Zopa goes State Side with Federal backing (allegedly)

According to report at Techcrunch, Zopa, the peer-to-peer lending platform is to launch in the USA. However, the major element of the annoucement that caught my eye was that Zopa claims that the loans would be Federally insured and hence, if true, the credit risk element would be effectively be stripped out but the rates could continue to attract personal lending rates (less the Fed insurance premium that I'd anticipate would be deducted from the rate by the platform).

This would be likely to attract serious funds, since the deemed rating on these would be AAA as USA Govt backed loans. As such this could become a popular asset class, especially if the value of each lenders insured amount on the platform weren't be capped. Why is that notable? Well for a start, if you ordinarily deposit with a bank, you are only covered up to $100k. But if you instead deposited with Zopa, all your deposits would be covered by Fed guarantee whilst still attracting decent interest. Secondly, high net worth or institutional investors might place deposits on the platform as part of their bond allocation. Whilst these loans couldnt be traded or collateralised, they would be secured and attract a reasonable return on the asset and at a premium to T-Bills even though the risk is the same.

The same Techcrunch article highlights that
According to the research firm Online Banking Report, around $100 million in new P2P loans will be issued this year, mostly by Prosper, with new loans growing to as much as $1 billion in 2010 and $9 billion in 2017. Prosper already registered an S-1 with the SEC and reported $96.4 million in loans.

I think the supply of funds could go way beyond that and directly compete for business with money funds. In the USA, assets in US money market mutual funds hit $3,031bn this week according to iMoney.net, with $13.38bn of new monies in the week ended 27 Nov.

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Weak dollar keeps Warner Music afloat

If it weren't for a weak dollar, Warner Music result for the quarter to Sept 30 would have been even more uncomfortable. As it was the translation of overseas earnings into dollar equivalents was flattered by the decline in the value of the dollar, allowing them to report that £1 of sales was worth more in dollars than in the previous period.

PaidContent has the following report

As expected, the Warner Music Group (NYSE: WMG) quarter ending Sept. 30 proved to be a challenge: The company booked revenue of $869 million, up 2 percent from last year’s $854 million, although on a constant-currency basis, revenue would have declined by 2 percent. Net income slid to $5 million ($.03 per share) during the company’s fiscal Q4, from $12 million ($.08) in the year-ago period. Digital helped make up for weakness in physical sales, as revenue hit $130 million, up 25 percent from last year’s $104 million, and 9 percent higher than the previous quarter. Digital accounts for 15 percent of the company’s total revenue, which is roughly where it stood last quarter.

-- Recorded music sales grew by .7 percent to $736, though again, there would have been a slight decline if not for currency effects. Domestic recorded music revenue grew by 7.6 percent, while international slipped 6.3 percent. This was the same story as last quarter, but the company says this isn’t a trend, but rather a matter relating to the timing of albums of certain popular artists in each region. In other words, last year’s lineup of releases was particularly weak in the US.

-- Music publishing revenue grew by 7 percent to $137 million, although most of this was due to currency. Digital publishing revenue came to $7 million.

-- Results included $9 million in restructuring charges and a $12 million gain from the Bertelsmann/Napster (NSDQ: NAPS) settlement.

The full company release is here.

Bottom line is $5m on revenues of $869m i.e 0.6% margin after tax (big jump in tax charge relative to previous period). And people look at me with surprise when I suggest shorting the stock, perhaps because they can't believe it can get worse. I can.

One interesting snippet from PaidContent conference call was that already, non-music sales (merchandise, touring) represent 5 -15 percent of music revenues in some Asian markets, although the company isn’t giving any indication of where this is expected to grow to, or what the breakdown will look like in the US. CEO Edgar Bronfman Jnr insisted that these shouldn’t be called ancillary businesses, as they’re core to the WMG model.

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Statistics are meaningless, unless you are a sports fan

As a passionate cricket fan, I've long been exposed to the plethora of statistics about cricketers which attempt to provide a means of comparing players across the ages or offer a guide to form.

There is a constant search for better ways of measuring success in the game and address the flaws which can detract such as giving greater credit to someone who ended the innings not out, with the result that No.11 used to often be shown with better statistics than someone at No.9 simply by virtue of coming in last and not having to face many balls before the innings ended.

The Undercover Economist column on FT.com this week reported on Vani Borooah, an economist at the University of Ulster, and his analysis of batting averages:

Batsmen in cricket are invariably ranked according to their batting average. Such a ranking suffers from two defects. First, it does not take into account the consistency of scores across innings: a batsman might have a high career average but with low scores interspersed with high scores; another might have a lower average but with much less variation in his scores. Second, it pays no attention to the “value” of the player’s runs to the team: arguably, a century, when the total score is 600, has less value compared to a half-century in an innings total of, say, 200. The purpose of this paper is to suggest new ways of computing batting averages which, by addressing these deficiencies, complement the existing method and present a more complete picture of batsmen’s performance. Based on these “new” averages, the paper offers a “new” ranking of the top 50 batsmen in the history of Test Cricket.

The revised league tables are fascinating, giving greater weight to aspects such as consistency and the relative importance of contribution to the team score. Unsurprisingly, Don Bradman comes out first on every measure used.

If you love cricket, this will provide an even more fuel to the fire of the endless debate on the relative merits of the game's greats. Definitely one for the Test Match Special team and Wisden to pick up.

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An interest rate is a supposed to be risk-related

Yesterday overnight Libor was trading at 5.75% whilst 3 month Libor was 6.49%. This difference is largely accounted for by the unwillingness of banks to lend to each over longer periods in the current climate of uncertainty and fear - everyone is scared about what lies below the waterline in terms of potential losses yet to be uncovered/revealed and the possibility of losses on a scale that could massively erode or even eradicate a bank's capital.

So the talk of the Bank of England reducing interest rates to encourage liquidity strikes me as odd. Interest rates are there to compensate for risk and with such fears around, what is the motivation of the banks to charge a lower rate? Default risk in the sector isn't reducing but growing and indeed it seems to now be seeping into the mainstream economy.

Hence, whilst banks may be able to source funds from the Bank of England more cheaply with a rate reduction, unless the Bank is willing to fund the entire inter-bank market by acting as a central counterparty or the like, it doesn't feel like the banks are going to be willing to lend long at cheaper rates.

The Council of Mortgage Lenders Chief Executive also pointed out yesterday that it is a fallacy to believe that the mortgage market can entirely rely on retail funding to support current levels of mortgage lending. Firms like Bradford & Bingley and Alliance and Leicester take 5% and 11% of their funding respectively from the wholesale markets, a pattern repeated elsewhere. Hence the seizing up of the credit market will mean a tightening of lending criteria, higher rates and less funds available for mortgages.

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Google maps on the blackberry is superb

As someone that travels around London to various meetings, I have use Google maps extensively to navigate my way from the nearest tube station to destination. When I upgraded my Blackberry to a Blackberry 8800 which comes with GPS, it was a delight to find that Google had integrated the GPS capability inside google maps. Thus, it plots my exact location on the map as I travel.

If you've got one of the new Blackberry's with GPS, I thoroughly recommend installing Google Maps. Even if you only use it a couple of times, I think you'll see what an invaluable aid it can be when you aren't quite sure where you are and how to get to where you are going.

If you don't have GPS though, apparently Google have released a new version of google maps that tries to identify your location by triangulating the phone mast signal.

You can download google maps onto your mobile device from www.google.com/gmm

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London house prices slip 0.8% last month

The drop in London prices in October is the biggest single month fall for 10 years. Unsurprising given that the trend has been up due to a widespread belief that houses only go up in value.

The daily barrage of news about looming recession, tighter lending conditions on new borrowing and reduced availability of funds to borrow, high street retailer reporting lower sales is clearly scaring the "real economy" and belt tightening is the order of the day.

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Money can't buy me love, but it helps the share price

Both Warner and EMI have shelved plans to securitise their publishing catalogue, due to the problems in the credit markets, according to the Financial Times.

In each case, they would have hoped to raise cash from selling a bond that a) paid a return secured on the cash flows from the back catalogue sales and b) was secured on the ownership on the library. These funds would have allowed the groups to pay down debt and return some funds to their private equity shareholders in either dividends or share buy backs.

For Terra Firma, owners of EMI, they would have been keen to reduce the significant proportion of their funds presently invested in EMI. For Warner, they would have wanted to support their ailing share price which is languishing at $7.

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Was I plagarised by the Financial Times?

The FT's Lombard column yesterday commented that Virgin was in effect a private equity group and that Richard Branson should adopt the voluntary code of disclosure if he was the good corporate citizen he always claimed to be.

Funny, I'm sure I said the same thing the day before here

A separate article on the same day in the FT also referred to the reputational risk on Northern Rock being way in excess of previous situations for Virgin.

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"Hi Biz Devt - Please sign this death warrant"

I'm grateful to Paul Lomax, who referred me to a Seth Godin quote, in a comment he left on the post on the Universal CEO's recent interview.

Seth Godin's idea about how to try and get past the lower-level biz-dev guys... He suggests giving them a piece of paper saying "I, the undersigned, have been briefed on idea X but I wish to pass up on the opportunity. I authorised company X to take this idea to our competitors."

Of course, the chances are they'll kick you out of the meeting, but at least you can say "I told you so" years later ;-)

I must try this, but also suspect a number of entrepreneurs might do it with VCs as well when their fantastic investment opportunity gets passed up.

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How to get a free legal copy of SnagIT

I've used the SnagIt application for years to do screen grabs and the like. Whilst freeware tools are popping up doing something similar, I've stuck with it and recommended it to others. Whilst there was a small licence fee to pay, I bought it years ago and so it's a sunk cost.

However, the company behind it, are pursuing a new strategy to lure in customers which involves making available old version of the software for free, in the hope you may decide to upgrade subsequently. The details of how you can get version 7.2.5 can be found here, with version 8 being the latest release.

In addition Techsmith are distributing free Camtasia Studio licenses, an application which is great for creating online screen tutorials/demos.

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Universal CEO didn't know what they didn't know

There's a report here about an interview in the Dec edition of Wired with the CEO of Universal Music Group, Doug Morris.

He makes clear that their failure to capitalise on music downloading in the early days of the internet and file sharing was simply through ignorance of the possible.

When Morris is asked why the music business didn't work harder, in the early days of file-sharing, to build its own (legal) online presence, there's this exchange:

"There's no one in the record industry that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"
Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me."
Even though we shouldn't be, we're actually a little shocked. We'd always assumed the labels had met with a team of technology experts in the late nineties and ignored their advice, but it turns out they never even got that far — they didn't even try!

I would stake a chunk of cash on there having been numerous people who tried to talk to Universal (and other labels) about the possibility of collaborating on such a venture but who were all rebuffed at lower levels by "business development people" who would have claimed that they were too busy on more important things and that this wasn't a priority for the business.

Do I have inside knowledge? Nope, but make this assertion since I see the same thing happen on a regular basis with big companies, who turn away ideas that are offered to them without really giving them much thought or because the points of entry to the organisation are not staffed with the right calibre of people. Whilst some ideas are daft and organisations have restricted bandwidth, it's rare that companies have a unique insight into "the next big thing". I always believed that the job of the door keeper (biz devt) is to search for and welcome/"catch" lots of such innovations for an initial evaluation and not shoo them away.

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Samsung plasma TV sucks - the workaround

Some time back I had a rant about the fact that my Sony Vaio wouldn't connect to my new Samsung Plasma TV. This was a problem known by Samsung but not revealed publicly.

Well, evidently this is a problem encountered by lots of folks, as evidenced by the large number of hits this post has received.

Stupidly I forgot to ever publish the workaround solution I came up with. It's not pretty but if you happen to have fallen into the same situation then here's how I have gotten the Vaio to display on the Samsung plasma.

A chance comment that a friend made to me about "tricking" the plasma prompted me to take a chance and buy a Belkin device which is designed to connect several computers to single screen which can then be alternated between. To make the whole thing work, this is what I do:

1. Connect the Samsung Plasma and the Vaio to this "intermediate" dumb device in "a daisy chain", the former with a monitor cable and the latter with the Belkin device cable.

2. On your Vaio, activate the external monitor output (on my keyboard this is achieved with Fn+f7 buttons). At this point the Samsung plasma recognises that a PC is attempting to connect to it and activates the PC source, which was previously inaccessible. However, it reports on screen that you need to check the signal.

3. Disconnect both the plasma and the vaio from the Belkin device and connect the plasma directly to the vaio. Voila, your vaio screen is now visible on the Samsung plasma screen.

It seems crazy, but it works for reasons I don't care about. It needn't be a Belkin device you use in all likelihood, provided it performs that same sort of function to initially camouflage the Vaio.

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He's no Virgin, he's private equity in disguise

I confess to some shock that Virgin are the front runner to acquire Northern Rock for many reasons. Whilst Virgin Money has been around for some years, it's never really made much of an impact on the sector.

Taking over Northern Rock is a completely different proposition for Virgin though. Although the bid is backed by a consortium including AIG, the brand at stake is Virgin's and keeping the venture afloat will be no easy task without a fundamental restructuring of the balance sheet.

It's by no means certain this deal will happen though, given that the shareholders, led by two funds that have built up a combined 13% stake, are seeking to instruct/remind the Board to act in the interest of the shareholders, who are almost being overlooked in the whole process.

However, the thing that most astounds me is the easy ride that Virgin is getting, given that it is effectively a private equity business, but which happens to be headed by a populist figure in the form of Richard Branson. The reality is that he is a tax exile living in Switzerland, heading a secretive group that operating behind a series of complex cross holding in offshore vehicles. An attempt by the Economist a couple of years ago to lift the veil of secrecy failed and it is fairly unlikely Virgin will adopt the private equity code of voluntary disclosure - why should they when people aren't bracketing them as a private equity firm thanks to the excellent PR they operate.

One has to hope that the Bank of England and FSA conduct adequate due diligence on the bidders and their financial stability, rather than simply skip this step in gratitude for someone stepping into rescue them. But perhaps they are also attracted by the possibility that if the bank was to be turned around and Branson made a fortune down the line, the public would think more kindly of that ("what a hero, he deserves the money") than they would of JC Flowers doing the same.

Still to have a Bank fail once is bad, but to have it fall again would be calamitous.

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Deacon Blue - Real Gone Kid


Deacon Blue
Originally uploaded by Alec Sp
I had such a fantastic evening last night. It was the last night of Deacon Blue's 2007 tour and a group of four of us went as guest of Jim, the keyboard player. They have been one of my favourite bands ever since University days, and I have many great memories of them.

One summer I went backpacking around America and had the great fortune to see them perform in a small bar in Washington DC on their first US tour. A group of five brits from the youth hostel joined me at the gig, which was awesome show, after which we had some beer with the band. We were given a US tour t-shirt, which I still have and wear every time I go to see them.

Since then, I've seen them many times but last night was really special. Playing at Hammersmith, which is my local venue, they did a fabulous set to a three-quarter full house, who received them with rapturous applause and sang throughout - I was without a voice this morning (much to the delight of many).

After the show, the four of us went backstage to have drinks with the band, which was great fun. The band spotted the t-shirt and I chatted with Jim about that night in Washington (he politely pretended to remember). To cap it off, I got to take home a live recording of the gig, courtesy of Concert Live which I have been listening to in the office all day today.

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Hands up, I got it wrong

When I said bankers had got thick skins, so probably wouldn't care about being called whimpering dogs by Guy Hands, evidently they decided to yank his chain.

Perhaps lenders have decided to extract their pound of flesh given the shortage of funds available. But howsoever it transpired, Guy has issued a public apology emphasising he meant no offence.

One banker had apparently sent him a box of dog biscuits, suggesting he use them sparingly.

Evidently even masters of the universe need to keep their pets/slaves/serfs/allies on good terms and not humiliate them just in case they might be needed at a later date..

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Ouch. Remember the idea that property funds were a great route to get exposure to the sector without the aggro of buying directly and with better liquidity.

Well, turns out that it was not so great for several reasons
- you can only sell units back to the manager at the price they set, rather than offering your property to anyone
- the manager can change the settlement period or willingness to trade

Hence, Schroders has just applied a sellers discount of 12.5% on the net asset value as it assumes the market will worsen (you'd have thought they should mark down the NAV if the valuation are so wrong, but then fees get calculated off the NAV & buyers don't get the discount I'm told).

Likewise M&G is imposing a lockup on institutional investors until the fund can sell assets.

A market in property derivatives that wasn't reliant on physical assets would be a safer exposure route (credit issues aside). Hence, open a spreadbet on property indices. There are many natural users of such a market from funds to property owners to outright speculators. Such markets are in their formative stages but not for long I'd bet.

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An unhealthy sector needing to shape up

The recession we are entering is bad news for fitness clubs. They rely on the hefty monthly fees that make up 80% of revenues, which are a chunky piece of discretionary expenditure for many.

The clubs typically have attrition rates of about 40% ie proportion not renewing for whatever reason. Whilst in the UK only 7% of people have memberships, the large number of clubs mean supply constraints aren't the thing holding the market back - probably apathy.

For a country with a growing obesity problems, you'd think gyms would do well in attracting custom, but evidently fewer fat people care to make the effort than you might suppose. Its certainly self serving of the industry to ask government to somehow get more people to exercise (obviously health of the nation rather than the P&L is the motive)

Amusingly, chains in London are increasingly turning to family friendly settings - allowing the whole family to spend the weekend at "the club" playing sport and socialising, sometimes with each other. "Its like being on holiday every weekend". We have lots of friends that do exactly this now.

Clubs owners now just have to worry about the health of the economy.

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A co-ordinated London transport

Based on my experiences this weekend, this notion evidently means closing all lines (tube & rail) simultaneously!

Or was it while Mayor Ken was in India, the staff thought they'd all slope off together and allow the maintenance guys in?

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Barcamplondon3 - the international meetup

Wow. We've just gone round the roomfor everyone to introduce themself (20 secs inc 3 "tags", mine being money, family and music) and about 35% of the attendees at barcamplondon3 have travelled from outside the UK to attend, with the biggest group from Germany.

Once again, I'm the only VC in the room. Everyone else is a techie of some sort albeit with different degrees of intensity!

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Barcamplondon3 kicks off

Today I'm at my third barcamp - a member of a small band who've been to all of the London ones.

Google are the hosts in their palatial offices. Lavish free restaurant!

The room is packed with folks armed with laptops and cameras(?).

Organised by Ian Forrestor & co-sponsored by BBC Backstage, the event runs for 36hrs.

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A team on top of their game

Obviously I'm not talking about the England Football shower, but about Newsbiscuit whose headline today was

England manager loses details of 25 million alternative goalkeepers

Sources within the Football Association have revealed that national coach Steve McLaren lost two crucial CDs containing vital data about England's European Championship campaign. Apparently the two disks contained details of 25 million alternative possible goalkeepers and one about individuals who might possibly support Peter Crouch up front.

Full story here

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BBC - Points of view in a new media age

Is user generated content actually a means of giving a voice to individuals in a democracy who might otherwise go unheard? Has it become a means of allowing popular expression to be aired directly rather than by alleged "community representatives"?

The comments board on the BBC News story about the lost CDs containing 25 millions personal records has doubled since last night

DEBATE STATUS

Total comments:10222
Published comments:7325
Rejected comments:203
Moderation queue:2693

Prior to such facilities and wider access to the internet, outlets for discontent were probably restricted to letters to newspapers and politicians, with perhaps a few opting for the rant lines of radio station phone-ins.

New and old methods may still be ignored by those in power until popular dissent is picked up and reflected by the mainstream media, but the opportunity for groundswells to form and attract attention is much greater.

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Pair of Selfridges pyjamas, was £90 but yours for £1,200

Alan Yentob has been presenting an interesting series on BBC One recently and tonight's episode covered the modern art world.

It was amusing and interesting throughout
- how Galleries were "selecting" who was allowed to buy pictures and the price they would pay. A prestigious buyer added to the value of the artist
- how agents and existing owners would intercede at auctions if they saw works by an artist they had an interest in, were failing to meet a reserve, in attempt to prop up prices
- one leading New York art critic described 98% of the works on show as "Sh*t" and how prices had become detached from any form of reality (which is was supposed to be the job of the work by artists)
- prices had rocketed recently with pieces that would have been lucky to fetch $50k two years ago, now reaching $6m
- modern art prices matching and exceeding those of old masters

Part of the show featured Alan trying to buy a piece of modern art for himself within a budget of £5,000. Lots of the items he saw (easy to see where the 98% figure came from) were out of his price range. But even he laughed when presented with

- an bicycle tyre, which the artist would ride to Paris and then re-inflate with Paris air all for a bargain price of £3,000
- the accumulated mastheads from the Sun newspaper for a year which had been stuck onto a card, but with the "S" cut out to leave "un", available for £4,000
- a pair of pyjamas from Selfriges which had been folded by the artist in a special way and could be bought for £1,200

He ended up buying a painted ladder for £3,500, which apparently was a bargain.

And people claim we City boys are pulling a fast one - seriously Dahrling, its art! Still, at least the people being laid-off from the fixed income teams because of the credit crunch might find work in such a market.

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We won't share your data with anyone unless our junior staffers leave it lying around

In view of the UK Government's latest blunder, which involves the loss of 2 discs containing the personal details for 25 million peoples, I wonder whether there is the potential for a) a class action suit for negligence and b) this to transform privacy policies to allow for junior staffers mislaying your details that are then acquired by others to be an exclusion from liability?

MISSING DATA INCLUDES...
  • National insurance number
  • Name, address and birth date
  • Partner's details
  • Names, sex and age of children
  • Bank/savings account details
Sadly, in the case of the class action I suppose one might have to prove actual loss but also the Government could simply put up taxes to pay for it.

Clearly the concern is that such information, were it to end up in the wrong hands, could be used for identify fraud purposes.

Makes you wonder how a "junior staffer" has the necessary system permissions/authority to download the entire set of child benefit records onto a disk? And had access to a CD/DVD burner, which most IT departments tend to disable to specific prevent such activities. Was the sloppy use of the postal service the only cock-up or is the bigger story that there open access to such records by staff.

At time of writing, evidently the ability of people to express their view on the BBC web site is a popular feature - being a site moderator tonight probably isn't the slackest job on the BBC night shift.

DEBATE STATUS

Total comments: 5020
Published comments:2738
Rejected comments:54
Moderation queue:2227

Can't wait for the No.10 petition to start that demands blood! Might rival the fuel tax petition.

On one hand, Gordon Brown must be furious as his Chancellor is forced to apologise twice in two days, the other being the (lost) money pit of Northern Rock. On the other, he must a little smug that he avoided as many calamities on his watch as Chancellor.

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Spice Girls do Yugoslavia

Most of the population will think of the FT as a dull read. Like any paper you just have to skim to the interesting bits.

Whilst every tabloid has inspired journalists who each day create punchy and witty headlines and simplify the hardest story, so the FT has journalists who provide insightful commentaries.

They also have cutting wit though.

Last week end the Music Section of the FT (yes, it has one) had a review by Peter Aspden of the Spice Girls and contained this absolute gem

"To judge by the video (of Headlines), it is the kind of reunion I imagine when the former states of Yugoslavia get together to discuss mutual sewage needs.......they adopt a series of poses and pouts that would shame a $10 drag act"

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That's one bite of apple for you, five for them and four for me

Mashable's quick guide to how the record pie slices up.

Out of every track sold for $.99, Apple receives $.35, the artist takes $.11, and the record label walks away with the lions share at $.53.

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Not bad for a day's work

I was with the boss of a music artist management company today chatting about the live sector. He commented that the live sector success is actually slanted towards the high end acts and the summer festivals market. Many acts aren't seeing the same results trickle down to them.

The festivals are providing bumper pay-days for some acts. Oasis reported got £1m for headlining at the V festival whilst the 3rd on the bill got £300k. Headliners are typically getting between £500k-£1m payout for an appearance. Bearing in mind these aren't usually full shows, but short sets that an act plays, it's very attractive work.

It's noteworthy that many festival goers often sign-up/buy tickets well ahead of the line-ups being announced simply on the basis of the event e.g. O2 wireless festival, V Festival, Glastonbury.

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What in Cod's name is going on

Radio 4's tomorrow programme carried a report today that between 40%-60% of all cod caught in the North Sea is thrown back dead in order to comply with quotas. This is an EU Commission sourced statistic.

By the time the fish have been sorted on board the boats, most of the fish are dead. However, because the quotas restrict the volume of cod that can be landed, they have to be discarded in the sea.

Some conservationists on the programme suggested using technologies to only catch certain fish - unfortunately the fish aren't playing along and enter the nets anyway.

When regulators interfere with markets with good intentions, unforeseen and harmful consequences can often arise. This is a perfect example. The quotas are designed to protect and preserve cod stock in the North Sea, but they only work to stop the fish being landed. The idea of not rewarding fishermen for "accidentally" catching the wrong fish makes sense - getting them to dump it instead, plainly doesn't.

The response from the Government Minister invited to appear on the programme was ........ to propose increasing the quotas such that more could be landed. Whilst it may reduce the "waste", that doesn't appear to deal with the shortage issue.

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Omer Golan wins at the bookmakers

Unbelievable.

Israel beat Russia 2-1 thanks to a last minute goal from Omer Golan, which means England could reach the Euro finals if they get a draw v Croatia on Wednesday.

As for Omer, he gets to collect a new £50k Mercedes from Betfred, who promised to award the car to the scorer of a winning goal against Russia. There was one they never expected to payout on. Then again, I bet a few folks lost a few quid on Israel winning.

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Hi, remember us. You promised we could return these if there was a problem.

Marc Andreessen has this on his blog

Carol Loomis buries the lede:

At bottom, the countdown to both [Citigroup CEO] Prince's exit and Citi's November shocks began in [the] summer crisis period for the credit markets. Citi started then to have ominous dealings with CDOs [financial instruments that consist of bundled debt] that carried a "liquidity put." Never heard of a liquidity put? Google will give you a few uninformative references. But it is testimony to the obscurity of this term that [Citigroup Chairman and former Treasury Secretary] Rubin says he had never heard of liquidity puts until they started harassing Citi last summer.

What Citi did a couple of years ago was insert a put type of option into otherwise conventional CDOs that were backed by subprime mortgages and sold to such entities as funds set up by Wall Street firms. The put allowed any buyer of these CDOs who ran into financing problems to sell them back - at original value - to Citi. The likelihood of the put being exercised, however, was regarded as extremely remote because the CDOs were structured to be high-grade entities called "super-senior."

Meanwhile, you might think the existence of the put would make it impossible for Citi to get those CDOs entirely off its balance sheet. [Yes, you might.] But in fact Citi found a complex accounting rationale for doing exactly that, and the CDOs jumped entirely to somebody else's balance sheet. All that remained in Citi's realm was this sticky little matter of the puts - which, as we shall immediately see, ultimately worked to get these CDOs right back to their creator, Citi.

Last summer, with the whole world suddenly unwilling to finance CDOs, the holders of the liquidity-put CDOs began to return them to Citi. And that's where they now reside - $25 billion of them, a very large lump in Citi's $55 billion of subprime-related securities. That entire package of trouble was the subject of Citi's Nov. 5 analyst call. This was the third presentation that Citi had made to analysts in five weeks - each of these confessionals more anguished than the last - and in that time Citi's stock and Prince's credibility had been punished.


Wow. Writing that kind of option always seems innocent at the time - never gonna happen but makes the buyer feel better, so what's the harm. Hardly worth mentioning that kind of embedded option in the books as it carries no value. In fact, so insignificant everyone but the buyers seem to have forgotten about it.

Failure to disclose contingent liabilities of this magnitude is going to cause a stink.

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Housing crash is the fault of a bloke down the pub

Harry Hill who is the Chairman of the Countrywide, which is the UK's biggest chain of estate agents, was quoted in today's Financial Times as saying

"Mr Average is just seeing this maelstrom of new going around in his head, most of which isn't very good. Even if he foes to buy a house, he goes to the pub and half his mates say he must be mental. So he rings (us) up and changes his mind (about the purchase of a house he agreed to)"

So you see, the bloke in the pub is the real cause of the downturn in the housing market - if he kept his mouth shut things would be fine. Instead, his negativity is hitting Countrywide and prompting branch closures in the group which was only taken private last May for £1bn but which has since reported falling sales and turnover.

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Brands and artist in need

Need some TV exposure to pep up a brand ordinarily viewed with cynicism or ignored.

Or got an act falling into obscurity that needs to relaunch and get new album/tour off the ground.

Film or single launch perhaps that would benefit from primetime.

Then offer your services to the BBC to help their charity appeal night.

After watching a few hours of the BBC Children in Need fund raising show tonight, I lost count of the number of brands vying for airtime, amongst the acts giving careers a nudge (or a resurrection in a few cases).

It's in a great cause (a childrens charity I'm involved with has been a beneficiary in years past) and so its forgivable - indeed perhaps I'm mistakenly seeing commercial motives where there are an "unitended" byproduct.

Highlight of the night - Anna Lennox performing (and you thought I was going to say first outing of the Spice Girls)

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Knowing me, knowing you

Aha.

You may recall that a service was launched sometime ago by Shazam, which could listen to music and help you identify what it was (artist, track). However, it relied on listening to the actual recording rather than the drunken rendition version.

Well, Midomi have gone one better and let you sing your version to it! Obviously it works better if you have a fantastic voice like myself ;-) and it worked for the few sample tests I ran, correctly putting each track at the top of the list of closest matches. And it was fast too.

Brilliant. So now you've an answer to the situation when that track you keep humming but don't know who it is by is bothering you. And yes, its a free service.

Lime in the Coconut - so that's what it was.

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Oh to have invested in this.

Paul Kedrosky has a post about two "contrarian" investors.

Paulson & Co. and Scion bet that the lowest quality subprime mortgages would see higher defaults than anyone expected; both have done so well that you can be sure they're chanting "Don't go! Don't go" in front of their Bloombergs.

How well have they done? Well, Paulson & Co. is up a staggering 435% in the first nine months of 2007, an astounding figure for any fund, but double-astounding for a firm running $24-billion in assets.

Both Paulson and Scion now say they are winding down some of their negative bets in residential mortgage-backed securities, and they're moving on to bets against corporate debt.

Oh, to have been in their syndicate. Also to have seen the reaction from their counterparties a) when they placed the bets and b) when they closed them.

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Jay-Z - are you sure about this?

Shawn "Jay-Z" Carter recently announced that his new album, American Gangster, will not be for sale through iTunes—not because of DRM issue or flat-rate pricing. Nope, it's because he doesn't want the album to be broken down into individually-purchasable tracks.

"As movies are not sold scene by scene, this collection will not be sold as individual singles," Carter said in a statement. Apparently it's the kind of album that you have to listen to from start to finish in order to really understand it.

Ok. So we can also conclude presumably that a) there will be no CD singles from the album b) radio stations will be barred from playing solitary tracks from it, lest the true art not come through. Moreover, the music video will include all the tracks from the album in one (long) piece. As for the downloadable ringtones.......

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Leaving the bride at the altar

Since the credit crunch, Dealogic have identified more than $200bn of failed corporate transactions, which is double the rate of 2006. Most deals were agreed in rosier times in the credit market.

Examples are Cerebus (a Northern Rock bidder) walked away from United Rentals ($7bn); JC Flowers walked away from Sallie Mae ($26bn); Cerebus left Affiliated Computer Sciences behind ($8bn)...........

That's a lot of cash remaining stashed under a mattress.

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The joy of youthful innocence

I happened to be speaking to an ex-EMI employee this week, who'd only recently left the company. When I suggested that Terra Firma would probably break the company up, to leave themselves with the publishing and back catalogue bits, she got most annoyed.

"Guy Hands verbally promised the staff that he wouldn't do that and he'd lose a lot of face if he did".

Hmmm. I can see that weighing heavily on Guy's mind were he to face the dilema that a breakup of EMI represented the best value option. "Shall I lose face with EMI staff or with the City and my investors who look to me to make them (and myself) stellar returns?"

I also learnt this week from a senior EMI executive that Guy's new management team are doing a root & branch review of the business asking penetrating questions of the EMI staffer such as
- "What do you actually do?"
- "Why, on earth, do you do that?"
- "How does the company make money from that?"

Don't forget these are generally people (like myself) who've not worked in the music industry and so aren't acclimatised to the culture and practices of the music sector. People, who instead, are driven by the profit motive and who may not understand the importance of pandering to big music stars, albeit I confess their are tons of similarities between the music industry and the City (egos, remuneration....).

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Guy Hands to be ejected from the Magic Circle

Guy Hands, the boss of Terra Firma, the high profile private equity firm that counts EMI amongst its' stable of portfolio companies has just done the daftest thing.

No, I'm not referring to his outburst of describing bankers as "whimpering dogs", on the basis bankers were refusing to bankroll mega buy-outs for years, given that most bankers have heard themselves described in worse terms (of course, they may extract revenge from future deal pricing).

What I'm referring to is breaking the code of magical mystery that surrounds how private equity works, in the same way as a magician might reveal how a magic trick is done.

In his speech at the Super Investor Conference in Paris (is that "super", as in "I think they are super"?), he laid out in plain english what private equity does, namely

- buy stuff with cheap debt and arbitrage the difference with the equity markets
- buy stuff at one multiple and wait for the multiples to go up
- buy stuff and see earnings go up

Doesn't he realise that for the layman to understand such matters, or more importantly investors financing private equity funds, that they might challenge the high remuneration paid to prviate equity firms.

Evidently, Guy's fury at not being able to raise tons of cheap debt from the banks, to allow the gravy train to keep flowing, sent him over the edge. Moreover, as he went onto lament, the first two options are now gone and the third is in peril from the real economy going into recession.

There must have been a stary glint in his eye as he described the conditions before the credit crunch as a "bygone era" and private equity firms having entered a "challenging phase".

He did offer some good news though - new opportunities would come from distressed investors with over-leveraged buy-out facing debt repayments in a year or so!

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Don't you hate it when markets go quiet

I remember a comedy skit from a while back in which the "news desk" reported that there had been no share trading on the markets today as everyone had what they wanted.

Well, Exchanges love volatile markets because by and large it increases share trading volumes. Moreover, the increasing trend to break share trades up into ever smaller sizes as a means of avoiding detecting and causing a market impact, also benefits exchanges as they normally charge a transaction fee.

Yesterday the London Stock Exchange reported trade volumes on SETS, its electronic order book, up 77% in the 6 months to end Sept. That's a average of 555,000 trades per day.

This increased volume has meant that more customers have qualified for volume discounts, which pushed their profit per trade down from £1.38 to 99p per trade. Still pretty decent for a system with a margal cost of zero and which benefits from hosting other people's activity.

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Yep, MediaMax stinks

Turns out my whining about the online storage service, Mediamax, is part of a much larger chorus.
A comment left on my post here, directed me to the user community venting their anger as well as a blog about the MediaMax service.

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Mobile phones companies need to jump to the beat

Edgar Bronfman, CEO of Warner Music (and 70% controller of Warner shares with his Private Equity firm), is berating the mobile phone manufacturers to make their phones easier to use as music devices!

After all, these devices sit in the sweaty palms of 3 billion people, which are customers that Edgar want to get his hands on, if he and his colleagues are to have any hope of reversing their lingering demise. Trading at $8, down from their float price of $17 of two years ago, Pali Research now has them down at $5 target price.

Edgar conceded that the pace of demise of the CD market took them by surprise. To offset this they are now looking to use mobile phone downloads to drive growth. Plus they are now looking to monetise a wider set of related products including concert tickets, videos, merchandise and other goods.

Hmmm. Me thinks that the mobile operators aren't going to give up their customers or related value so easily. Content is great, but exclusivity is important and which label is going to want to do exclusive deals in a territory.

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Dont say "bank run", you'll just cause a panic

Wow - E-trade is taking a pounding following a combination of announcements about "continued declines" in the value of its $3bn asset backed securities portfolio and analyst downgrades.

It has lost $9.2bn in market value since July now standing at $1.5bn. This won't be helped by Citigroup, which has issued an analyst report declaring a 15% probability of E-trade winding up in bankruptcy, further noting that
- 50% of e-trade deposits exceed $100k Federal deposit protection, equating to $15bn of deposits and accounting for 25% of e-trade funding.
- were investors to withdraw uninsured funds, e-trade would be forced to unload assets, incurring further losses with an enforced wind-down of their book, losses which they put at $5bn
- $12.5bn mortgage book expected to experience significant reduction in value

Hmmm. So if you were an e-trade customer, would you sit on your hands or get out quick just in case. After all, they aren't handing out medals for bravery in this situation!

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Social networks revealed

Interesting piece on Read/Write web today on demographics of social networks

Some highlights, followed by full details below from Rapleaf:

Facebook Users
- 2.6 million users identifed in Rapleaf
- 63% female, 36% male
- 17% <18>45 yrs
- 2.9 major social networking sites used on average
- 62% are on Myspace, 5% are on LinkedIn, 9% are on Friendster, 10% are on Plaxo, 22% are on Hi5

Myspace Users
- 11.3 million users identifed in Rapleaf
- 63% female, 36% male
- 20% <18>45 yrs
- 2.4 major social networking sites used on average
- 15% are on Facebook, 2% are on LinkedIn, 9% are on Friendster, 6% are on Plaxo, 17% are on Hi5

LinkedIn Users
- 0.8 million users identifed in Rapleaf
- 38% female, 61% male
- 2% <18>45 yrs
- 3.2 major social networking sites used on average
- 16% are on Facebook, 25% are on Myspace, 12% are on Friendster, 16% are on Plaxo, 8% are on Hi5

Friendster Users
- 2.3 million users identifed in Rapleaf
- 58% female, 41% male
- 12% <18>45 yrs
- 3.0 major social networking sites used on average
- 10% are on Facebook, 44% are on Myspace, 5% are on LinkedIn, 5% are on Plaxo, 26% are on Hi5

Plaxo Users
- 1.3 million users identifed in Rapleaf
- 62% female, 37% male
- 16% <18>45 yrs
- 3.6 major social networking sites used on average
- 20% are on Facebook, 53% are on Myspace, 11% are on LinkedIn, 9% are on Friendster, 15% are on Hi5

Hi5 Users
- 4.5 million users identifed in Rapleaf
- 60% female, 39% male
- 21% <18>45 yrs
- 2.8 major social networking sites used on average
- 13% are on Facebook, 43% are on Myspace, 2% are on LinkedIn, 13% are on Friendster, 2% are on Plaxo


Whilst this based on a sample using people they managed to identify, they are pretty sizeable sample sizes. I do wonder to what extent those people are active on multiple social networks rather than having simply left a footprint behind on sites they no longer use. The male/female ratios are also intriguing between the various communities - is it a surprise that LinkedIn is male dominated?

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Songza - music search that rocks

Seeqpod is one of my favourite sites, providing an excellent music search service with an embedded audio and video player of tracks found. Moreover, if you are a registered user, you can create and store playlists.

Along similar lines is a site I stumbled on today called Songza, which describes itself as a music search engine and internet jukebox. The simplicity of the site is its essence, but it is both slick and stylish with a very neat user interface. The site has a built-in audio player which sits unobtrusively sits at the foot of the page.

Clicking on a search result, pops up a control allowing you to play, share, rate (quality of audio), add to playlist.

One surprise was that the link to "discography" took me into a google music search service (not a well advertised service) which brought back a raft of info on the artist. I'm surprised more people aren't using this service but perhaps I'm not alone in having been ignorant of its' existence.

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The two faces of TV

Pleading poverty when negotiating with staff looking to take a slice of the action is a traditional negotiating technique. Simultaneously claiming to be worth a lot to a different group is not smart.

On being told their online work is “promotional” just doesn’t cut it anymore, one US TV script writer argued:
We understand that it’s a fairly new technology, but that doesn’t seem to prevent them (TV studios) from promising investors specific dollar amounts that they’re going to make off of it. It didn’t prevent them from valuing their Internet content at $1 billion when they sued YouTube.

Heck said the TV execs in response, who knew that script writers read the financial press!

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Spinvox - what's going on

I knew Spinvox were having problems getting staff to transcribe the calls, but is the message below their way out

"This person called and left you a new message. To hear it call +441412380250 on *44. - SpinVox"


Not exactly voice to text is it! So with just a notification, perhaps its now stopvox.

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Mervyn King, Governor of Bank of England speaks re Northern Rock

Below is an edited BBC interview with the Governor of the Bank of England talking about Northern Rock.

Some fascinating comments
- he would have wished to have had a mechanism to be able to transfer out retail accounts
- because of the inadequacies of the deposit protection scheme i.e not 100%, he refused to tell people that their money was safe when the rational thing was to withdraw their money
- the Bank had to intervene because of the number of retail depositors involved and the systemic risk that would have been created
- the photos of queues at a British Bank was the most damaging one to the reputation of the Bank

Link here

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Record Labels - Prices marked down

The City analysts are starting to spot the issue - record companies revenues may be under threat, with a resultant impact on share prices for such companies.

Webware picked up on a couple of those analysts recent notes on Warner Music, which were moved to a sell recommendation.

Richard Greenfield of Pali Research, penned a gloomy report about why he thinks the sector is headed for even greater losses.

"No matter how many people the RIAA sues, no matter how many times music executives point to the growth of digital music, we believe an increasing majority of worldwide consumers simply view recorded music as free," Greenfield wrote.

Following the reports, Warner Music's stock hit a 52-week low ($8.78) on Friday. The company's shares, which were trading above $27 a year ago, closed Tuesday at $9.50.

The recorded music sector generated revenues of $14.3 billion in 2000, according to the Recording Industry Association of America, or RIAA. This year, it's expected to report revenue of $10.3 billion. Had sales growth only kept pace with the U.S. economy, it now would be worth $17 billion

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Facebook has its eyes on you

Om Malik has an interesting post regarding Facebook's new ad-mechanism, which involves over 40 partners at present.

These partner sites put a little a piece of Facebook javascript on their web site and certain information, cleverly (and innocuously) labeled as a user alert, is sent to Facebook. For instance, Fandago users can publish information about the movies they saw. It all seems like a clever idea because it lets Facebook triangulate your likes and dislikes even more, and deliver more focused ads.

The javascript on the Fandango site pops up a little screen which asks if you want to publish the information on Facebook. If you say no, your friends won’t see the information, but apparently Facebook still receives it. This means that if you are a Facebook member, Facebook will know what you are doing on each of their partner sites. And there is no way for you to opt out of that. Or is there? I asked Facebook to clarify and I am still waiting for them to write back.

It's one thing to know about what your customers do on your own site, but way different to be snooping on them wherever they go without their knowledge. That said, I wonder how many will care. For some it will never be acceptable; others may initially find it creepy; lots may give it a "whatever" shrug.

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Prince prompts a revolution

According to Betanews:

Pop musician Prince continued his online content bulldozing with a series of legal notices sent to sites devoted to the artist, demanding that all images of, lyrics by, and "anything linked to the likeness of " the artist be removed.

Fan sites housequake.com, prince.org, and princefams.com have joined together to form Prince Fans United, stating that the actions amount to censorship and violate free speech laws.

Why do artists persist in persecuting fans who can be bothered to create "web-shrines" to their favourite artists? This volunteer labour is promoting the artist's work and creating a good feeling around "belonging" to the group that likes the artist. Most consumer brands would be delighted that anyone cared enough about their product.

Instead, these groups are being hounded with the probability that some of them may become incensed enough to abandon their love for the artist.


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Developer Jobs

To the folks who've been in touch re my "jobs available" blog post from a few days ago, thanks. To those that have left me meebome messages via this blog, please leave me your name, email address or IM address and I will get in touch.

Alternatively use john dot wilson at foliopartners dot com. BTW there are no fees available to recruiters, but you are welcome to send over candidates on that basis ;-)

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Selling bras - Making mountains out of molehills

Unusual experience today - met my wife for lunch in the West End, after which she decided she would pop into Bravissimo (Lingerie, Swimwear & Clothing for big boobed women - their strapline, not mine as you can see from their home page) which is just off Oxford Circus.

Well, if there was a wifi connection, I could have spent all day in there, but that's a different issue.

Anyway, the stores is peppered with little slogans like - "take the plunge with our swimwear" with a picture of an ample lady in a swimsuit etc. Their brand is definitely a humorous and sassy one.

So, whilst I am waiting for my wife, adjacent to me they are running a feedback session on an upcoming advertising campaign. Ladies that have just had the "Bravissimo experience" are being shown a series of ads and asked for their impressions on the message and visuals etc.

Well, as those that know me, I have a tendency to do wisecracks and fancy myself as an hobbyist advertiser (you should hear my mobile phone company campaign song, which I am still amazed Orange didn't jump at, involving a rewording of the track Shout from Tears for Fears).

So to my wife's embarrassment, I volunteered a few slogans they might use

- "Bravissimo, your second biggest asset"
- "For girls who can be a handful"
- "You've tried the rest, now fit the breast"
- "Bringing out your breast side"
- "This is one cup that shouldn't overfloweth"
- "Only for girls that can measure up"
- "Bravissimo, Definitely not a cover-up"
- "Bravissimo, You can count on our support"

To her astonishment - they actually liked them! So I now await my royalty cheques and my expulsion notice from Girl Geek Dinners. Meantime, I wonder if Hugh might take an interest in this social object.

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Tough Call - Work or Watch the Rugby World Cup Final

More news on Spinvox's trouble with their South African call centre.

Their sub-contractor, Valldata, make local staff work local holidays with no extra pay - this has upset most staff and reflected in poor staff attendances on the recent 2-day public holiday.

Similarly, the South African service queue had over 1600 messages and 2 staff the day SA won the Rugby World Cup - lots of celebratory calls but most staff absent to watch the game! Apparently, they are struggling with this accent and the continued mix of other languages (Zulu etc).

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It's highly toxic - beware

Aside from market news, access to a Bloomberg terminal taps you into a community of sharp wit. Market reaction times can be amazingly quick to respond to a news event - jokes may circulate within minutes!

To illustrate, some funds infected by the credit crunch have been branded "SIV-positive".

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IAC - end of the road

I was talking to someone the other day and pointed out that it was trading at much lower multiple than other internet firms.

Well IAC were obviously looking at the same table and realising they needed to expose the more valuable parts of the business and get access to those multiples.

Today they announced they are breaking the business up into 5 separate listed businesses.

IAC will include: Ask.com, Bloglines, Citysearch, CursorMania, IAC Advertising Solutions, Evite, Excite, InsiderPages, iWon, My Fun Cards, My Way, Popular Screensavers, Smiley Central, Webfetti, Zwinky, Match.com, ServiceMagic, Shoebuy.com, Entertainment Publications, ReserveAmerica, Black Web Enterprises, BustedTees, CollegeHumor, GarageGames, Gifts.com, Green.com, InstantAction, Primal Ventures, Pronto, Very Short List, Vimeo and 23/6, Active.com, Brightcove, FiLife, Medem, MerchantCircle, OpenTable, Points.com and SHOP Channel.

HSN: The Home Shopping Network, which includes HSN TV, hsn.com, and the Cornerstone Brands, Inc. portfolio of catalogs, web sites and retail locations.

Ticketmaster will include: Admission.com, Biletix, Billetnet, BillettService, Cottonblend, Echomusic, Kartenhaus.de, Lippupalvelu, LiveDaily, TicketService, Tick Tack Ticket, TicketWeb and Ticnet.se, as well as Ticketmaster’s current investments in Frontline and iLike.

Interval International will include: CondoDirect, Resort Quest Hawaii and VacationSource.com;

LendingTree will include: RealEstate.com, Domania, GetSmart, Home Loan Center and iNest.


Interesting that IAC didn't hold onto iLike. However, this might have been to given Ticketmaster some magic juice!

IAC didn't operate the group in a co-ordinated fashion - only the legal function had shared lines across the group as I understand it. So breaking it up in this fashion won't have an immediate imact on the business. However, down the line, they are all part of a smaller business and may be regarded differently in the outside world in places they don't expect e.g. banks.

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Prices slashed at Sainsburys

Wow, what a start to a Monday morning. Delta Two, the Qatar Investment vehicle abandons its bid for Sainsburys after being unable to raise the last bit of "shrapnel" to fund its bid. Many onlookers are puzzled why they would need to raise third party funds, since Qatar isn't short of a few dollars.

This is the second bidder to walk away this year, and the impact was dramatic with the share price dropping 19%. 600p had been the expected takeover price but now analysts are slashing their targets to 460p ish.

An unnoticed victim of this will be Robert Tchenguiz, with 8% of the stock and who had been looking at a decent paper profit had the deal gone through. Now with finance drying up for the sort of deals he does, this drop in asset value will be "an annoyance" at the very least.

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Chuck - was he chucked?

A week or so on and an even bigger cheese falls under the credit crunch wagon in the form of the CEO of Citigroup.

He too will walk away with reasonable comp but his departure may not dampen the calls for the breakup of the group that have been sounding in some quarters. Indeed, the choice of his replacement will be scrutinised for clues as to whether this is on the agenda.

His position had been weakened by some of his quotes during the summer, which were regularly being thrown back at him to suggest he had lost touch and may have even been goading on parts of the bank to take even bigger risks whilst "American mortage books burned".

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UK Chancellor squirms more than a Northern Rock CEO

Alistair Darling was interviewed on BBC Radio 4's Today programme this morning and was plainly uncomfortable about the situation he finds himself re Northern Rock, struggling to counter accusations of incompetence.

He ridiculed the notion that the Govt was already lending £40bn via the Bank of England, but it can't be far off as the business continues to find it impossible to attract wholesale funds from banks concerned that they will look stupidly if they are left holding Northern Rock debt by rolling over existing debt or providing new funds. Only retail depositors are being provided with a Government guarantee.

Click here to hear the interview

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700th post - giveaway

This being my 700th post, I wanted to share with you a special offer that I got through today- get the Financial Times on a 4 week trial for a quid (£1) including home delivery if you live inside the M25 and free access to FT.com.

Trial details are here.

It remains the top business newspaper in the UK, and is essential reading.

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Can't get this tune out of my head

Caleb at Seeqpod sent me a link to this tune, without any warning and bang - I cannot get this tune by Harry Nilsson out of my head. I'm either singing the chorus or humming it in my head.

So, in case it is infectious, play now!



Up there with Shaddap your face below

posted by John Wilson @ 11:41 PM Permanent Link ,

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Are your reception turning away business deal?

I happened to call a business today to speak with their MD, who I had been referred to by a mutual acquaintance.

As with many switchboards, they were very guarded about putting me though to such "an important person". So I explained that I was calling from a VC and had a proposition to discuss with him.

The receptionist (not PA) advised me that I could send an email but that he probably wouldn't want to talk to a VC (assuming she knew what that was).

Clearly, she could have been instructed to do this, but I just wonder whether her MD might have wanted to hear about what was on offer and make that decision himself. For all his receptionist knew, I could have been going to make an offer to buy the business at a ludicrously high price.

I wonder what else they let their reception turn away out of ignorance?

posted by John Wilson @ 1:23 PM Permanent Link ,

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Workers lose someone else's shirt

Apparently, following the news that

a virtual stripper named "Melissa" that promises to progressively remove items of clothing for viewers who solve online CAPTCHAs is actually part of a scheme by spammers to crack web site registration traps meant to keep them out

Every time a user correctly enters the text on a CAPTCHA, the user is rewarded by Melissa removing another item of clothing. The catch is that the CAPTCHAs are being fed from real services, like Yahoo! Mail's signup process. So users looking for a free skin show are actually helping spammers and scammers thwart online security measures that usually keep their robots out.

the same Mechanical Turks can also be caught out when they go to lapdancing bars and hand over their credit cards to pay for live shows, thereby helping the adult industry to prosper. Evidently they think it is a fair trade.

posted by John Wilson @ 9:34 AM Permanent Link ,

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Easily add wifi to your camera

18 months or so ago I bought a compact flash GPS device, for about £40 which quickly transformed an old dell PDA I had into a portable satnav device.

Today I saw this on Photojojo - the Eye-Fi Wireless memory card adds Wi-Fi to any camera that uses SD memory. It’s orange. It looks like a normal SD camera memory card. It holds 2 GB of photos. And it wirelessly uploads your photos to your computer and to Flickr or one of 16 other photo sharing sites

Check here for details

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posted by John Wilson @ 9:29 AM Permanent Link ,

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50gb of online space for free - do I hear higher?

In online storage, how do you get anyone's attention? Losing everyone's data is one way. Giving away free storage in huge amounts?

I thought that MediaMax had been generous with 25gb (shame the service doesnt work), but now Adrive are offering 50gb for free. That is a stonking amount and more that most people could need for personal use.

My only hesitation is a) who are these people, as details are very sparce and by implication how do I know who has access to my data b) can I rely on this service - or does free mean I should consider it unreliable, in which case it's more of a secondary backup rather than a primary backup.

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posted by John Wilson @ 9:13 AM Permanent Link ,

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Get RICH!

Actually, I can't guarantee that, but several of our ventures are actively looking for great engineers and designers to join the team mainly on the application side (DHTML, Javascript, Ajax, PHP, web services, drupal) and back-ends (mysql, postgres).

Exceptional candidates will have the opportunity to participate in the equity pool to reflect their contributions to creating successful businesses.

The ventures are London based, but remote working is generally permitted.

If you are interested in learning more, please ping me.

posted by John Wilson @ 8:58 AM Permanent Link ,

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Corporate blogging - are you crazy?




Is this why corporates are scared of blogging?

posted by John Wilson @ 8:51 AM Permanent Link ,

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Why do we build businesses to crash systems

Many start-ups long for the spotlight to be turned on them by popular tech blogs such as blognation, mashable and techcrunch because of the traffic that will typically flow from mentions. Yet in most cases the initial spike in activity, trails off and the business which has geared up to handle the surge now finds itself with under-used capacity.

Sharp volatility in business activity is generally a bad thing, because it is wasteful. Capacity has to be created to handle peaks and left idle in slacker periods. Whilst the marginal cost of running such an environment may be low, the upfront investment demanded is usually disproportionate to the reward.

Yet some businesses create situations that cause the volatility eg sales of a scarce good are announced to be going on sale at a particular time; result in that the sales facilities are overwhelmed with demand.

Indeed, there was news today that China's Olympic ticketing systems crashed due to the sheer weight of demand for the second round of tickets, which were to be allocated on a first come first served basis.

Ticket sales for the Games were halted after demand proved to be far too much for the database to handle. The ticketing database could supposedly process 150,000 transactions an hour, but in just the first hour, the Games' site had 8 million hits, its hotline had 3.8 million calls, and 200,000 orders were taken from customers.

Given it was obvious there would be enormous demand for tickets, why did the organisers not employ a process that avoided there being a surge and thereby avoid the necessity to create an enormous infrastructure at great cost for a one-off surge? Of course, the PR people may contend that this is a great story showing how popular the games are, but the story reads as China Olympics screwed up by either not being prepared or stupid in not realising.

Some industries can only react to demand - eg power suppliers; but they typically introduce pricing mechanism to try to flatten the peaks. Likewise, transport infrastructure uses off-peak pricing to encourage travellers to avoid the peak periods. In either case, the factors that prompt demand are outside of their control.

Recognising this, some businesses actually exist to provide firms with flexible supply eg some data and hosting centres make available facilities that scale with you and you only pay for what you use eg XCalibre's Flexiscale hosting service.

But to inflict such volatility on yourself is plain daft, if you can avoid it.

posted by John Wilson @ 8:11 AM Permanent Link ,

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This social is cookin'

According to Mashable, MySpace may join the OpenSocial party. As I mentioned in my previous post today, this would make perfect sense. My Space can play catch-up but without looking defensive, since they are joining an "industry initiative" as a good internet citizen.

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posted by John Wilson @ 5:33 PM Permanent Link ,

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A barometer of live entertainment

IAC's latest results included the following

Ticketmaster

Revenue growth was driven by an 11% increase in worldwide ticket sales and 2% higher average revenue per ticket. Domestic revenue increased 5% primarily due to higher average revenue per ticket and increased ticket volume. International revenue grew 36%, or 28% excluding the effects of foreign exchange, due primarily to increased revenue in the United Kingdom and Australia. Profit growth was adversely impacted by higher operating expenses associated with technology improvements and the continued build out of worldwide infrastructure and higher overall royalty rates. Operating income was negatively impacted by an increase in amortization of non-cash compensation of $1.9 million.


As with most businesses, you can improve your results with
- better margins
- industry price increase
- more sales volume

or combinations thereof. I suspect the 2% growth in revenue per ticket has come from higher ticket prices rather than improved margins, but sales volumes are definitely the driving force as more people participate in the live entertainment space.

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posted by John Wilson @ 9:59 AM Permanent Link ,

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Re-unite with Friends for free

Friends Re-united, the ITV owned social "re-network" site for contacting your old school and university friends is dropping it's subscription model according to Jemima Kiss at the Guardian.

If you wanted to "reach out" to those you'd evidently decided to drop as friends previously, you had to pay about £7.50 or so for a premium membership that would let you send them a message via Friends Re-United.

Given that many of those people can be freely found and contacted via Facebook etc, one might suggest uncharitably that only the ignorant, stupid or desperate must have resorted to paying FU.

So now, you can happily hook up with folks from 20-30 years ago to either gloat or be gloated at, all without charge.

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posted by John Wilson @ 9:42 AM Permanent Link ,

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How to tackle the competition for free

Two years ago we evaluated a medium sized financial technology software company with a view to investing. It was evident that they had way too many "products", which was actually causing them internal challenges.

Most had begun life as bespoke developments for customers but over which they had negotiated the right to commercialise. In many cases, little research or development effort had gone into the commercialisation of the products but because they had potential, so the company deemed them to be product offerings.

From a sales perspective, the sales effort was blunted by the confusion of what message to present to the customer - they simply had to many offerings and so weren't sure what to pitch with. Added to which, the "products" range spanned several market segments within financial services, so it diluted their "specialist" message - customers in each segment perceived them as being generalists!

But one product caught my eye and so I enquired how they were approaching selling it. Answer - they weren't trying really because the market had a dominant supplier. Leaving aside why they hadn't just dumped it then, I offered them an answer - give it away for free to everyone in the market. My rationale was a) they would probably get some consulting revenues from folks eg as per open source model b) you'll get noticed for disrupting the market, which may prompt other conversations c) the dominant supplier will suffer some pain and have to go on the defensive d) there was no downside to them because they were doing nothing with it anyway e) you can shape the agenda, even if only briefly.

For several reasons, the investment didn't proceed. And sadly, I don't think they proceeded with the advice either, because it just felt "too scary".

I was reminded of this when I read the story here on Blognation about a consortium's efforts to create "Open Social". Led by Google, it's an initiative to create an open set of APIs for application development for social networks. The throng includes Ning, LinkedIn and Plaxo.

At a stroke, the consortium are pitching an attractive alternative to developers who might be focussed on Facebook applications (dominant supplier) with the option that they could development applications that can be even more widely distributed over many networks. Moreover, by challenging the Facebook "walled garden", they are shifting the agenda and may disrupt the market with this moral high ground. Aside from distribution, it also shifts the balance of power back towards the developer - with Facebook, they could just shut you out or copy you at any point.

At the same time, with other social networks such as Bebo playing catch up and racing to try to offer their own platform to developers, this provides a "higher ground" response than simply one of "me too". For some, they may feel themselves already too far along the proprietary route, but I'd suggest better to delay and hop aboard this train given the greater abundance of developers likely to convert to this model.

As for Facebook, they have an interesting choice - fall in line or tough it out based on their distribution offering and existing position.

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