MonthDecember 2008

Why it really does matter that the media covers tax avoidance (ref: Rusbridger & Guardian v Tesco)

Alan Rusbridger (he’s my editor) writes about the fallout from the Guardian’s incorrect coverage of Tesco’s tax affairs in the New York Review of Books. (I suspect in the NYRB so that it falls under the First Amendment…? Though possibly not: there’s a footnote which says “This article has itself cost several thousand dollars in order to make sure that it stands on solid legal, tax, and accountancy ground.”)

John Naughton has already blogged on this – about the unbelievable costs – and it’s got to be the first time I’ve seen Jeff Jarvis lost for words.

But there’s also the problem of how to do the followups when Private Eye, helped by “a tax specialist who was once employed by HMRC”, wrote about similar Tesco tax avoidance methods:

In order for The Guardian to follow up the Private Eye story, the paper had to spend perhaps $17,000 in seeking expert libel and tax advice on whether the magazine was correct (and maybe double that to secure the opinion of a senior tax lawyer in order safely to plead it in the paper’s defense). Any editor wanting definitively to state that this was, indeed, a strategy to minimize corporation tax would have needed to be able to find a qualified tax specialist prepared to testify under oath to that effect. Such an expert would have needed an extremely sophisticated understanding of current corporate tax law; the latest filed accounts of all the companies involved (including in Luxembourg); details of the partnership’s lending activities; and a knowledge of Luxembourg accounting practice.

Of course, almost no news organization has this sort of expertise to hand. Pro-bono advice, for example, from professors of law or business, might be of help—but few academics would volunteer to give evidence in the High Court. So, after the Tesco legal assault, it is fairly safe to predict that almost no British paper will investigate in any detail how companies today increasingly fund and structure their overseas expansion with an eye to avoiding tax. If Tesco feels unfairly spotlighted in this respect, it is with some justification. The company does pay a great deal of tax, and is by no means the worst culprit in matters of avoidance. The UK government’s own estimates suggest that thousands of major companies behave in a similar way. Their directors can sleep easy, knowing that the likelihood of anyone writing about their tax affairs is slim.

And here’s the key point. Big companies avoiding tax has a direct effect on us all: it means that we don’t get the tax revenues that we are really owed by those companies, who get our work and our revenue here, but don’t want to pay back into the society what they owe – to pay for the hospitals, schools, roads, railways that the people who work for them rely on.

They want to take, but not give. That’s wrong.

Which is why at the very least Andy Burnham should be trying to reform the law of libel, and make it more like the US where there’s an assumption of freedom of speech – but also more like the blogosphere, where you correct things if they’re wrong as soon as you can. Rather as the Guardian does, in fact.

Do read the Rusbridger article though. The numbers involved, especially on the Tesco side, will make your hair stand on end.

Still, it does have happy ending:

Mr. Justice Eady found against Tesco on all counts.

Yes, that’s the same Justice Eady who Paul Dacre hates.

Zavvi’s death is good news for Simon Cowell. Unfortunately. (Updated)

Popjustice rather neatly puts its finger on the problem with Zavvi going bust (as a result of Woolworth’s EUK, its distribution arm, demanding money sooner in order to cover its own problems):

You can complain about Zavvi as much as you like – and we have done – but its disappearance from high streets is terrible for music. With Woolworths also going, it means that supermarkets will overnight become even more powerful not just at dictating what music people buy but also – this is the important bit – which artists record labels sign and what music they produce.

Supermarkets running the British music industry is good news if you’re in Il Divo, or if you’re Duffy, or if it’s your job to keep repackaging the same 400 songs in an endless cycle of Valentine’s Day / Mothering Sunday / Love At The Movies compilations, or if your idea of alternative music is the new Razorlight album. But if you like anything else, or if you’re a current or future popstar making anything else, you are in for a difficult few years as major label A&R departments aim for the lowest, blandest, risk-freeiest common denominator options, and a generation of future music fans grows up listening to the results.

Tower, Fopp, Our Price, Woolworths, all the other independent places you used to buy music in a few years ago, now Zavvi: gone. What a load of old shit.

Which means we’re going to get more things like the dire version of Hallelujah that was our Xmas X-Factor No.1 – which, as Chris Edwards points out, indicates how folks like Simon C don’t really care for music, do ya?:

the X-Factor has not let us down by spraying both cheese and saccharine over a song that does a whole lot better with just a slice of lemon.

At first, Burke’s version seemed OK. Strip it of the baggage that goes with the X-Factor and you have a cover that isn’t all bad. Whoops, thought that thought too soon. Suddenly, the producer found the Dion-a-Tron and cranked it up to 11.

It’s crap. Utter Simon-inspired crap. Thinks that the title means it’s a song of celebration. Tell me, please, any music-biz readers of this blog, what edgy, inspired, unusual music has Simon Cowell ever nurtured into being?

Update: ah, here’s Simon Cowell’s Desert Island Discs. Well, that doesn’t tell you a lot; after all, a person’s DIDs are more about the things that they grew up with than the things they create (or nurture) now. Although I have to say that when I get invited on (you can laugh now) there’ll be some King Crimson, Queens of the Stone Age and Alanis Morrisette in there, as well as T.Rex and Slade. (Wow, that’s five already out of the permitted eight.) So yeah, perhaps it does tell you something.

So how good is the CEBR at predicting things, given its prediction of a 3% shrinkage in 2009?

As the post-Christmas sales got underway, the story was about all these shoppers coming through the door. But that’s not going to satisfy a newsdesk hungry for bad news. Oh no. So the Radio 4 news mixed in the good news – all those people buying stuff! – with some bad: an outfit called the Centre for Economics and Business Research, saying that the British economy will shrink by 3% next year.

OMG!! 3%!!

Except.. who is this CEBR? I’d never heard of it before, and nobody on the programmes which quoted it (BBC, most newspapers, ITN – does that leave anyone out?) seemed prepared to give us any idea of its bona fides. It had given a juicy bad news forecast; why trouble to ask about it?

OK, so I will, since they won’t.

Here’s the CEBR site. And here’s its “newsroom” – where it puts out its press releases – after a time. (You have to “sign in” to get its latest press releases, it seems.) Except it doesn’t seem to have updated with the gloomy statement quoted by all and sundry.

Still, that’s OK: we can look back at previous things it has said. Are they any good?

Here’s what it thought about the purchase of Fannie Mae and Freddie Mac in September:

Is the Freddie and Fannie bail out good news for the United Kingdom housing market? First, this will mean a stronger United States economy. Second, and perhaps more importantly, the Federal government is demonstrating leadership by example. The move will up the pressure on Alastair Darling to be as radical with our mortgage markets. Two of the options being considered by the Treasury are: providing a similar guarantee for mortgage-backed securities; and extending and expanding the current special liquidity scheme to help banks increase their mortgage lending. We await the publication of Crosby’s final report – but the nationalisation of Freddie and Fannie increases the odds of government underwriting of new mortgage-backed security issuance in the United Kingdon. In our view, this represents the best chance of the United Kingdom housing market recovering in 2009.

Yeah, well, some of the mortgage-backed stuff happened, but housing market recovery in 2009? Unlikely, and certainly not triggered by FM/FM’s takeover.

It goes on like this. Basically, I can’t see any clear reason why CEBR would be quoted so highly – except that it had the publication nous to put out its doom-mongering release on Boxing Day.

And newsdesks love a bit of doom-mongering. Who cares whether it’s accurate? Who cares whether the think tank has any sort of track record? It’s bad news, and we love some of that.

But you have to wonder about whether we aren’t sometimes talking ourselves into recession. Hear enough of those sorts of predictions, and of course you’ll be scared of your shadow. No matter that it comes from people whose predictions have been about as good as those that I could make.

We’ll put a marker and come back to the CEBR next year. After all, why not? We could find we praise them, not bury them.

The embedded slides connected to the.. iPhone

I gave a talk at the Webbys – it was meant to be be five minutes on what you love about the web, but the message got a bit wrangled on the way to me, so I spoke about the Free Our Data campaign instead. (It ws a cut-down version of the talk I’d given at Be2Camp, which you can also find on Slideshare. You can see the slides I showed here, or from the embed below; I don’t know how well they would work to any of the songs from Dark Side of The Moon, but give it a stab.)


View SlideShare presentation or Upload your own. (tags: keynote freedata)

One of the talks before me used the video below, though, which I loved.

It’s the work of the advertising agency Lean Mean Fighting Machine.

My wife was unimpressed, however: “it’s just the hand of viral marketing,” she remarked. To which I can only say: yes, but I like it. Isn’t that the idea of viral marketing?

Michael Arrington and the broken embargoes: welcome to journalism, Mikey boy

Michael Arrington, the businessman – think of him like a publisher from paper-magazine days – says he’s introducing a new policy for TechCrunch (not to be confused with TechCrunch UK). The policy: he won’t respect any embargoes – unless, that is, the story (whatever it is) that’s given under embargo is given as an exclusive.

Interesting. Stupid, but interesting. He claims all those PR people keep ringing him up (well boo-hoo, matey) and – falsely, according to someone else – that TechCrunch has never broken an embargo. (Well, he then accepts there was the once, by accident.)

The clear reason for this isn’t about PR people bothering him, or other people breaking embargoes, at all; it’s to get web traffic. It’s to be the site that gets the linkage when a story appears on the basis that it will appear on TC; to be the one the bloggers point to.

However, bloggers don’t do that, in my experience; they don’t necessarily point to original sources. They point to wherever they read it first. (Perhaps one key difference between amateur bloggers and pro journalists.) If TechCrunch doesn’t get more traffic, this won’t actually make a difference.

But it’s also a stupid idea: the idea that exclusives matter any more. As Allan Stern, writing at that Centernetworks writes,

I get offered exclusives every week and I turn down every single one of them. I turn them down because my belief is that it’s best that the startup (or big company) gets the most coverage they can. Some blogs like the embargo as it allows them to look like a news-breaking organization. The truth is, any exclusive that goes up on any blog, I can have a better post written about the story in 5 minutes. Exclusives are the real worthless item out of today’s conversation. But clearly for some blogs, they need to force the exclusive because it’s critical for their success.


There’s a belief that if you don’t offer an exclusive, you won’t be covered. Let me clue you in on a secret, that’s not true. If your story is newsworthy, it will be covered without an exclusive. And if your story isn’t newsworthy, an exclusive probably won’t help anyway. Many outlets won’t cover a story if they know an exclusive was issued. My advice to startups is that exclusives aren’t a good vehicle to use – you want as much coverage as you can, not one outlet.

This is pretty much what I tell people and companies that ask for media advice: exclusives can act against you. Give the story only to The Times, or The Telegraph, or The Guardian (rather than them ferreting it out on their own) and any of those others will dislike you, the PR company or startup company, for showing favour. And while we do try to be extremely professional about all that we do, there’s always a niggling thing with companies that try to play the exclusive game: why do you think we aren’t good enough for you?

Of course that means that you have to try to get the message out to all those different media at once. That, I’m sure, must be hellish for people in PR now. Folks, you’ve got my sympathies there. (Though even so, a little less of the “I’m just phoning to see if you got my email?” wouldn’t go amiss.)

Anyhow, I’ll be very interested to see whether this “exclusives-only embargoes” actually flies for any length of time. We’ll have to watch carefully to see whether the stories on TechCrunch US are embargoed plants, or stuff they get themselves.

My money’s on this policy being dead in six months. Perhaps nine.

Why credit goes bad, and how bankers make it happen

Joe Nocera, at the New York Times, gets told by a banker what’s wrong with the current method of offering people credit:

As a banker, let me describe what we do wrong when we accept and review an application for a credit card. First, we don’t verify income. The first ‘C’ of credit: Capacity to repay, is completely ignored by the banks, just as it was in when they approved subprime mortgages. Then we ask for “household income” — as if other parties in the household could be held responsible for that debt. They cannot. And since we don’t ask for any proof of income, the customer can throw out any number they think will work for them. Then we ask if they rent or own and how much they pay. If their name is not on the mortgage, they can state zero. If they pay $1,000 in rent, they can say $500. (Years ago we asked for a copy of the lease to verify this number.) And finally, we don’t ask how much of a credit line the consumer is looking for. The banker can’t even put that amount into the system. There isn’t any place on the application for that information. We simply put unverified information into a mindless computer and the computer gets the person’s credit score and grants them the biggest line that score and income (ha!) qualifies for.

The trouble though is that as people get made redundant – did you notice the US had one of its biggest layoffs in a single month just now? – they can’t pay those bills. Credit card bills? Screw ’em. We’ll pay the mortgage (if we can). If the credit isn’t secured (which in these cases it won’t be), that means it comes back onto the lender’s books as a bad loan.

Back to the banker:

I recently had a client apply for a credit card. She is a homemaker, with no personal income. The house she lives in is in her husband’s name. She would have asked for a $3,000 credit line, just to pay miscellaneous expenses and to establish some credit on her own. So the computer is told that her household income is $150,000; her mortgage/rent payment is zero. The fact is that her husband’s mortgage payment is $7,000 a month (which he got with a no-income-verification loan). She had a good credit score, but limited credit since she has only lived in this country for the last three years. The system gave her an approval for a $26,000 line of credit!

(No-income-verification loans are also known as “liar loans”, in case you hadn’t noticed.) But there’s a law in the US which lets you opt out of being sent credit offers. Wait – why is it opt-out?

I think Congress did this backwards. Perhaps it could amend the law. The regulation should have required the consumer to opt in, if they so desire, instead of opting out. That would mean that no one would get an unsolicited credit card offer. If a consumer needs a credit card he or she could be given an option to call an 800-number to opt in. Or the consumer could go to their local bank and apply for a credit card in person. Or the consumer could go online and apply for a credit card. The consumer can also view all the best credit cards, nationally, at is an invaluable tool for consumers.

At the time of this writing, the article has 716 comments spread over 29 pages: that’s on a par with Charlie Brooker letting rip at Macs vs PCs.

Some are interesting – especially this one, reading in part:

My wife got confused in a double-cycle billing trap and paid a credit-card balance a day late (technically the day it was due). The bank jacked the interest rate to 30%. I told them “forget it — we’re not paying.” After a few phone calls down went the interest rate to 4%, at least by phone, but when I called for paperwork the bank told me the department that does that is overwhelmed with calls.

Hmm, that sounds like a penalty fee, doesn’t it?

The interesting question will be which banks are the most exposed to credit card debt. Bank of America is rumoured to be at the head of the line. Perhaps Hank Paulson will give them an unbeatable offer to pay it off at 0%, rising to 29% if the balance isn’t paid off in six months…

MySQL errno 13 on OSX: it’s a permissions problem. (Yes, this is technical. Move on.)

This is really techy, and only for those who find themselves in the same situation as me, frantically searching Google for some nugget. No media or financial info here – ignore and move on.

Here’s what happened. I thought one of my databases needed another table (don’t they all?). So I clicked in CocoaMySQL to add a table. Nuh-uh: /* ERROR 14:48:53 Can't create table '#sql-ca_36' (errno: 13) */

Uh? Tried again in a different program, MySQL Administrator. Same result. Tried while logged into to MySQL as root. No luck. So I spent some time tweaking permissions in the administrator. No luck. Clearly, MySQL couldn’t change the structure of its own tables. That seemed a bit remiss.

Puzzled, I searched around a bit – but got nothing that seemed helpful. Except some people had had bad installs… hmm.. Aha! I’d had a problem a couple of months back where a key system program got corrupted – everything else was fine, so I’d done an Archive and Install, and just dragged over the folders holding MySQL (and its data: it all lives in the folder referenced by /usr/local/mysql (get there by going to the Finder and typing Cmd-Shift-G and then enter /usr/local/) – which is usually itself a symbolic link to the folder holding your version of MySQL.

The Apple guide to installing OSX is intended for server but works perfectly well for your own. The key lines are those about getting the right permissions:

Note that at this point everything is owned by root — meaning the mysql account won’t be able to write to the databases under var/ nor be able to create the mysql UNIX socket in the run/ directory. Since we want to run the MySQL database under the mysql account, and not under the root account, we need to change the group association of /usr/local/mysql to the group mysql, and the ownership of /usr/local/mysql/run and /usr/local/mysql/var to the mysql account, as follows:

sudo chgrp -R mysql /usr/local/mysql
sudo chown -R mysql /usr/local/mysql/run /usr/local/mysql/var

That fixes things. But then you need to apply them to the enclosed items too – see the popup at right. Apply to enclosed items, and you’re done. There. A bit of a pain. But maybe it’ll sort someone out who’s flummoxed.

Cochlear implants: what it sounds like for someone who gets one

A fascinating Radio 4 program in the “It’s My Story” series: “Earfull” (stored on Odeo; I hope it survives). First played on 28 November 2008, and telling the story – by an actor aged in his, I think, 60s – going through a cochlear implant. He went deaf in his 20s, and now after four decades (including a life spent as an actor, despite not being able any more to hear dialogue) he is having an implant.

I’m listening to it. Fascinating. He’s talking about having the operation to do the implant and then going to a party the next evening saying “Sorry, can’t stay long, I’ve had brain surgery!” (Except of course that an implant isn’t.)

Including recordings made inside the operating theatre, I have to warn you. “We’re literally operating less than one millimetre away from the facial nerve.”

The experience of actually using the implant happens at about 18:30. He’s a charming man, so happy and amused by the process.

And at 22.45 – you hear a representation of his voice as it comes through the implant. I suspect that it’s processed to make it sound processed, but it does give you an idea of what it’s like. (I suspect it’s normal speech split into 128 channels – which is roughly what it would be like.)

His reaction: “I’ve been playing a deaf character – which I’ve never been able to do before because I couldn’t hear!”

As a reminder of other syntheses of hearing with an implant, there’s the PBS series from a while ago that was presented by Alan Alda. (Requires QuickTime plugin.)

Follow the links to hear their syntheses of sound as hear through a cochlear implant (starting with 1 channel, then 4 channels, then 16 channels, and 22 channels) – and how it gets better and better. These are quite old now by modern standards – we’re up to 128 (virtual) channels on, I think, all the manufacturers. Better lies ahead. (Note: the PBS site can be slow to load.)