The impossible dream
Fading fast (Pic: Rakka)
The Labour Party can still win the next UK general election.
It seems impossible now, and almost is, but there remains a narrow path to victory. However, it would involve being truly radical (in other words, diverging completely from its direction of the last 12 years). There are five steps:
- Remove Gordon Brown as Prime Minister
- Install Alan Johnson as leader
- Remove Alistair Darling, Harriet Harman, David Miliband and Jack Straw from the cabinet, replacing them with preferably unknown, preferably female junior Ministers/backbenchers
- Call an immediate referendum on the EU Constitution
- Announce an immediate package of loan guarantees for domestic manufacturing plants, while compelling the majority state-owned banks to provide these funds through direct board-level intervention.
All of these things are drastic, radical, populist and un-New Labour; the attributes Labour needs to demonstrate if it is to reverse its disastrous poll ratings. But none is hugely irresponsible, relative to recent history.
Even concerning step 5, loan guarantees as opposed to direct funding would allow the government to demonstrate that the public money injected into banks is improving the real economy, while not necessarily harming the UK’s fiscal position any further. It looks Socialist enough to please left-wingers, but the exceptional circumstances of the current economy would allow Labour to assure moderates that it is only temporary.
Of course, Labour will do none of these things, and will lose the next election by a landslide. And having done so, its small Parliamentary presence, low membership and lack of funding will put it in real danger of becoming the country’s third party.
Booze Britain Part II
Supermarkets sell alcohol below cost as a loss leader (Pic: sashafatcat)
At least one major UK supermarket chain has had internal discussions about the possibility of a tax targeted at retailers that sell low-priced alcohol, a supermarket insider has told me.
No detail was given as to how such a tax might be targeted, or whether the extra costs would be passed on in retail prices. Competition laws might also make it unworkable. However, this particular company is said to recognise that it has a social responsibility, given its influence over both supply chains and the retail market. Such a tax would be more capable than current alcohol duties of preventing alcohol from being priced as a ‘loss leader’ to drive footfall into stores, without disadvantaging small, independent pubs.
The chancellor, Alistair Darling, announced in the Budget in April that UK alcohol duty would rise again this year by 2%, maintaining the government’s ‘price escalator’ by which it has pledged to raise duty by 2% above inflation in each of the next four years. If his prediction that inflation will reach -3% on the Retail Prices Index this year is realised, that could become a 5% rise in real terms.
In October last year, prior to the Pre-Budget Report, I argued that this would hit small, independent pubs hardest since they (unlike supermarkets and pub franchise chains) can’t take advantage of economies of scale by buying in volume to keep prices stable. Indeed, the British Bar and Pub Association says that around 39 pubs are closing each week, as discussed this week by the Economist.
The government has already rejected a recommendation from its chief medical officer, Sir Liam Donaldson, to set minimum alcohol prices, which would level out any competitive disadvantage to small pubs (though it would indiscriminately penalise consumers), and so appears determined to continue its present policies.
But by consistently increasing duties across the board, the government is distorting the market, disadvantaging local pubs so that only the highest-volume purchasers can compete. Price wars have resulted between supermarkets and large pub chains, where certain drinks are sold at a loss to bring people through the doors . The 99p pint, for example, was unheard of in the on-trade (licensed pubs and bars) for 20 years until this January, while another report has found that some supermarket alcohol prices are lower now than in 1983.
The situation has worsened further for independent pubs as a result of the recession, as consumers increasingly buy alcohol to drink at home rather than going out. It is proving the government’s tax measures to be counter-productive for the purpose of preventing irresponsible drinking, given that Labour MP Keith Vaz, who chaired a Home Affairs Committee investigation into alcohol and policing, has said: “The main responsibility in my view rests with the supermarkets, who compete with each other to sell alcohol at the cheapest level.”
Free assembly
False imprisonment by police at the G20 protests in London? (Photo: Greg N Baker)
Only one brief thought today, from the G20 protests in London. Since when are police allowed to restrict the movements of citizens and detain them without warrant or suspicion during a peaceful protest? Regardless of the questions of tactics and any threat of violence, and glossing over for a moment the use of anti-terrorism powers of detention, how is this not false imprisonment?
It might be noted, too, that the police have a duty not only to allow, but moreover to “protect and facilitate” peaceful protest, as the Joint Select Committee on Human Rights reminded us a little over a week ago.
Seems more like ‘protract and frustrate’.
Stop being evil
Google goes to the European Court of Justice today to argue that a ruling made against it in 2005 should be overturned. This ruling, made in French courts in favour of fashion brand Louis Vuitton, determined that Google’s selling of trademarked keywords for competitors to buy search ads against was “counterfeiting, unfair competition and misleading advertising”, according to this report from the time.
The outcome could be significant. In a previous post, I argued that media companies should claim links as a form of intellectual property and that Google selling ads against search terms was effectively content licensing. While there are differences in the scenarios (notably the matter of counterfeiting), the question of whether a keyword is a trademark will be a crucial distinction for the future of the media industires, and in particular, for whether the majority of future advertising revenue is likely to be reclaimed by the content producers themselves, or absorbed by the huge money sponge known as Google.
If Google wins, in European jurisdictions at least it could guarantee the Google hegemony in perpetuity. If it loses, it could give a lot of lawyers a lot of ideas.
Antisocial media?
Are 'traditional' and 'social' media mutually exclusive?
A seminar on ’social media’ at the Technology for Marketing and Advertising (TFM&A) exhibition at London’s Earls Court 2 arena today held some worrying indications for those media companies that depend upon syndication of their content. It appears that the giveaway culture is continuing, even amongst those who will suffer most from it.
The first example was given by Reuters consumer media general manager Tim Faircliff, who repeated the recent story that the company’s editor-in-chief beat his own newswire with a ‘live tweet’ from the World Economic Forum in Davos, Switzerland, in January. (For those uninitiated, a tweet is a 140-character update submitted via the newsfeed site Twitter.)
More on that in a moment.
The second indication was from the head of BBC News Interactive, who said that the BBC would, in the coming year, “try to embrace some of the Facebook-style functionality”. He referred in particular to users’ ability to embed BBC videos in other websites. The two men were speaking on a panel with representatives of Facebook and YouTube, moderated by digital marketing consultant Danny Meadows-Klue.
These comments should worry newswires and distributors of syndicated content. Twitter, and its potential to provide a source for any news story before it has reached the wires, could mean that news organisations will be free to source and write their own copy rather than buying syndicated articles from companies such as Reuters, the Press Association and the Associated Press. Meanwhile, if the BBC and other companies start giving away video content, this could easily begin to encroach on the services of independent footage distributors and video libraries.
This adds to the woes of image libraries, who could soon be undone by Flickr and Creative Commons licences.
Social media can potentially be an immense influence for good in terms of public engagement with world events, but as my last post indicated, quality journalism could be jeopardised if revenue streams continue to go up in flames. The media industry seems worryingly willing to fuel the fire.
Show me the money
The media must take back revenue from Google
Journalism and media more widely are in need of new business models, but those that seem to be prevailing lack one thing: money. More precisely, they lack a secure and sustainable revenue stream.
Advertising spend has migrated rapidly from print to new media in the past two years in particular, as I have written elsewhere, so naturally media companies realise they need an online presence. However, the decision to provide their content for free while funding it almost exclusively through banner ads on their websites is misguided.
Advertisers are fickle, and can take flight at a moment’s notice, especially during a recession, so it is not a model to be depended on; meanwhile, charging advertisers while giving away content to readers means that media companies are in thrall to commercial interests, as the reader is no longer the customer. This is a point made by Time’s Walter Isaacson here and here.
The internet will never go away, but media companies need to learn to make money from disseminating their content through it, otherwise there will be no more quality journalism. Proposed new models of journalism extolling the potential of new media and social networks ignore this. In the link above, note particularly the comment by the technology editor who refers to himself there only as Charles.
As Isaacson suggests, syndication will be an important element of taking back a share of the revenue that aggregators are currently earning off media companies’ intellectual property.
As important as this, is taking revenues back from Google and other search engines. It’s true that Google drives traffic, which is a big part of the ad money that publishers currently make; but Google also makes money through targeted ads that appear next to every search result.
There is a difficult legal question here, which I’m not sure has been tested; but if individuals are using Google to gain access to intellectual property (IP), and Google is making money from returning that IP as its top result (through search ads), aren’t the companies entitled to a more significant proportion of that money?
Links themselves, when they are used to access IP, should be claimed as IP by publishers, and royalties should be claimed according to the traffic they generate — not simply as a flat rate. This will seem counter-intuitive as, for too long, being given a link has been seen by content owners as being done a favour.
But put it another way: if it were not possible for someone to access the Guardian website, for example, through Google, users would not use Google to find it, and thus Google would make proportionally less money from those advertisers that had paid to appear in search results for the Guardian. But people could still read the Guardian website by other means. So the Guardian is effectively ‘licensing’ its content to Google.
Legal threats are not a way to resolve this, but given the possibility of search results being removed, it might encourage some sort of best practice to develop whereby content owners get a significant proportion of the money that search engines make from them.
There seems to be a crippling fear on the part of media companies to actually charge anyone for using their content now. But look back at Sky: by securing the rights to Premier League football, they made a success of TV subscription, because people were willing to pay to see it.
Publishers need to trust the quality of their content to force the hand of consumers and media buyers.
[UPDATE: Another interesting point of reference on this subject, which I had not seen at the time of writing, can be found here.]
Snow business
A few inches of snow and Britain breaks. All week people have been talking about the country’s ‘Dunkirk spirit’ in braving the weather. Yesterday I was praised for my ‘Blitz spirit’, without even a hint of irony. The war on snow has moved to stage two in the space of three days, it seems.
One of the few trains not cancelled (Pic: Annie Mole)
This comically inflated view of the challenge posed by small flakes of frozen water (apparently comparable with wartime bombing) is not the only indicator that Britain has a shambolic approach to preparing for bad weather.
A woman from Boston, Mass., interviewed on the BBC news commented on how surprised she was that such a small amount of snow could cause such shock and awe, compared with what her city deals with for months every winter. When I was in that city in January, I saw gritters and snowploughs on the streets on a daily basis, not just when it snowed but when snow was even expected.
And surely that is the point — not that Britain is incapable of preparing, but that it chooses not to because these events happen so rarely.
The argument councils have put forward in mitigation of the lack of gritting they have done on the country’s roads has been that the infrastructure investment would not be justified, given that the last time we had so much snow was 18 years ago.
And since businesses have been the ones most severely affected, perhaps the solution would be for them to contribute to a fund that would prevent bad weather from having such a large impact. A sort of ‘pay as you go’ scheme, where a business contributes money to the body responsible for its local roads in proportion to its turnover or number of employees would be a manageable way of reacting to the weather without detriment to the core services a council offers residents the rest of the year.
Presumably, the cost to business would be far less than the £1bn+ figures that have been estimated this week. Yet, to my knowledge, no-one else has suggested it.
New media age
As a major US publisher files for bankruptcy, and in the UK the staff of the Independent ready themselves to move in with the Daily Mail, it’s plain to see that times are tough for printed publications.
Those are not the only high-profile examples, with loss-making London freesheets driving one another toward oblivion and taking the Evening Standard with it, while magazine and newspaper revenues from both ads and sales are down across the board.
The culpability of digital media in the decline of printed mags and papers is obvious and has been widely discussed, so instead of analysing the reasons, I’d like to speculate on the outcome — or rather the best survival strategy. In all businesses, response to lower demand must be either to cut prices (not possible given that paper costs for publishers are generally moving up) or create a product that provides value above its competitors.
There are ways to do this editorially: maintaining an online and print product that share an identity while offer different substance, for example, which from a print point of view probably means relying less on breaking news and more on comment and analysis.
The Guardian and Telegraph have done this well, cultivating a community of emerging bloggers and columnists online while doing the same with a distinct roster of respected cloumnists in print. The Independent, on the other hand, has descended into daily irrelevant campaigns on the relatively unimportant subjects like free range chickens that, unlike the Daily Mail or Sun, for example, refuses to be honest about the partisan nature of the audience it targets.
In terms of advertising, digital print (as opposed to conventional offset lithography or gravure print) allows the possibility of variable data creating targeted ads for sections of a readership or even individuals. This is too expensive to be done on long print runs at present, but it is one way to provide value for advertisers by increasing their returns.
It is the future.
Printed newspapers and magazines will never die out as an industry, but individual titles will. And just as in any business, it will be those that don’t innovate that die first.
You can’t always get what you want
While commenting on Matt Robinson’s post about modern journalism and the media business, I found myself writing what turned out to be a post of its own, so I thought it would be a shame if I didn’t post it here too. His question was: Are journalists to blame for the decline in newspaper sales?
Are journalists to blame for the decline in newspaper sales?
I sometimes write on the publishing industry and those I talk to say that bad economic conditions and digital media are hurting all print publications. Look at the ABC figures and any publishing company’s annual report and it’s obvious that falling revenues from sales and advertising are the problem.
I don’t think this is because of bad journalism; I think it’s a question of where readers can get what they’re looking for. The individual bloggers won’t seriously damage major media companies (Guido Fawkes is the exception, not the rule); though when a blog becomes mainstream (e.g. The Huffington Post), it might. But this is a question of sources and resources, not of anything inherent in the appeal or quality of ‘digital’. The biggest problem in this country is the all-pervasive BBC.
It can’t be faulted for quality – they have some of the finest journalists in the world – but that’s also part of the problem. The BBC has a dominant share of almost every readership/viewership it competes for (terrestrial TV, digital TV, online, radio, its magazine brands), but doesn’t need to worry about attracting advertising revenue.
Other 24-hour news channels and news websites would crop up if the BBC weren’t there, so print publications will have to evolve anyway (newspapers becoming ‘viewspapers’, for example, and concentrating on their own websites), but there is a danger that the disappearance of ad revenue from the established news media entirely will result in cost-cutting, meaning fewer and less well paid editorial staff. That means losing the best candidates to better-paid careers, which means losing quality journalism.
So my question isn’t whether bad journalism fragments audiences; it’s whether fragmented audiences will cause bad journalism.
Puppet, on “strings”
Chief Secretary to the Treasury Yvette Cooper appeared on The Andrew Marr Show this morning to give some (selective) enlightenment about the Government’s deal to guarantee the lending of major British banks and to provide capital injections in return for preference shares. Asked by Marr whether there would be a government voice on the board of banks in which the State invests, Cooper would say only that the money would have “strings attached”, adding: “We’ll set out the sorts of strings that will be attached on a case-by-case basis.”
Yvette Cooper would not confirm that the fiscal rules have been abandoned (Photo: The Andrew Marr Show, BBC)
While over-regulation would be undesirable, probably stifling the chances of banks making back the money lent to them, this alternative sounds worryingly like a different extreme of ad hoc regulation: opaque, inconsistent and liable to lead to conflicts of interest (or at least accusations thereof) arising.
As other bloggers and news organisations are noting, banks have first looked elsewhere, for example sovereign wealth funds, for capital. However, as BBC business editor Robert Peston has written today, banks cannot receive the guarantee against their lending from the Government without going to that pool of public cash. It remains to be seen whether this is a flaw in the Brown/Darling plan: the guarantee is probably as crucial as the money itself, making it more likely that banks will go seeking that capital. Merely the suggestion that banks were prodding the Chancellor for funds sent stock prices into a downward spiral this week, and there is a good chance that this will continue.
Meanwhile, Cooper would not confirm explicitly to Marr that the fiscal rule limiting public borrowing to 40% of GDP has been abandoned. As I wrote on Thursday, the decision is a fait accompli – the fiscal rule has been abandoned already – but the Government apparently wants to wait for the 2008 pre-Budget report to announce it. I doubt whether they will be able to hold out until then.
