies thus far; it acts as a safety valve. It gives new artists access to large audiences anyway, even if the record companies they sign to try to prevent it. If that access is denied both the artist and the company will find it more difficult to reach a critical mass, risk is increased for both parties. The companies can, and almost certainly will, respond by reducing their advances and probably - in another self-defeating move - the royalties they offer too . At that point unsigned new artists have a clear advantage over signed ones, increasingly they will learn to hold out.
The more artists hold out the greater the opportunity for new business models to develop, especially those that manage the trade-offs better then record companies currently do. Eventually those companies will be forced to change the way they do business. The signs are that most of them will leave it too late to retain anything like the market share they do now.
So all the legislative fuss is just another way of putting off the evil hour. Record companies are betting the farm on external saviours riding to the rescue in preference to questioning the way their business works. Whilst probably not the coup de grace, successful copyright enforcement will certainly prove to be another nail in their coffin.
Alarmed, on a blog that's after all primarily about business strategy, to be writing for the second day running about abuses of citizen privacy.
The Telegraph - now apparently transforming into an investigative powerhouse for the people - reports the pride that the Met are taking in a new strategy of "preventative DNA capture".
Youth as young as 10 are being arrested, specifically in order that their DNA can be taken and stored as long as is legally permitted. Whatever that means ... little to me I must say. Any trust in such softeners is long gone.
This is a cynical "guilty unless you somehow manage to stay innocent" strategy, made all the more startling by the statement in the article by an officer who bluntly outlines the core argument: if you know we've got your DNA, you're that much less likely to commit a crime.
Of course the usual punch-pulling devices will be hard on the heels of this lunacy - only in certain circumstances etc etc - but given that the make or break decisions will one assumes migrate back through the system - via layers of similarly data-obsessed amoral nutters - to the very cabinet that's falling apart due to its own comical failure to observe the most basic code of behaviour ... Is this a case of "Trust Me ... I know where you live"?
Briefly, more worrying developments on the trust front. In certain UK locations, applicants for new passports are being asked questions regarding their credit record. There's apparently a partnership in place between the IPS and a credit agency: Equifax has been mentioned.
Extraordinarily galling is that some white sock grey shoe nutter on the IPS side claims - in the above linked article in Computer Weekly - that this is an example of how people are happy for data to be exchanged between public and private sector when they can get something in return: a passport!
The Open Rights Group - where I picked this one up - will no doubt be tracking this development. Am I the only person who's wondering how much longer we can put up with this - sadly no longer funny - inept creeping surveillance state we clearly now live in.
David Stoughton of ValueKinetics writes:
So, last week Santander joined the long role of corporate raiders to put their acquired brands to the sword. Managements just can't resist this one. Hubris of course plays a part, as does the continuing misapprehension that the relationship with the customer (to the extent it makes sense to talk about such things) is made in the database not at the interface. (You can be sure that there will have been much talk about marketing synergies and cross-sale opportunities). This lethal concoction leaves misguided CEOs at the mercy of Financial Directors and Analysts who argue for the short term gains.
I have no especial brief for the brands that will vanish. Some of them are old, but distinguished would be too strong a word. There is little differentiation, and no assurance of quality, left amongst the financial service brands. Many do have strong local connections and, I'm sure, some residual loyalties, but this is not why their passing bothers me. No, my concern is diversity.
In the rather messy study I've been conducting into the impact of the socio-technical revolution that is bringing a tidal wave of change to so many sectors, a suspicion is arising that diversity is a key survival factor.
Strategic diversity amongst the individual players seems to help the sector as a whole adapt to change and evolve new business models. Look for instance at the package holiday market where the up-market providers like Kuoni have suffered less and specialists like the Trekking Company have thrived. Conversely little such diversity remains among the record companies I've been looking at, leaving the category as a whole far more vulnerable. A biological metaphor is, as is so often the case, useful here. Species need to retain a high degree of diversity even to survive, let alone to adapt - so, I contend to business ecosystems.
Individual conglomerates almost certainly need diversity too; especially when they are threatened with radical change. A diversity of strategies greatly enhances the probability that one or more will prove resilient in the face of change. A diversity of brands enables the group to experiment with new strategies and business models without threatening the core.
I am beginning to believe it was this lack of diversity, as well as the close coupling of unrelated businesses, that made the banking crash so serious and still leaves the big banks vulnerable. It appears that the parliamentary committee in the UK charged with making proposals to prevent a repeat, agrees. Serious proposals to break up the monsters have been aired. It won't happen of course, vested interests (not to mention a certain erstwhile chancellor's reputation) will ensure that. And, of course, someone always points to HSBC as an example of an apparently monolithic player that remains relatively undamaged, failing to understand that, in its deeply rooted relationships in markets that do business in a very different way from the West, HSBC has plenty of internal diversity.
Santander, it appears, is determined to ignore the warning signals, their acquired brands must die. The cold logic of the deeply ignorant finance experts has won again. Absolute Zero is the emotional temperature at which brands burn, it seems also to be the sum total of what managements are able to learn from recent history.