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Posts tagged Technology
Portraits of the dotcom entrepreneurs
Mar 14th
Remember the dotcom tycoons who shook up the business world before the bubble burst spectacularly? Ten years on, we look at what they are doing now
In the late 1990s wannabe entrepreneurs with a dotcom idea flocked to the monthly get-togethers organised by First Tuesday, co-founded by London-based American expat Julie Meyer, left. In the hothouse of the dotcom craze, the get-togethers developed into a weekly schmoozefest replicated in 16 countries. The business was sold for £33m to Israeli firm Yazam in 2000 and Meyer went on to create investment group Ariadne Capital. Often outspoken, Meyer is a web evangelist who often sticks her neck out for web businesses she advises.
In 1995, leading City options specialist Geoffrey Chamberlain took the helm of a small loss-making stockbroking firm called Durlacher and decided to focus on the technology sector. When Durlacher floated on Aim in September of that year it was the smallest company on the market, with a value of just £800,000 and a share price (in today’s terms) of 2.5p. A few years later its value later soared to £2.2bn and its employees were credited with helping create such hits as Autonomy, Demon Internet and 365 Corporation. But when the bubble burst, it took many of Durlacher’s more fledgling businesses with it. When Chamberlain and his brother Graham, the finance director, quit in 2002 the firm was worth just £17m. (they walked off with £2.7m) In 2005, the saga came to an end as Durlacher merged with Panmure Gordon.
Along with co-founder Brent Hoberman, Martha Lane Fox became one of the pin-ups of the dotcom boom this side of the Atlantic with her creation, Lastminute.com, becoming the benchmark by which all British tech-startups were judged. She stepped down as managing director in 2003, having helped pull the company’s stock price out of the doldrums, but hit the headlines in 2004 when she was involved in a near-fatal car crash in Morocco. She remained as a non-executive at Lastminute until 2005 when the company was sold to Travelocity owner Sabre Holdings for £577m and became a non-executive director of Marks & Spencer, Channel 4 and mydeco.com – the interior design web shop set up by Hoberman. She currently divides her time between charity work, her karaoke bar chain Lucky Voice and being the government’s digital inclusion champion, a role created by Lord Carter in his Digital Britain review.
You know you’ve hit a raw nerve when traders change the name of your firm from Dialog to Dial-a-dog. That is what happened to Dan Wagner, a man named “the new Bill Gates” by the Daily Mirror’s disgraced City Slickers team. He was one of the first people to realise the benefits of packaging electronic information and data for scientists, librarians and other specialists and created his first company – Maid – in 1985. It floated a decade later but in 1998 he saddled his firm with too much debt.Name changes from Maid to Dialog and then to Bright Station failed to erase City memories, while his acquisition of the remnants of Boo.com raised eyebrows. Wagner vowed to keep out of the spotlight when he left Bright Station in 2001 but has since built a fashion blogging empire and Venda, an e-commerce service and is run by former Orange boss Eric Abensur. Perhaps Wagner’s biggest mistake was failing to take up the chance to invest just over half a million pounds in an tech start-up created by one of Maid’s former staff. It would have given him a 30% stake in eBay.
Jonathan Rowland came to be a major figure in the British dotcom boom when he launched Jellyworks, designed to nurture new dotcom companies. Backed by the Barclay Brothers, JellyWorks listed in December 1999 and saw its value increase tenfold on the first day of dealings. Seven months later it was sold to investment bank Shore Capital for less than a quarter of its peak value. His next venture onto the stockmarket, buyout vehicle Resurge, was refinanced in 2005; later that year Jonathan launched a new vehicle, Nettworx, which was wound up in 2009 and cash returned to investors after it failed to find any attractive acquisition targets; in 2007 Tembusu Investments, designed to buy financial services assets in Asia, gained 40% to 14p on its AIM debut, he remains its chairman. Rowland currently has more than a dozen directorships to his name, and for three years was a director of Wagner’s Venda business.
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Portraits of the dotcom entrepreneurs
Mar 14th
Remember the dotcom tycoons who shook up the business world before the bubble burst spectacularly? Ten years on, we look at what they are doing now
In the late 1990s wannabe entrepreneurs with a dotcom idea flocked to the monthly get-togethers organised by First Tuesday, co-founded by London-based American expat Julie Meyer, left. In the hothouse of the dotcom craze, the get-togethers developed into a weekly schmoozefest replicated in 16 countries. The business was sold for £33m to Israeli firm Yazam in 2000 and Meyer went on to create investment group Ariadne Capital. Often outspoken, Meyer is a web evangelist who often sticks her neck out for web businesses she advises.
In 1995, leading City options specialist Geoffrey Chamberlain took the helm of a small loss-making stockbroking firm called Durlacher and decided to focus on the technology sector. When Durlacher floated on Aim in September of that year it was the smallest company on the market, with a value of just £800,000 and a share price (in today’s terms) of 2.5p. A few years later its value later soared to £2.2bn and its employees were credited with helping create such hits as Autonomy, Demon Internet and 365 Corporation. But when the bubble burst, it took many of Durlacher’s more fledgling businesses with it. When Chamberlain and his brother Graham, the finance director, quit in 2002 the firm was worth just £17m. (they walked off with £2.7m) In 2005, the saga came to an end as Durlacher merged with Panmure Gordon.
Along with co-founder Brent Hoberman, Martha Lane Fox became one of the pin-ups of the dotcom boom this side of the Atlantic with her creation, Lastminute.com, becoming the benchmark by which all British tech-startups were judged. She stepped down as managing director in 2003, having helped pull the company’s stock price out of the doldrums, but hit the headlines in 2004 when she was involved in a near-fatal car crash in Morocco. She remained as a non-executive at Lastminute until 2005 when the company was sold to Travelocity owner Sabre Holdings for £577m and became a non-executive director of Marks & Spencer, Channel 4 and mydeco.com – the interior design web shop set up by Hoberman. She currently divides her time between charity work, her karaoke bar chain Lucky Voice and being the government’s digital inclusion champion, a role created by Lord Carter in his Digital Britain review.
You know you’ve hit a raw nerve when traders change the name of your firm from Dialog to Dial-a-dog. That is what happened to Dan Wagner, a man named “the new Bill Gates” by the Daily Mirror’s disgraced City Slickers team. He was one of the first people to realise the benefits of packaging electronic information and data for scientists, librarians and other specialists and created his first company – Maid – in 1985. It floated a decade later but in 1998 he saddled his firm with too much debt.Name changes from Maid to Dialog and then to Bright Station failed to erase City memories, while his acquisition of the remnants of Boo.com raised eyebrows. Wagner vowed to keep out of the spotlight when he left Bright Station in 2001 but has since built a fashion blogging empire and Venda, an e-commerce service and is run by former Orange boss Eric Abensur. Perhaps Wagner’s biggest mistake was failing to take up the chance to invest just over half a million pounds in an tech start-up created by one of Maid’s former staff. It would have given him a 30% stake in eBay.
Jonathan Rowland came to be a major figure in the British dotcom boom when he launched Jellyworks, designed to nurture new dotcom companies. Backed by the Barclay Brothers, JellyWorks listed in December 1999 and saw its value increase tenfold on the first day of dealings. Seven months later it was sold to investment bank Shore Capital for less than a quarter of its peak value. His next venture onto the stockmarket, buyout vehicle Resurge, was refinanced in 2005; later that year Jonathan launched a new vehicle, Nettworx, which was wound up in 2009 and cash returned to investors after it failed to find any attractive acquisition targets; in 2007 Tembusu Investments, designed to buy financial services assets in Asia, gained 40% to 14p on its AIM debut, he remains its chairman. Rowland currently has more than a dozen directorships to his name, and for three years was a director of Wagner’s Venda business.
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US State Department launches site to gather views on US foreign policy
Mar 12th
The US State Department has launched a web application to gather and map the views of citizens and those abroad about US foreign policy
The US State Department has launched a web application, Opinion Space, that solicits views and input on US foreign policy.
The site was launched at the Alliance of Youth Movements summit in London.
Instead of a virtual suggestion box, users respond to comments by moving a slider showing gauging your view ranging from strongly disagree to strongly agree. For the launch, Opinion Space explores five topics, the threat posed by nuclear weapons in the hands of terrorists, the role of empowering women in terms of development, “proactive diplomacy”, food security and climate change. Users can also leave an idea and suggestions for follow up for Secretary of State Hillary Clinton.
The topics will change every month. The initial topics are broad, but in the coming months, the questions will “drill down” into issues including those that might relate to upcoming trips by Secretary Clinton, said Ari Wallach, founder of consultancy studioBenZion which was involved with the launch strategy of the site and developing the topics and questions.
Secretary Clinton said: “Opinion Space is an example of 21st Century Statecraft, where connection technologies can encourage open dialogue and engagement. My staff and I look forward to listening to the opinions and ideas the Opinion Space participants provide and vote on.”
What is 21st Century Statecraft (for those of us who don’t have a degree in international relations)?
In the past, Wallach said that diplomacy was often “two people in suits over Scotch talking about how they were going to do this or that vis a vis the other country”.
In Secretary Clinton’s vision, 21st Century statecraft means that foreign relations isn’t just government-to-government but also government-to-people, people-to-people and people-to-government, “a new matrix of how we interact with one another”.
Developed with the Centre for New Media at the University of California Berkeley, the site designers hope that contributors will not only add interesting views but also filter the best ones.
Once you’ve added your views, you are charted in what looks almost like a star chart. It’s a very impressionistic mapping of your views.
“This map is not based on geography or predetermined categories, but on similarity of opinion,” said UC Professor and Berkeley Centre for New Media director Ken Goldberg. “It’s designed to ‘depolarise’ discussions by including all participants on a level playing field.”
Wallach said that they thought a lot about ways to create incentive systems as opposed to “unintelligent, unenlightening, debate flame wars”.
Also, once you’ve left your views and comments, you can then see the views and comments of others and again, using a slider, say whether you strongly agree or disagree with the comment and whether you found the comment insightful. The site also lists the top authors and reviewers. You can see other views and see how they relate to one another.
This is not just an information gathering tool for the State Department, it’s also an information gathering tool for everyone who uses it, Wallach said. People answer the questions but in testing the site, they saw people spending 20 to 40 minutes exploring other views.
It’s an experiment and they hope to refine this over the years, he said. “In line with the technological aesthetic of the day, don’t wait for something to be perfect. Put it out there. See how it works and how it doesn’t work. Refine along the way.”
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Cafe con cookie? Spanish city in a frap over lack of Starbucks
Mar 12th
Murcia residents start Facebook campaign to attract global coffee chain – possibly for the muffins, the wifi or the mugs!
Murcia is one of the fastest growing cities in Spain, the proud capital of the country’s south-eastern market garden region. But the coffee guzzling citizens of Murcia say it still lacks the one thing that would prove they have made it onto the global map of cities that count: the green, white and black sign of a local Starbucks.
Now the city’s cappuccino and mocha starved citizens have mounted a Facebook campaign to join the list of 16,000 places on the planet with a Starbucks.
“They have got it everywhere but here,” complains Alicia Delgado, a recent contributor to the Starbucks campaign wall. “It is about time we had one too.”
Enrique Marhuenda agrees: “The day we have a Starbucks, Murcia will be an important city.”
Although Spaniards have long had a variety of good quality coffee on hand at almost every street corner cafe, Starbucks has already established 76 outlets in Spain and continues to expand there while it shrinks elsewhere in the world.
But do the people of Murcia, who can get Spanish carajillos, cortados, cafes solo and cafes con leche at the dozens of cafes doted around each neighbourhood, really know what they would be getting?
Some who have had the Starbucks experience insist they would kill for a muffin and a frappuccino. Others admit that the coffee is often better (not to say cheaper) elsewhere – but say that is not why they want their Starbucks. “The coffee is not really up to much,” admits Maria Esther Ser. “But the muffins, the seats, the powdered chocolate and the cinammon are good – and the iced coffees too.”
The Murcia fans are also organising an email campaign, hoping the firm will pay attention to the severity of their Starbucks starvation when bombarded by mails. The owners of the Starbucks brand in Spain, Grupo VIPS, were not available for comment.
Some Facebook users are not convinced that their fellow campaigners are only interested in the wifi, sofas and cherry mocha. “Admit it, what you really want is to steal those mugs,” says Luis Vallejo.
Others believe Starbucks will destroy local cafe culture. “If I get back to Murcia this summer and find a Starbucks I will turn my back on my birthplace,” said Marcos Campillo Supongo.
“In the US the Starbucks coffee is awful and priced like gold. A lot of people only drink it because ‘it’s Starbucks and it makes me feel cool.’”
Meanwhile, teachers on the Murcia university marketing master’s course have already set their pupils the task of putting together a marketing plan for a local Starbucks.
For the moment, those who go to the Starbucks store locator screen and enter “Murcia” will continue getting the following message: “There are no stores matching your search parameters. Please try a different search.”
The nearest one the Guardian could find was 140 miles away in Valencia.
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Peers ’set to offer digital economy bill concessions’
Mar 12th
Lib Dem and Conservative peers plan to address concerns raised by ISPs and web companies over anti-piracy legislation
Peers will reportedly offer concessions over controversial anti-piracy legislation that would lead to websites being blocked without due judicial process, following criticism from internet companies including Google, Facebook and Yahoo.
The Liberal Democrats are planning to publish changes to an earlier amendment to the digital economy bill, 120A, that seek to address concerns about the anti-piracy proposals raised by internet service providers and leading web companies, according to today’s Financial Times.
Last week Lib Dem and Conservatives peers added amendment 120A to the bill giving a high court judge the right to issue an injunction against a website accused of hosting a “substantial” amount of copyright infringing material, potentially forcing the entire site offline. The amendment was passed in the House of Lords by 165 votes to 140.
Under three changes proposed by the Lib Dems, of which the FT reports the Conservatives are broadly supportive, a judge could order copyright owners to pay legal costs and other compensation for asking a service provider to block a site. Content owners must also inform owners of sites they accuse of infringing their copyright before asking that it be blocked, and list the works illegally hosted.
Website owners or “any person aggrieved” would be able to appeal against a block under the latest amendments.
The Lib Dems are expected to publish the amendment today and they will be voted on in the Lords on Monday as part of the third reading of the digital economy bill, according to the FT.
Earlier this week a group of internet and technology companies, along with consumer groups, co-signed a letter published in the FT criticising amendment 120A. They said it raised “myriad legal, technical and practical issues” that needed to be reconciled before it could be “considered a proportionate and necessary public policy option”.
The letter was co-signed by the heads of the four largest UK internet service providers – BT, Orange, Virgin Media and TalkTalk – as well as Google, Facebook, eBay and Yahoo, along with consumer groups, academics and the technophile television host Stephen Fry.
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Play video games at work? I’d rather make a cup of tea
Mar 12th
Spaceships on your spreadsheets are fun, says Todd Nash, but there are easier ways to waste time at work
I’ve been sitting at my desk for half an hour trying to guide a tiny spaceship between two lines of a graph in a computer game disguised to make it appear as though I’m hard at work. If anyone walks over I press the spacebar and it disappears. Despite the fact I’ve not had cause to create a graph since my schooldays, nobody seems in the least suspicious. This is too easy.
As it is, I’m doing my utmost to draw attention to myself. I start sighing and banging my fists on the desk each time I lose a life, but everyone has their headphones on and is oblivious to my crime.
In the end, I show the graph to my colleague and tell her it’s the results of a survey about office productivity, while I merrily steer my ship through the middle of it. It’s a good couple of minutes before she notices that something is up. “Is that a spaceship?” she tentatively asks. Finally, I’ve been caught!
This is the latest internet timewasting scam as showcased by Can’t You See I’m Busy!, a website that allows bored office workers to play simple flash games without getting caught. With backdrops closely resembling typical office applications such as spreadsheets and Word documents, the site proudly estimates it has already cost the economy more than £4m in reduced productivity.
Should you grow tired of spaceships, two further games are provided to fool your boss with. Breakdown clearly takes inspiration from the Atari classic Breakout, except with the text of a work document to destroy instead of blocks. A further game, CostCutter, is a Tetris-like puzzle that involves removing cubes of the same colour before they reach the end of the screen under the guise of a simple bar chart.
To be honest though, I’m finding them a little dull. In fact, I’d probably rather be working. The games are pretty retro and only really interesting for the first five minutes; not long enough for a proper skiving session. Let’s face it, I can spend longer than that making a cup of tea.
It’s not just online games that have cottoned on to the benefits of providing a safe outlet for slackers. Totesport, an online betting website, provides a little exclamation mark at the top of the screen which, when clicked, quickly redirects you to a nondescript “sales spreadsheet”. The football365.com forum too has a “Quick, Boss!” button just in case you get caught off guard.
It seems it is easier than ever to get away with doing things you shouldn’t be doing in the office. All we need now is Facebook to jump on the bandwagon and nobody in the UK will be doing any work whatsoever. What are your secret timewasting favourites?
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Controversial digital economy bill amendment follows lobbyists’ draft
Mar 11th
Text added to digital economy bill that could block sites such as YouTube echoes almost word for word a suggestion from the BPI
A controversial amendment to the digital economy bill that could block sites such as YouTube is copied almost word-for-word from a draft written by the BPI, which lobbies on behalf of the British music industry.
The BPI confirmed on Thursday that it drafted a letter which was circulated to government and opposition peers containing a suggested draft amendment to the 1988 Copyright, Designs and Patent Act. Earlier this month the Liberal Democrat peer Lord Clement-Jones added the text into the digital economy bill almost exactly as provided as part of amendment 120a.
However, the suggested changes – which won approval from peers and will now be considered by the House of Commons – have come under fire from the heads of the four biggest internet service providers in the UK, as well as the UK chiefs of companies including Google, eBay and Yahoo, who said yesterday that they threatened freedom of speech and could lead to British websites being blocked without due judicial process.
In response, the BPI said that the amendment a “clear and sensible” way to deal with illegal downloading – but not that it had been the source of the draft version.
Today a spokesman for the BPI insisted that the organisation was not embarrassed at the disclosure of the source of the amendment.
“This was a suggestion that we made to the government in 2009, with this wording. This version of the proposal was sent to the government and also to the opposition parties. The government decided it wanted to go a different way. The opposition parties, while not fully agreeing with it, saw it as a good framework for what they wanted to put down,” the spokesman said. “We have consistently said that the digital economy bill should have sensible measures to deal with peer-to-peer file sharing.”
The BPI’s proposed amendment, in a letter dated 8 January, is almost identical to the version put forward by Lord Clement-Jones on 3 March. The key difference is the addition in Clement-Jones’s version of questions about national security, and of tests to see whether the blocking of a site infringes human rights and freedom of speech, and whether an ISP has tried to “facilitate legal access to content”.
Jim Killock, head of the Open Rights Group, a pressure group on digital rights which opposes the amendment, said that it was understandable that a lobby group such as the BPI would try to draft legislation – but that the Lords were at fault for not querying the source and intention of the amendment more closely.
“The BPI has got every right to do this,” said Killock. “The question is why the politicians have said in such a complicated arena that they will take the BPI’s ideas wholesale without consulting anybody else.”
Killock said that ORG, Consumer Focus and Liberty had all provided draft legislation and notes to politicians for the bill – but that theirs took the form of “probing amendments”, whose purpose was to show weaknesses in the draft bill which could then be revised.
“It’s the politicians who have been irresponsible here. It shows that they’re taking the BPI far too seriously,” Killock said.
The BPI spokesman responded: ” We made a proposal on this – and as is quite common – used statutory language to convey our point. This is something that all sides in the digital economy debate do.” He defended the addition of the amendment to the draft bill: “[the peers] made changes to our proposal which was then tabled by them, debated fully in the House of Lords, before being agreed and made part of the bill.”
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Tory tech plans let the City off the hook
Mar 11th
The Conservative technology manifesto fails to tackle what’s really holding the industry back – the City’s reluctance to invest
No one can accuse today’s Tory technology manifesto of failing to keep up with the hot trends. Crowdsourcing parliament? Check. Superfast broadband? Check. Opensource software and open data standards? Tick. Tick. Even price comparison websites get a namecheck in this whirlwind nine-page tour through Britain’s internet landscape. Perhaps Aleksandr the Meerkat would have been a more fashionable choice of cover art than the slightly retro circuit board illustration.
The report is at its best when looking at how government employs technology. Few could argue that the disastrous NHS IT programme is a sign that throwing billions at a handful of big contractors is not always the best way to procure software. It’s not clear that smaller suppliers or inhouse government teams would do better, but given how bad the alternative has proved, there is no harm in trying.
Similiarly, co-opting the phrase “skunk works” from US military contractors to describe a new team of Whitehall computer experts is an unpromising lingusitic start, but a useful way of recognising that government departments have been tragically naive in their dealings with industry so far. I’ll leave it to others to decide whether publishing procurement and salary data is a positive step toward government transparency or just ammunition for its critics, but it’s an idea worth exploring given the public anger over MPs’ expenses.
Yet public sector failure is only one side of the story. Oddly for a Conservative manifesto there is little talk about how fix private sector shortcomings. The big wasted opportunity in recent years has not been government technology spending but the failure to develop a world-beating technology industry. Some bright spots, such as mobile telephony, have flared and dimmed. Others, such as computer games or bioscience, go under-appreciated. But by and large, Britain punches below its (considerable) scientific weight when it comes to developing world-leading technology companies. And until Silicon Fen and other would-be British clusters can seriously compete with their Californian namesake for funding and investment, the rest is all window-dressing.
The Tories know this because their own report into the subject has told them so. But neither Sir James Dyson’s recent study nor today’s manifesto get far into asking why. Politicians prefer to talk about things that they have direct control over, such as red-tape or innovation tax credits, but the real problem of Britain’s technology industry has been a lack of private sector investment and a City that is more interested in financial engineering than software engineering.
Recessions have historically been good times to launch technology businesses. Many of Silicon Valley’s biggest names, from Cisco to HP, Google and Apple rose to prominence during downturns. But you only have to look at the list of companies receiving risk capital from the City of London today to see where British investment priorities lie. The Alternative Investment Market (an offshoot of the London Stock Exchange designed to compete with the Nasdaq in New York) lists six new public fund raisings currently: two African mining companies, a Guernsey fund manager, a Brazilian shopping mall developer and a rape alarm distributor. Only one can remotely be described as a technology company, and that is based in Malaysia.
In fact, ever since the dotcom boom, the City has almost entirely turned its back on venture capital and technology flotations, preferring the shorter-term lure of hedge fund management and private equity buy-outs. Only when this fundamental imbalance in our economy is addressed are we likely to see the garages of East Anglia become the birthplace of future Hewlett-Packards. But it is hard to see George Osborne wanting to rock more boats in the City when it is those same private equity and hedge funds that serve as his biggest donors. So much simpler to stick to attacking Whitehall.
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Tories vow to roll out superfast broadband
Mar 11th
Conservatives try to outdo Labour by promising broadband speeds of up to 100Mbps in technology manifesto
The Conservatives have launched a technology manifesto that aims to increase broadband speeds and improve access to government data as the government’s digital economy bill moves quickly through parliament.
The manifesto pulls together a number of technology proposals that the Conservatives have floated in the runup to the general election, including promising superfast broadband connections of 100Mbps to most Britons and opening up data on contracts and public sector salaries.
The Tories are looking to outdo Labour by promising improved broadband speeds. Labour set a target of universal access of 2Mbps by 2012. The Tories promise 50 times that but to most citizens, not to everyone.
Rather than the controversial 50p a month levy on fixed-line phones proposed in the digital economy bill to pay for broadband rollout, the Tories promise to “unleash private sector investment to build this superfast broadband network by opening up network infrastructure, easing planning rules and boosting competition”.
The party points to Singapore and South Korea, where such strategies have worked. However, Singapore is a city-state with the third highest population density in the world. Unlike the UK, it has very few rural areas. South Korea has a population density 10 times the global average and most its residents live in major cities, also making it much easier to deploy superfast broadband to most of its population.
If private sector investment does not achieve the desired target, the Conservatives would consider taking some of the licence fee settlement from the BBC currently dedicated to digital switchover.
In addition to trying to best Labour with their broadband plans, the Conservatives are trying to outdo the government’s open-data plans, pledging to open up data on smaller contracts and information on public sector pay.
Their technology proposals also include changes to IT procurement so that large projects would be broken into smaller components and opened to small and medium-size businesses. They also want to create a “government skunkworks” to speed the development of low-cost IT projects.
The technology manifesto is couched in terms of economic development. Quoting Nesta, the Conservatives say their plans for a superfast broadband network will create 600,000 jobs and add £18bn to Britain’s GDP. For their open-data proposals, they cite new research by Dr Rufus Pollock of Cambridge University which says open-data programmes could create £6bn in additional value to the UK.
Apart from the internet and IT, the manifesto also called for the creation of a high-speed rail network and a smart electrical grid.
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The demise of the music industry is visible everywhere but in the facts
Mar 12th
Posted by Victor Keegan in Business
No comments
If music executives sold bottled water, they’d be calling for a ban on tapwater downloads. But their industry is proving resilient
Illegal downloads continue to be a cause of Armageddon within the music industry and a source of endless fascination outside. Business leaders still regularly moan that illegal downloads are destroying their livelihood, especially if representatives of government are within hearing range. At the first Music 4.5 conference in London last week, speakers took it as read that “kids are not buying music anymore” and that they must look elsewhere for revenues. Evidence of the demise of purchased music is everywhere to be seen, except for one place: the statistics.
In fact it is easier to make the case that the music industry, far from imploding, is one of the great success stories of the recession. The most dramatic example of this is in what kids are supposed not to be buying any more: single tracks. Last year sales of singles soared to an all-time record of 152.7m units, an astonishing 33% rise in a year when the whole economy (GDP) contracted by 3.3%. If the music pundits seriously think that these are not being bought by kids, then it shows how out of touch they are with their customers. These same youngsters who were – and probably still are – massively downloading free music from the internet were prepared to pay up to £3 a pop for an insipid ringtone (interestingly, not included on the industry’s statistics unless they are full-track ones). Why? Because there is an easy payment system on phones which didn’t exist on the web. Now there is an easy payment system (iTunes et al) on the web they are starting to pay again. If the big music companies had spent their energies dreaming up a payments mechanism for web downloads instead of suing their customers they could have swept all before them. Instead they were like the crew of a sinking boat that blames the sea instead of trying to mend the leak. If they were in the bottled water industry, they would probably be urging the government to stop free downloads of tap water at home as unfair competition. Yet the bottled water industry should have been their model. It got away with charging us lots of money for a product that was no better than free tapwater through clever marketing.
Even now practically everyone I meet from the music industry protests that it couldn’t be expected to combat the technological disruption that was eroding its traditional model. What piffle. Lots of books have been written about disruptive technologies. They can’t say they weren’t warned. As it turned out, pretty well every system for monetising music – iTunes, Spotify, We7, Shazam, Nokia’s Comes with Music et al – has come from outside the industry. What a missed opportunity.
Sales of singles are, of course, only one part of the industry. There has, unsurprisingly, been a fall in sales of albums – down from 133.6m units to 128.9m last year, not helped by the closure of key UK retail chains Zavvi and Woolworths – but that was more than offset by growth elsewhere in sponsorship, live shows and merchandising where there is something of a boom happening in Britain. Overall, the music industry grew by an amazing 4.7% in recession-ridden 2008, according to PRS for Music, and will probably be resilient when the full 2009 figures come in. A key fact is that last year income from live music overtook that from recorded music for the first time. Don’t think tracks, think music.
Clearly, the industry is changing. Consumers can now buy the singles they want without being locked into buying albums containing other tracks they don’t want. That may bring in less income but it is the gateway to other revenues. The people who allegedly won’t pay for downloads will pay huge sums to hear their favourite artists live or be part of the merchandising experience. Maybe illegal downloads – which, needless to say, I don’t approve of – should be looked on as a massive crowd-sourced marketing operation to generate money for gigs, memorabilia and future sales.
The future lies in capitalising on the whole musical experience, as the admirable Music 4.5 initiative well knows: it seeks to bring together artists and entrepreneurs to plot the future. If the quality of the five-minute pitches made at the conference by budding businesses is anything to go by, the future is bright. I loved the way Songkick.com is moving beyond Last.fm by linking songs you and your friends like with information about the band’s past and present gigs, enabling you to talk about them after the show. MusicGlue offers free downloads in exchange for email addresses which, over time, will produce geographic patterns showing where there is a dense enough cluster of fans to justify a gig. CloseCallMusic encourages people to interact with live music as it happens, while TuneRights is trying to crowd-source the financing of records. Audiofuel, which matches music to your jogging beat, aims to be the new Ministry of Sound. I loved what Decibel is planning – to have a vast data base of meta tags so you can find out details of each member of the band: that Jimi Hendrix played as a session man on a Little Richard track, for instance. That is just the sort of value-added that will lure people away from free downloads. Nick Hornby would love it.
These were only some of the pitches made which suggest that the future of the industry may continue to reside in bottom-up initiatives rather than the top-down approach of the major labels. The music industry, to be fair, is still a very heavy investor as a new study shows, but it had better be alert if it doesn’t want to be upstaged even more. The sad fact is that around 90% of start-ups fail – but it is vital for future employment, as well as the health of the music industry that we spend money to find the winners. A revolution is under way.