Monthly Archives: August 2006

How much is music worth?

Universal’s spin is that they’re going to give away music downloads to defeat the file sharers. It’s not true.

To understand why the Spiral Frog announcement is important you need to understand what Apple’s iTunes Music Store has done to the music industry. iTunes is important for all sorts of reasons, obviously but – as far as the labels are concerned – for one really big reason: Apple robbed the record companies of their pricing power.

Steve Jobs stepped in, chucked his weight around a bit and cheekily took away the labels’ right to set prices and thus any meaningful control over their own profitability. The big fights between the labels and iTunes during these vital first three years have all centred on Apple’s stubborn insistence on a single, fixed price per track with no variation for fame, historic sales, up-to-dateness, trendiness… anything really.

You don’t need to be an economist to understand that pricing power is fundamental to a sector’s success. If the biggest players in an industry can’t set their own prices they are effectively reduced to dependent status. For an outsider to enter an unfamiliar industry and, in short order, to seize ownership of the most fundamental economic lever – the big red one marked ‘don’t touch . Not ever’ – from under the noses of the industry’s biggest players – is a feat of quite awesome self-confidence and one never attempted by a Tech firm before.

Universal (and, presumably, other labels as yet unannounced) have decided they’re not going to wait around while Apple reduces their hundred year-old industry to a blackened shell. They’re going to take the fight back to Apple, do something really unexpected and attack them where they are least able to respond. Giving away music (no matter how onerous the embedded DRM scheme is) is the most radical thing the industry has decided to do in that whole Century-long history.

It requires trashing the business’ only stable, continuously-profitable business model and jumping aboard the advertising train. Of course, they won’t be alone – they’ll join the respectable roster of media businesses whose only or principle source of income is advertising: radio, network television, newspapers. For the music industry, this shift will surely mark the beginning of the end of the battle with Apple and, overnight of course, the battle with the file sharers.

Morality and Labour Mobility

Labour mobility is a good thing. That much is economic orthodoxy. It spreads wealth and makes economies more efficient. In Britain, over the last two years, we’ve been experimenting with the limits of labour mobility. As a result, we now know that if you open your borders to poorer states their more enterprising young citizens will head your way en masse.

For Britain’s economy this has been an unreservedly good thing. The labour market is soaking up these new arrivals with alacrity, our cities are loud with construction work and our service sector is booming. For ordinary people – by which I mean people in permanent work – it’s also been good: cheaper services, more places to get your car washed, better-staffed hospitals and so on.

One group has probably suffered, though (I say ‘probably’ because the data isn’t in yet and, so far, we have only the Daily Mail’s word for it). This group was already vulnerable to labour market change and is almost certainly suffering now: workers at the fringe of the permanent job market: casual and seasonal workers, illegal and off-the-books staff at the bottom end of the economy. These people are almost certainly seeing hourly rates pushed down and more competition for jobs they’d have got easily two years ago.

Deciding whether we should close the border or apply special limits for the next wave of accession states is tricky. To begin with, what we’ve been seeing over the last two years is not immigration. It’s genuine labour mobility. Freedom of movement in the EU now makes it possible for workers to take their earnings home with them and spend them where they’ll buy three times as much. Many already have. Many will make the return journey lots of times.

Isn’t it a matter of simple morality?

It’s actually quite hard to make a coherent moral argument in favour of keeping the border wide open. Those that try are usually confusing asylum policy with European labour mobility. These workers are not asylum seekers, they’re not fleeing persecution or starvation, nor even extreme poverty. They’re driving here in their late model VWs and Fiats (across those less welcoming states), paying for Channel Tunnel tickets, staying in guest houses, renting flats – they have no interest in welfare benefits. In fact it’s easier to make a moral argument against open borders: EU expansion was not meant to impoverish – or even inconvenience – poorer Britons and the pressure on public services, housing and the environment must not be ignored.

Simple economics, then?

Economic and social arguments in favour of admitting all-comers are easier to come by: the British economy is getting the lion’s share of the economic benefits of this wave of willing workers. The Treasuries of our near neighbours look on enviously at Britain’s labour market-led boom. Some are even changing their own policies to match ours. Some analysts here say it’s a matter of ‘holding our nerve’, keeping the doors open and waiting for the economic benefits to trickle down to everyone – the flow will tail off as Britain’s capacity to use the labour falls anyway. Others say the boost to the nation’s ethnic diversity will produce benefits of its own, as it has done in the past. Still others, more credibly, say that putting the hysterical anti-immigration lobby in the driving seat will set back racial tolerance and make things tougher for asylum seekers and earlier immigrants.

Media and legislators muddy the waters

So this is a subtler issue than most of the media want you to believe. It’s not a battle for the soul of open, tolerant Britain (The Independent), nor doomsday for swamped public services (The Daily Mail). Romanians and Bulgarians should probably be allowed to come freely, like citizens of the eight nations before them, but we don’t owe them a living and their rights don’t trump those of Poor Britons. We should do so because European openness is important but also because there will be fewer incomers in this wave and because we haven’t exhausted the economic benefits of the first wave yet.

Since there’s no moral urgency (no lives to save) we have the luxury of treating the whole exercise as an ongoing experiment and that means being ready to close or part-close the border if it’s not working. If plugging Britain’s economy into what’s probably the most powerful source of labour market renewal Europe has ever seen is not an unqualified good thing then we should be prepared to admit it and change direction. As usual, the problems that arise, if they do, will be the result of political contingency and shortsightedness (“how will this play in the marginals?”) and nothing to do with the challenge itself (“how do we make Britain more competitive?”).

Elstein loses it

Everybody says David Elstein is clever. I’ve met him once or twice and he’s certainly an entertaining critic of TV and media in general – a real Maverick from outside the liberal public service media consensus. So it’s disappointing to learn that he’s turned into a silly old git. In this week’s New Media Age we learn that he’s convinced himself that the BBC’s mission to give away its whole archive online will devalue content created by commercial rivals and encourage people to steal it. Likewise, I suppose, ITV’s entirely free output encourages people to wander into Woolies and steal DVDs.

Scientific curiosity in action

Space scientists have been preoccupied for a while with the tantalising prospect of life in the ultra-cold oceans and ice-sheets and deserts of the solar system’s rockier lumps. Their readiness to believe that organic life might thrive even in these nasty, inhospitable places has got earth’s biologists thinking about life here. If there could be life on Titan or Mars what about the sub-zero environments here on Earth?

Well, it turns out that at least one organism, bacterium Colwellia 34H, metabolises quite happily inside solid ice at -20°C and keeps on working all the way down to the temperature of liquid nitrogen (-196°C), at which scientists had long assumed life was impossible. You’ll need a New Scientist subscription for this quite mind-blowing story.

The curiosity and readiness to challenge received wisdom shown by scientists never ceases to amaze me.

What’s the point of inheritance tax?

The trouble with defending inheritance tax is that it’s impossible to do so without sounding like a miserable, money-grubbing pensioner-basher (although I suppose you’re actually bashing the kids). The best its defenders can manage is the obviously contradictory: “It’s worth £3Billion per year and hardly anyone pays it anyway.” The tax systems of the world are cluttered with these slightly embarrassing throwbacks to times when monarchs were always looking for ways to fund the latest acquisitive war or lavish palace building programme.

Tax collectors of old had to be opportunistic: taxation was arbitrary and sometimes punitive because the assets of the taxable masses were – most of the time, anyway – invisible, out of reach. Death was a convenient moment for the taxman to intervene and grab some cash because, at death, those assets had to surface, at least for long enough to sort out probate (quiz: which is fairer, inheritance tax or window tax?). These days, of course, especially if you’ve got a proper job, your earned income is on show at all times and the taxman can take what he wants before you even get your share. In this context, taking a share of what you leave to your kids is harder to justify.

Of course it’s politically impossible to use the only real justification for taxing inheritance which is the perfectly sound but paternalistic economic argument that you should leave your money to someone who knows how to invest it and probably not to your idiot offspring. The theory is that the investment return on money given to Government will be better than that on money given to your spendthrift kids – who will probably blow it on Cider and trampoline lessons anyway. Leaving a proportion of your money to the Government will boost the economy and produce social goods. Leaving it to your kids might boost the economy but is more likely to provide a one-time boost to the profitability of a local off license or pie shop.

What I find myself wondering is: is there a ‘third way’? Could the dieing be obliged to leave chunks of their estates not to Government but to an approved investment vehicle, one which would yield a profit for the dead person’s intended beneficiaries but, in the meantime, also benefit, say, the hospital building programme or early years education. If I were obliged to leave 40% of my assets on my death to a fund that would produce visible benefits to the economy while still benefiting my kids in the end I think I might be happier to pay up, especially if I could actually choose the destination for my legacy: if I could pick a fund from a list, for instance.

Three new planets: astrologers not bothered

Of course it turns out that the planetary scientists opted not to demote one planet but to promote three new ones. Brilliant. I can see Michael Hanlon’s Daily Mail story already: “Dumbing down is out of control: now even frozen lumps of rock qualify as planets. What next: asteroids?”.

Remarkably, it looks like the new planets will actually produce better horoscopes. All these teeny-tiny ultra-distant mini planets somehow enhance astrology’s… er… resolution. Happily, it looks like Vedic Astrology is also unaffected by the addition of three new planets to the zodiac.

Indian astrologers only use the first six planets (up to and including Saturn) anyway and although one of the new planets, Ceres, actually sits between Mars and Jupiter, it’s unlikely to change your horoscope much because it’s so small.

What is profiling?

Psychologists, ethnographers, market researchers, coppers: correct me if I’ve got this wrong. I think profiling works like this. You start by watching the behaviour of lots of people (more likely a representative sample). From your laborious, systematic observations, you infer characteristics so that you can say, with some certainty, “this behaviour = this characteristic”.

Then you derive the simplest possible indicators for these characteristics and codify them so that anyone can apply them. This is analagous to the way untrained HR staff are able to use sophisticated psychometric tests – they follow the steps printed on the laminated card and the result is close enough to be useful.

The point of all this mucking around – again, feel free to correct me here – is to exclude the kind of assumptions that trip us up when we make unguided assessments. Profiling, when it’s working, helps us to identify the right person (for the job, for the prison sentence, for the training scheme, for the next place in The Big Brother House…) in spite of our own prejudices.

So profiling is not about pulling young Asians out of the queue at customs but about reading the behaviour and appearance of a stream of people against the hints on the laminated card and isolating those most likely to be planning the next nihilist infamy, the next glorious assent into heaven or the next bank job. In fact, if profiling does boil down to hassling brown people, it’s not working.

It’s planetary correctness gone mad

Michael Hanlon on Planet Pluto in The Daily Mail

The Mail‘s Science Editor Michael Hanlon can be relied upon to recruit even the most obscure and disinterested branch of science to the cause of rampant political correctness. Today he takes on the ‘loony’ planetary scientists who want to ‘demote’ poor Pluto, removing the plucky planetoid from the list of proper planets all together. He provides a reasonable summary of the science but manages to sign off: “There are few enough certainties in life. Please, let’s keep little Pluto as one of them.” Brilliant. Quite brilliant.

Reuters and Photoshop

Comparison of Adnan Hajj's Photoshop work on a pic from the Israel/Lebanon war

I’ve met Tom Szlukovenyi, Reuters Gobal Picture Editor, a few times and almost all we talked about was his practically pathological hatred of ‘photoshopping’ and all other kinds of doctoring, fixing, enhancing and otherwise fiddling with his precious news photographs. The idea – spread by the warbloggers and by the Israeli media – that he might have deliberately permitted Adnan Hajj‘s crappy Photoshop-job onto the wires is absurd. Just look at these two pics – can you see the glaring error in the doctored pic on the left? I think that’s the most obvious use of the Clone Stamp Tool I’ve ever seen. Back to school, Adnan…

Media bias?

Peter Wilby failed to endear himself to British Jews whilst editor of the New Statesman, what with that stupid Star of David cover and everything. Still, his media column in the redesigned mag is always worth a read – cynical, funny. This week’s piece examines allegations of bias in the British media from both sides of the Israel/Lebanon war. Remarkably, it seems both are able to provide concrete evidence of bias against them.