The Strategy Review

"Doghouse" ads for JC Penney 2008

From a couple of years ago ... perhaps the funniest long-form ad ever?

Also check out Return to the Doghouse ... absolute genius.

Unreleased Exile on Main St track with video

Remember when the music business was truly exciting? Exile reissue 17th May 2010 has obliged me to cough up £100 for the whole shebang ... vinyl, book, postcards, CD's and DVD ... and you know what? Feels like a bargain.

http://www.amazon.co.uk/gp/mpd/permalink/m3LHHSYQZG7ZJ6

Martin Mills on surviving the Web ... and thriving

Always interesting to hear what Beggars are up to and - via Bob Lefsetz - I got to hear about this interview.

Let the man speak for himself ...

Smirnoff Experience - Berlin

Rarely does one get the opportunity to claim even vague involvement with a strategically sound and well-executed piece of consumer engagement blended with experiential.

Congratulations to all involved. Now do it again :-)

Understanding Engagement - Part Five: A Case in Point

Runners are Nike’s original audience … and they’re a peculiar, isolated breed: it’s a bit like fishing, an exclusive and mysterious passion.

Nike and Apple developed and announced their Nike + venture several years ago, bringing together two of the worlds brand icons in one tech-led brand experience initiative.

The Nike + product at its most basic tracks your runs, coaches you, and enables you to upload the details of every run. There are motivational tools too, as well as cute functions like a booster tune. Sadly perhaps, the most popular one is “Eye Of The Tiger”.

Tens of thousands of runners are using the service to form virtual clubs – and to tell the stories of not just their runs, but of building a more sweeping Identity story about the process of “becoming a bigger, better Me”;

The shared data of their runs is alchemised into personal and tribal capital, and this most isolated of hobbies becomes deeply social and powerfully rewarding.

With Nike +, a runner’s Identity is tribalised and legitimised: “I Am A Runner!”

A continuing socialised narrative of struggle, achievement and progress, gives regular, reinforcing Expression to that Identity;

These powerful, transformational experiences – both personal and tribal – grow Consumer Equity. We can see the fresh access and Brand Intimacy with key influencers and consumers that Nike has created – warmth, trust, and willingness to engage.

Understanding Engagement - Part Four: Advocacy and Amplification

We’re rightly fascinated by Advocacy. 

Not only because positive word of mouth has long been recognised for its power and relative impact.

But also because, in a media context where access and permissions become constantly tougher to achieve, and when online media and digital tools have created a whole new layer of consumer connectedness and influence over brand equity …

… the opportunity to go beyond mere “occasional serendipitous buzz”, to repeatably recognise, deliver, tribalise and measure networked consumer intimacy seems now within reach.

So what – really – drives the Advocacy that will drive our brands deeper Behind The Line?

The roots of truly credible, sustainable brand advocacy lie in smart, observant, consumer-led brand innovation. This “true advocacy” can’t be bought in the same way that we have historically bought media: the best brand advocacy is earned.

Despite a logical connection and superficial resemblance, advocacy is not the same as loyalty: the dynamic’s utterly different; furthermore, while any loyal customer is a powerful asset to a brand, our advocates need many specific extra attributes in order to be of positive value;

But first – and most -  of all, what’s in it for the consumer?

When consumers act as brand advocates, they’re rarely promoting the brand, but that aspect of themselves that the brand helps them feel good about: in other words, a facet of their own identity, not the brand’s – identifying with the brand, and then speaking about themselves, using the brand as a conduit. 

When we’re dealing with this phenomenon, traditional planning and measurement are less central, and personal media and tribal models of engagement become important.

This consumer – strongly influenced by tribal opinions and trends – controls the game of attention and media value, saying “Never mind about your brand. Tell me about … myself!”

So … advertising used to be just about distribution of content and messaging … here it’s consumers themselves who are distributed: their “personal brand messages”, pushed out via ringtone, via carefully-monitored brand purchases, and of course via their media selections.

This we can call “The Distributed Me”.

We know all about brand equity.

This new “Consumer Equity” is the extra value a brand creates in the experience of today’s in-control consumer, no longer just promising, but repeatably delivering enhanced Consumer Identity and Consumer Expression;

This is the new currency of premium brand communications: it’s this with this that we “pay the consumer” for the Intimacy – the warmth, trust and receptiveness and accessibility – that we need. 

What do we buy when we buy a premium brand?

Most of all, we buy access to a story of which we can take some personal ownership.

It’s the new, bigger, richer story of Me, and I need help to live in it.

This means I seek to accessorise myself with the tools of Social Display, because it’s not enough to succeed …

… others must see it happening and share it with me;

Today, the trappings of the premium brand are almost all social: it’s a new language spoken by the connoisseurs, the (very small) club of aficionados, the inner circle, the “people who know”.

Many of the most important communication opportunities and brand experiences in premium are delivered via or in the context of the tribe;

In fact, these days it’s also the tribe that defines many of those attributes.

Premium brand communications need to support and enable me to enact two ideas about my Consumer Identity.

I am both unique, and I am part of an exclusive tribe. 

These are interlocking, mutually reinforcing elements to be managed in parallel by the brand.

While personal concierge-type services and experiences are often used to build the sense of my special uniqueness, the complementary tribal affiliations are built with, for example, exclusive contract publishing magazines and restricted brand-sponsored events.

Tribal belonging is also powerfully built – not always by brands but certainly by luxury elites (art, wines, yachting, haute couture and so on) using private Knowledge and Codes.

These enable the all-important Social Display which commonly forms the Expression opportunity for the premium consumer.

How on earth can we engage with and manage this troublesome new dynamic? Don’t worry, we can do it.

The Whole Equation ... Revisited

Like many media folks – or the lucky ones – I just made it back to London from MIPTV in Cannes, in the wake of the Icelandic volcano crisis. Hopefully by the time you read this, it’ll be resolved and everyone will have made it home!

For the first time at MIP I think, the agenda, the featured speakers and the mood of the delegates came together to really embrace and engage with “what comes next”.

Talk of digital was everywhere, and the digitally-led “Content 360” element of the conference was both heavily attended and much-discussed. Interesting also to see not only Ogilvy – to my mind still one of the great agencies – supporting MIP for the fourth year running, but also clients from Coke and Nestle both in attendance, and actively participating in keynotes, workshops and branded content sessions. Finally an important corner is being turned, and we saw this at MIP 2010.

Entertainment, of course, has always looked dangerously simple from the outside. Listen to Scott Fitzgerald – one of Hollywood’s tragic casualties – writing in The Last Tycoon:

“You can take Hollywood for granted like I did, or you can dismiss it with the contempt we reserve for what we don’t understand. It can be understood, too but only dimly and in flashes. Not half a dozen men have ever been able to keep the whole equation of pictures in their heads.”

But today there’s another Whole Equation (or perhaps a significantly extended version of the established one) that we in entertainment must engage with, analyse and solve, if we are to unlock the new value, models and revenue streams that are demanded by the profound cultural flux that processing power and connectedness bestowed on our generation.

It’s an equation with the new consumer – totally connected, empowered and full of high expectation – at its heart. And, just like the traditional Hollywood model, it looks at first sight deceptively simple.

I advise divisions of substantial media players such as Fremantle, SyCo, Sky and Sony ATV, and “across the bridge”, brand advertiser clients such as Diageo (currently the world’s largest spirits company), Telefonica (the giant Spanish telco group) and Bacardi Global Brands. Most of my work is with senior executives who are asking themselves of this new consumer, just as Butch and Sundance did as they were pursued across America by their righteous and relentless persecutors … “Who ARE those guys?”

If you believe, like most do, that there’s a troubling shift on the content side in terms of new models, walk a mile in the shoes of a global CMO. The tried and true models of advertising investment and return are just not hitting the button the way they used to.

It’s my job to help “These Guys” understand “Those Guys” … To get to grips with the new consumer, and find convincing, sustainable, repeatable ways of moving marketing investment into not just reaching eyeballs with brand messaging, but getting over the wall, to seize and retain the quality attention of this prickly beast and its equally challenging – and apparently limitless – tribes of globally-connected fellows.

What concerns me about any post-digital media and entertainment innovation initiative that – without hesitation – puts Content at the heart of the equation is that … well, it’s not as simple as that anymore. We’re finding on the brand side that consumer-centric thinking – and this starts with a lot of smart online listening and analysis – is beginning to yield the effective, impactful and measurable impacts in the badlands of social media, content strategies and mobile, that the faltering steps of traditional advertising now demands.

This is not to say that great entertainment providers should be quaking in their boots in the face of Facebook and Twitter. There are those who argue that, but not me. Superb movies, TV and music speak – and earn – for themselves. But my point is both more blunt and more subtle.

Brands are still spending all in about $650bn per year on reaching “Those Guys”. Many of the giant advertisers are currently – rightly I believe – obsessed with moving significant spend into what’s called engagement marketing. Much of the flurry around the subject of so-called Branded Content derives from this trend. An awful lot of brand spend is heading this way.

The big movie and TV studios do one thing marvellously well. You call it entertaining audiences. Brands call it consumer engagement.

If we’re going to make the 360 thing – which means different things  to different people – really work, we need to bring these two highly diverse groups together in the same meaningful discussion. The brand on one side and the content on the other, naturally have enormous roles to play. But at the centre of the circle – the equation if you like – sits neither of these. 180 + 180 does not in this case equal 360.

It’s the new consumer. Hi there!

Understanding Engagement - Part Three: Getting Past Digital

Technology alone doesn’t tell us where to anchor the value of digital to a brand. 

Digital tools and systems are by now ubiquitous on both the demand and supply sides of the market.

It’s to affluent consumers themselves that we must look. Their expectations of complete control, “my time, my place, my terms” access, and their consistent avoidance of interruptive messaging, define the rules of attention.

Digital tools – the web, the mobile, IM and so on – are most usefully distinguished in this complicated landscape by their unprecedented closeness to the consumer. 

If mass media provide a sort of background chorus, the new digital services, in sharp contrast, are leading players … they have the ear and eye of the consumer at close quarters. In other words, this is a new challenge of Intimacy between consumer and brand.

And Intimacy, as we all know, is not that easy.

Digital tools are as much guardians of consumers’ pet likes and hates as they are – more traditionally – vehicles of consumption.  They express and enact the needs and values of the consumer. 

Getting close to our consumer – getting inside the gate in order to communicate with any credible effectiveness against the background of media noise – now requires the delivery of “up-front value”, rather than a bland, one-size-fits-all brand promise. 

It requires the sort of recognition and intelligent sensitivity that you’d expect from the concierge in your favourite boutique hotel. 

This is all about what we can call The New Intimacy. And let’s be clear: owning information about an individual is nowhere near the same as having a meaningful relationship with them. 

The intimate consumer relationship is built not in the database, but at the interface. Intimacy happens at close quarters, in real time. 

And this, if you buy the argument so far, is both the real promise and the massive challenge of consumer connections planning.

The networked, digitally empowered consumer has created an “infinitely small, infinitely large”, intimate media space, owned no longer by the media industry, but by this increasingly private - yet increasingly tribal – individual

We can call this the I-zone, as in I for Intimacy

Crossing the chasm both into and across the heart of the I-zone, is perhaps the most urgent challenge in consumer marketing today.

Tribes as well as individuals have their I-Zones … both are ring-fenced by digitally managed preferences, and tend to vigorously resist invasion by uninvited guests.

Why? Because the I-Zone reflects and supports the identity of individual or tribe … just as we feel slightly mugged when we’re sent mobile spam: individual or tribal … it’s all Personal.

It’s no longer just “media”.

Where does this leave media then? 

Stepping back, the most significant single impact of the digital revolution is a complete flip in value.

The Morecambe and Wise Xmas show – perhaps Carson in the US – in their heydays commanded the sort of audience numbers (and, importantly, their undivided attention …) that we dream of today.

Attention was everywhere – and media was very very scarce …

… meaning that consumers would happily pay for their entertainment by allocating their (cheap and plentiful) attention to brand communications;

Now media is everywhere, and the attention of the valuable consumer is the rare, precious commodity we must court;

This leads to a new model of media value and a new currency: Return On Attention.

So … what are the new rules of “ROA”?

Today’s consumer is spoiled for choice in terms of free, powerful, accessible and easy-to-use digital tools for play, creativity and communication: we can call these “Box X”: they’re what’s expected, almost a birthright for the younger consumer.

Attempts by brands to apply Box X-type offerings as engagement tactics (Coke’s early music downloads promotions service is perhaps a case in point) tend to be met with a consumer shrug.

However, when we a) understand what’s already happening in the Box X of our consumers’ digital life and then b) find ways to enhance those activities with experiences that are otherwise difficult for consumers to do themselves …

… we’re creating what we can call “Box Y”. 

This is where the value-added Return On Attention begins, and where powerful, sustainable consumer>brand Intimacy originate.

Understanding Engagement - Part Two: Looking "Behind The Line"

Advertising used to be all about media. Media is all about buying and selling consumer attention. Consumer attention used to be a more or less passive player in the game of media.

Think of a bowling alley, with the alley as a channel, the ball as a brand; the skittles at the end of the alley, waiting to be knocked over and racked up again, are … consumers!

The bowler – just like an agency managing a campaign – hurls the big heavy ball again and again down the alley, scoring points by knocking over as many skittles as possible. 

This is how the traditional eyeball/impression-based media planning and buying business of reach and frequency works. And when we’re looking for large-scale brand awareness, there’s still no better way to achieve our goals.

And let’s not imagine that it doesn’t take considerable skill and size to knock over lots of skittles, and do so repeatably. It certainly does.

The problems for bowling alley-style advertising begin, however, when the hitherto passive skittles wake up, start chatting to each other, and moving about.

With the Internet, an entirely new and disruptive type of dynamic appeared in media. If Media 1.0 is best summarised with our bowling alley analogy, then Media 2.0 resembles nothing so much as a pinball machine.

We fire the ball (which again stands in for the brand) – with perhaps an illusion of control – up onto the board. 

Note that the board is sealed in glass: we can see exactly what’s happening, but can do more or less nothing about it (we’ll come back to flippers and nudging …) after launching the brand/ball into play.

And what does happen to the ball? 

It’s the bumpers at the top of the board that produce the high scores. With all the flashing lights, pumping and thumping noises and bells, our brand/ball is bashed back and forth around and between the bumpers. 

And note: each of these bumpers has what our skittle consumer entirely lacked – an energy of their own. 

They push back.

This is what today’s active, tribal consumers do with information, with brand communications, with media of any kind. 

With the new control and energy provided by the web - also by increasingly rich-featured mobile – they, not we, determine the flow of the game and the score.

We do in pinball have access to those feeble digits, the board’s flippers: in the course of a campaign, we have the occasional opportunity to step into the game. 

To do what? One thing only: to use the “flippers” to drive the ball back to that high-scoring cluster of rambunctious bumpers: to keep the brand in the new game of tribal media.

When all else fails, perhaps we can try a frustrated “nudge” of the pin table. But when we push our 21st century consumer too hard, most of the time the machine just tilts, and it’s game over.

This is dramatically different from what went before.

Understanding Engagement - Part One: "Who Are Those Guys?"

This series of posts is an introduction to how brands can convert digital strategies and tactics into manageable, measurable and sustainable consumer Intimacy, Advocacy and Amplification.

The overall dynamic – when we get it right – is about taking content and brand “Behind The Line” into tribal and viral media, and ensuring that a meaningful, sustainable dialogue with - and between - consumers and their tribes is ignited and managed forwards.

Let’s put this in some context.

Today, our sense of who we are, and our ways of making sense of the world, increasingly gravitate to People Like Us.

Trust in church, state and commerce have dropped dramatically in 15 years, in parallel with a huge surge in consumer to consumer (C2C) communications;

Especially among premium brands, permissions for brands are mediated and controlled by consumer tribes, while premium value is both conferred and driven up by acceptance and C2C messaging between tribal consumers.

Today, with so many compelling and free experiences being instantly available to the aspirational, connected consumer, smart brands seek to understand the experiences and lifestyle meaning these consumers find in their tribes …

… recognising that new type of value, and finding ways of significantly enhancing it with brand-relevant services, and being powerfully rewarded with networked approval and positive buzz.

Where previously the isolated consumer was the “final destination” or end-point of brand communications, now, remarkably, the tribal networked consumer is becoming a departure point for “direct to tribe to consumer” communications.

Brand messaging is carried to hitherto hard-to-reach locations, both into and across tribes of consumers: access, permissions and precious intimacy can turn into highly valuable advocacy and amplification.

The brand plays a critical but still partially understood role here, as a facilitator of the dramatically different new consumer experiences that the digital revolution has enabled.

When we make these socially aspirational consumers happy, we both equip and motivate them to share their stories – with our brands riding along in the slipstream – into, across and beyond the networked tribes.

Freely available media tools such as YouTube, and the very social networks within which these identities and narratives are enacted day-to-day, provide the means of very effective and economical production and distribution for all this positive brand energy.

So … it’s in recognising, supporting and enhancing this entirely modern new cultural process that the most powerful opportunities for brand value, access to the tribal consumer, and permissions to meaningfully and intimately engage, lie.

The Game of Plotwit

A number of people - not many - a select few - have been seeing cryptic references to The Game of Plotwit on Twitter and Facebook. I launched it a couple of weeks ago with friend and colleague Tom Gueterbock of the excellent gaming company 3rd Sense.

Plotwit's a parlour game designed for micro-media, based on the idea that - for some of us anyway - Smart, Quick and Funny is the new Sexy. We pick a title once a day - a movie or book - and players Tweet by replying to the original Tweet a three word "Plotwit" of the title. The smartest, quickest and funniest entries win the day.

So for example, "The Lord of the Rings" (the movie) could yield a player entry of "Tiny Little Legs", or 'Visit New Zealand". These appear in the world of Twitter as (challenge) #thelordoftherings and (entry) #tinylittlelegs, enabling players to track the game and their own entries - and vote for others (which is done by Retweeting) using the hashtags that drive Twitter.

The original Plotwit - and still to my mind the best - arose when I was talking one day with my friend Steve Brown, the great music consultant. I floated the idea of Plotwit - not at the time as a social game but as something that could be fun ... I said, "Take, for example, I dunno ... Kafka's Metamorphosis?" Without, as I remember, drawing serious breath, he came back: "Bug Goes Mad".

After rolling helplessly round on the floor for a while (well I did), we realised that there was something a bit special there. And that - about a year ago - is where The Game of Plotwit came from.

So, pop over to the page and follow it, if you're a smart / quick / funny person. Or like a bit of a laugh in the working day. Or, and we know you're out there, you're wondering what Twitter's actually for!

Malcolm MacLaren dead in NYC

R.I.P.O.F.F!

Perhaps this is one of MM's finer moments ... 

Prof Robin Dunbar gets deep around the "new friendship"

Key lecture at RSA on real social networking impacts by Connected author

New Pepsi ad cuts through ... but at what cost!?

Fan-made Pre ad hits harder than ...

Marketing guru does an E

In the ongoing thread of What Happens to Brands and Branding when the consumer leads the dance, m'learned friend Mark Sherrington's eBook "So You Wanna Know About eMarketing" is a mercifully brief and very rewarding read. Download here and then go back and read his other work ... Mark founded seriously clever and successful firm Added Value back in the day, and was a great inspiration to me.

Pinter's Nobel acceptance video

A divergence from the usual obsessions of this blog to show a piece of video I just found as a result of pursuing a new-found interest in the work of Harold Pinter. 

Perhaps not as much of a divergence as it seems, on reflection. A lot of the writing here has - one way or another - been about Meaning, Trust and Value: the core issues addressed in "Promiscuous Customers: Invisible Brands", our book of 2002, and taken forward in various guises ever since.

I think Pinter's work often explores Meaning, and here perhaps we see what happens when that subject is followed unflinchingly - Pinter was extremely ill at this point - through to its authentic conclusions.

The death of branding?

Having put down the blog for several months, it's time to get back on it. Over Xmas I had the space and time to think quite productively about the areas I'm most interested in exploring and developing.

An issue that keeps coming back to my mind is this: Branding as a discipline derived and evolved - like its wilder sister, advertising - from the early challenges of meaning and trust caused by the lack of both physical and cultural connections between manufacturer and consumer. Where folks used to buy flour loose from out of a barrel at the local store, Aunt Jemima's centrally-made, packaged and nationally distributed brand of pancake mix created a whole new requirement.

If we broadly accept this as a departure point, what happens today, when a) consumers' own communications are increasingly driven and sustained by the urge to self-expresssion ("never mind your story, let me tell you mine!") and b) consumer and citizen connectedness dramatically and conclusively shifts the locus of meaning and trust away from Big Media to peer networks?

Branding has to date been so much a push discipline, but it's the brands that have more recently accepted and built their communications strategies around Consumer Self-expression and Connectedness - obviously the Nikes and Apples come to mind - who seem to have become the touchstones and bellwethers of 21st century marketing nous.

So ... is branding still something we as marketers actually DO, or it is now, post-Internet, more done TO us?

I'll be writing about - and I hope developing a new body of thought around - this area of exploration, in the early part of 2010.

Doing it for the experience

To Olympia this morning for a quiet Adtech London conference, where despite the evident impact of - yes it's still there - the recession on attendance, we had a very lively and enlightening session on customer experience.

I moderated, with the iron grip they expect from me, and on the excellent panel were Lawrence Merritt of Photobox, Matthew Cashmore of Lonely Planet, David Chalmers of Cisco and Benjamin Braun of British Gas.

Our focal points - which (see iron grip above …) mapped neatly across the key strategic emphases of the panelists, were a) where does customer experience - and its associated benefit, customer engagement - now live in business and brand strategy, b) how does that proceed to play out in terms of the way experience is viewed and managed and c) what approaches to measurement are being adopted?

Without going into too much detail on individual points made - all very succinctly and credibly expressed of course - the following headlines emerged.

First of all, where, till relatively recently, customer experience was just a problem for customer service divisions, it's now - certainly across all the panelists - perceived at the highest levels in the business as a critical driver of marketing and sales value. 

For Photobox and Cisco, the medium is to an overwhelming extent, the message, and not only is their brand equity overwhelmingly held in customer tribes, but remarkably high percentages of revenue - with, one gathered, highly efficient cost levels - are achieved with astute leveraging of both experience and engagement.

Lawrence stressed Photobox's lack of dependence on traditional forms of advertising and its corresponding focus on customer advocacy - what some are calling "earned media" if you like - to drive both brand awareness and hard sales.

For British Gas, a brand with a number of unsurprising challenges, in that customer experience has been - especially around service and billing - till recently so ill-regarded that positive engagement of any kind has been out of the question, a fresh range of online and mobile service initiatives are clearly and meaningfully reversing the experience trend, directly empowering the customer, and establishing both control and clarity to replace the previous sense of murky disinterest. One was struck by the common sense pragmatism and - key element of all experience programs - Utility (OK no pun intended) of the activities Benjamin outlined.

Second, a rigorous and attentive approach to the management and refinement of customer experience - and, critically, processes for the recognition and reward of value-adding customer engagement - feature highly in all successful experience strategies

For Lonely Planet - a bold innovator from their DNA on out - the engagement IS, to a large extent, the business. Matthew reminded the audience that the publisher's earliest days were peppered with thousands of copies of their guides mailed back to them by passionate (not to mention engaged …) users with scores of corrections and additions hot from the field. 

The brand is carrying that focus into all its threads of activity, as their customer base shifts from real to, if you like, virtual backpackers whose concern is less "How do I get there and where can I lie down?", more "How can this location provide the depth and relavance of overall experience I seek from leisure travel?" Matthew also talked in some detail about the attention devoted to testing and refining even the most trivial elements of, say, a web page to ensure that the online experience is as rewarding and engaging as possible.

David talked about the very effective recognition and reward dynamics among passionate Cisco users, to the extent that many of the businesses most valued support teams and even sales people … are customers too.

Third, and perhaps from my own point of view most essential, all of these very diverse operations are, at a gratifyingly high level, acknowledging in their expressed strategies and activities, that the customer really DOES own the brand, and that they - indeed all of us - ignore the impact of customer engagement and the role of customer experience, no longer as a chore, but as a core builder of competitive advantage, at our peril.

Facebook Sets Deal to Provide Ad Data to Nielsen - WSJ.com

When will we hear the last of this? When I read that Nielsen was partnering with Facebook I thought "interesting: they're finally engaging with engagement". 

Far from it: this is just a polling proposition to ask users about display ads in FB and then, of course, produce the usual reports. What a big, expensive, 2-steps-back Yawn.

Citizen Kane | BFI

Seldom seen on the big screen in recent years, Welles’ witty, gripping film famously views the controversial life of the late Charles Foster Kane (Welles) – a media tycoon partly inspired by William Randolph Hearst – from the sometimes contradictory perspectives of his friends, employees and mistress. It’s an extraordinary work, not just technically (Gregg Toland's cinematography, Bernard Herrmann's score, the editing, design and quietly bravura direction are all superb); but in its dramatic sophistication and thematic richness. An affecting meditation on memory, self-knowledge, solitude and mortality; a wry reflection on fame, fortune and the spirit of America; an exhilarating exploration of the artistic possibilities of the film medium - Citizen Kane is all this… and so very much more.

via www.bfi.org.uk

This is Welles' original trailer for the movie, which the BFI is putting on cinema release on 30th October 09. Somewhat off-piste for this blog of course, but watch the trailer and you'll be - in terms of the dreary fodder we are often obliged to call entertainment - immediately refreshed.

"It's been a long time ..."

Prompted - sad to say - after too many weeks of summer sloth and preoccupation with other matters - back to the blog by the slightly frilly reason of having been extensively quoted in a startlingly bullish article in the Daily Mirror regarding the projected £1bn income to the Fab Four (I supposed the Fab Two now really, plus Olivia Harrison and Yoko Ono) from 2 new boxed sets and the much fussed over Rock Band release. Note to self: must blog more.

Don't feed the banks - they bite

David Stoughton of ValueKinetics writes:

Once again much hot air and argumentation between parliamentary committees and city grandees about the right regime for banking governance - or is that regulation, or perhaps structure, or ownership. Who knows, clearly this lot do not? All this talk is put sharply in focus by the return, in some quarters, of mega-bonuses for risk takers.  

Here's yet another viewpoint (but I buy this one).

Talking with a business analyst in the city the other day, I encountered a perspective that hadn't previously occurred to me, but that makes perfect sense now I get it. It is, of course, all about those complex products derivatives, and it takes a mathematician to spot it.

Put simply the whole theory behind derivatives and the way risk is priced rests on one fundamental assumption, that of perfect information. A not unreasonable assumption under ordinary conditions of electronic trading. Provided that assumption holds true, risk can be estimated and properly reflected in prices.

The problem arises because the financial instruments that are made possible in this environment hide information, some of them deliberately. For instance the, now notorious, CDOs (Collateralised Debt Obligations) were devised precisely for the purpose of hiding the risk in sub-prime mortgages.

Once the information is hidden the pricing of risk ceases to reflect the reality and the market is potentially destabilised. Under those conditions no-one, and I mean no-one, can or could price the risk or predict the point at which it all starts to unwind (this is not a matter of more rocket science - the system moves from complexity into chaos). On top of that all derivatives multiply any risks many times, so once it starts to unwind the whole house of cards comes down.

Danger, keep out

If this analysis is correct, and it does seem to make sense, then no amount of tinkering with governance, regulation or ownership is going to make the slightest difference. Only banning derivatives might work or, more specifically, outlawing financial instruments that hide risk. But, as my friend pointed out, there are lots of ways in which information can be hidden or its flow impeded, most of them unintentional. So, either the mathematical foundation of modern banking are challenged, or we resign ourselves to periodic bouts of banking instability of unpredictable proportions.

I don't see any politicians who will want to make this case - it would effectively spell the end of banking as we know it, with a reversion to the practices of as long ago as the fifties. A leap too far then for any of the players who have a say in what happens next. It won't be happening any time soon.

So, as I've said before - though perhaps with less clear justification - keep your money under the mattress, or put it in one of the retail banks offered by high street retailers. It's safer there, I promise.

Police assaulting protesters

Not sure about the whole underlying story, but this is incredibly ugly ... draw your own conclusions from this extended and startling footage.

Time to abandon the financial services Titanic

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!

The copyright cavalry - Part 4 of Learning from the Losers

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.

"Minority Report" gets real at the Met

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"?

Thanks for sharing!

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.

Absolute Zero

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.

Diversity matters

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.