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Stunted By Reality Just another know-it-all talking about life, business, technology, sports and music.

10Jan/12Off

The screwing game: Cable companies vs Fred Wilson

New York Knicks logo

Perenially on the cusp

Fred Wilson on AVC recently wrote a blog post about how he ended up 'illegally' streaming a New York Knicks match because there was no 'legal' way for him to pay for it without actually going to the match. In that situation he had been willing to pay even $25 for the priviledge. The post is aptly titled #screwcable!

In and amongst the support for what Fred did were some well argued contrarian views. The quote below is not one of them though it raises an important issue.

The players, owners, league spend money to enter into contracts with cable companies and specialized networks, who in turn negotiate with advertisers to bring viewers an entertainment medium. They have real costs to all of this. But because someone doesn't like that there are fees or limitations or other obstacles within the creating group's model, it's okay to simply "hack" in and take what one likes?

I agree that a lot of planning and investment goes into making a profitable business out of a sports team or even any other entertainment performance like a music album or whatever. Those investors and operators are perfectly entitled to charge what they want and how they want in order to recoup their costs.

For me the big caveat in all the above that turns someone like Fred into a 'pirate' is the fact that during business planning a conscious decision has been made to have this sports package not appeal to him. That is through a combination of pricing, segmentation rights, down to stadium capacity, match day scheduling and location. When all is said and done the rights holders have put together a package which they believe will earn them the most revenue possible in order to recoup costs that they have deemed as appropriate for this enterprise.

In simple terms; when selling their package rightsholders are consciously saying #screwyou to a certain percentage of interested parties. Nothing wrong with that. It's their prerogative and a balance HAS to be found.

What I find interesting is that there seems to be a belief that it's okay to then go after these people who have already been told to screw themselves as if they actually mattered to the business model. They don't really; and any plan should not have taken into account revenue from someone who has been told where to go or revenue lost by that person consuming that service in a way that does not deprive other willing buyers. The fact is no business can sell all their products to everybody all of the time. Someone has to be out of the loop even though digital products make that scenario theoretically possible.

Naturally there are people who infringe copyright and would have been perfectly able to legally consume it. It is wrong of course, but I believe that every business model has to try to have low enough barriers to allow people to take up the product. In a previous post I referred to the concept of a consumption threshold. This is something that is generally not a feature of high quality digital content, though Louis C.K seems to have found a balance between price and protection and he is succeeding despite those who are saying #screwyou to him. It's probably because he only tried to 'screw' relatively few people in the first place!

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23Nov/11Off

Copyright infringement is not stealing

Anti-Theft

Maybe that ought to be a picture of a hammer cracking a nut.

Some time ago Fred Wilson on AVC.com posted an article about how annoying he finds it when people describe copyright infringement as stealing. He has a point. Infringing a copyright is not stealing. It is just that an infringement. Both are wrong and in most countries illegal, but they are not the same.

I also find it very annoying when people use words that should apply in an effort to get me on their side. It's a bit like that scenario where someone tries to turn you against another person by telling you something bad they are meant to have done. Except in this case the the squealer doubts that they have sufficient ammo to get you worked up and have to dress it up. A lot.

And so it is that the digital protection agencies and creative unions are uncomfortable about factual copyright debate and it seems that 'By-Any-Means-Necessary' is their new strategy. Unfortunately Fred didn't eloquently put his point across and his article soon generated into another 'How do I make money from my digital product?' debate.

Here on Stunted By Reality we don't like minced words and I tip my hat off to the commenter who noted the real difference between copyright infringement and theft.

Theft would be stealing a sculpture, or... picture.

Copyright infringement would be taking a picture of the sculpture and posting it online, or producing a replica of the sculpture.

Either act deprives the author the right to enjoy the benefits of his/her work, but they are totally different concepts.

I'll add that theft will definitely deprive an artist of the ability to sell his sculpture, however infringement does not do so. I am not saying that infringement is OK; I'm just saying lets not use hyperbole in trying to paint the picture.

If a serial groper terrorised women on public transport, by all means we should throw the book at him and even throw away the key, however it still wouldn't mean that he committed rape. That would be sexual assault no matter how depraved his groping technique was.

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16Aug/09Off

let the bankers get their money

Cut the bankers some slack. Greed is good.

Cut the bankers some slack. Greed is good.

I’ve just been reading about George Osborne (the opposition Conservative's Shadow Chancellor) statements about how bankers' large pay awards were "unacceptable" for any bank backed by state guarantees. I was stumped once again because I’ve heard this before from him, the press and the Man On The Street.

The Conservatives are making some mistakes on their journey to government. They'll get there despite themselves and because of Labour's ineptitude. However, this banker's pay issue is not going to be responsible for the Conservatives attracting voters and as such they should just stop taking vote-buying stances like these. The public is disillusioned by the banking sector, amongst other things, but thems the times we live in. All of a sudden the Man On The Street is not talking about Osama Bin-Laden, Kandahar and the Tora-Bora mountains, but about quantitative easing and the stimulus package. This doesn’t mean the Man On The Street is adequately informed as I’m about to point out.

For me to believe that the self-appointed party of business is sincere in not wanting the banks to issue big bonuses is quite hard. Why? Because we have to look at what a bonus is in the first instance for us to think about whether or not the practise is a good idea.  By definition a bonus is a reward for greater than expected performance. Success, in other words. Anyone who owns a business should be glad if they have to pay out a bonus. Simply put it means that things are going well and that the people responsible are being rewarded for helping to bring about that success. By extension large bonuses are probably a result of big success. I hear that HSBC delivered almost £200,000 in net earnings per head in their investment banking arm the other week. That was just for one quarter by the way. Stunning.

The only issue we should be arguing about is how bonuses are structured. Fred Wilson on AVC.com touched on it some time ago, though I didn't agree with all his points. Among the contentious issues I'm against that he pointed out are;

  • Guaranteed bonuses - This, I believe, was a big part of banking remuneration practise prior to the crisis. Guaranteed bonuses are not in anyone's interest other than the person receiving them. No company has any business guaranteeing a bonus, though I understand the thinking behind it.
  • Contractual obligations - "all bonuses should, at the end of the day, be subject to board and compensation committee approval (even if the goals that trigger the bonuses have been met). The board has a fiduciary responsibility to look after the stockholders first and foremost. If paying the bonuses (even if they have been earned) puts the company in trouble, then there needs to be a mechanism for the board to avoid paying them. Compensation committee and board approval does that." Where the compensation committee has approved remuneration they should not however, backtrack as happened with RBS and their former CEO.

Having taken into account the above two scenarios I believe bankers (and any other worker) must be given whatever bonuses their success dictates. If that bonus is large and based on a percentage of the business they've brought in, so be it. The bonus just has to be measurable and the business they've bought in, traceable.

Mr Osborne thinking that large bonuses are a bad thing is just something I can’t buy into. Maybe his, the Man On The Street and the press’ sentiments are driven by the prevailing economic crisis, but I think that it’s misguided and an over-reaction. On the contrary, some of these troubled banks like Northern Rock and Lloyds could do with attracting as much top talent as they can to get them out of the messes they’re in. How do you think they can do that?

Of course the Man On The Street is also a voter (probably a former Labour one at that) and thus Mr Osborne wants to be on his side. But hey, I believe voters are a stupid bunch anyway. Mr Osborne doesn’t need to placate them by giving them the bankers’ heads when he may just need those same bankers if he gets to government.