Wednesday, December 31, 2008

2008: Highlights and Lowlights

Everyone is doing one of these, so I thought I would contribute my list of the highs and lows of 2008.

Highlights of 2008

1. Barack Obama's US presidential election victory

After the campaign, the actual Presidency is bound to disappoint. It would have been pleasing to see Francis the Talking Mule take over as a Democratic Party president after eight years of the Bush administration, but Obama's campaign brought so many things together so seamlessly. Tapping into the 'Netroots' movement, the use of social media, a formidable bottom-up fundraising machine, and a campaign that actually offered hope rather than cynicism. Even the most hardened Obama sceptic would find it hard not to be moved by the victory speech in Grant Park, Chicago. I'm predicting a big win for Obama in 2012 as the two factors that could have worked against him in 2008 - race and inexperience - have been surpassed, and he meets a Republican Party at the end of the 40-year Nixon-Reagan Revolution and in its long, dark night of the soul.

2. The Rudd Government's apology to the Stolen Generations

At last, an Australian Prime Minister does the right thing about a historic wrong. Its hard to believe we spent a decade arguing over the importance of this.

3. The Beijing Olympics Opening Ceremony

OK, so the Torch Relays were controversial, and China's human rights record is pretty iffy. But the world wasn't looking at Beijing in 2008 to understand the National People's Congress or discern the inner workings of the SARFT. They wanted a spectacle, and got it. Opening with 2008 drummers with traditional instruments, this was the gold standard of Olympic opening ceremonies. And aside from the dodgy yachting venue at Qingdao and the ongoing pollution problems, the Games themselves went pretty smoothly

4. Matthew Mitcham's diving gold medal

An unexpected gold medal win for Australia, and Matthew Mitcham thanked his boyfriend, his parents, and his coach, in that order. Quite a change from the traumas faced by gay athletes such as the US diver Greg Louganis in the 80s, and the sort of signal of change that may have more impact in the longer term on human rights in China than battles over the Olympic torch relay.

5. Radiohead "In Rainbows"

This came out on the Net in 2007, but the CD was an 08 release (just!). At a time when the album as format may be on its death bed (see Guns 'n' Roses "Chinese Democracy" lowlight #8 below), Radiohead released a beautifully seamless album that synthesises their mid 90s feel for a catchy hook with their late 90s/early 00s avant-gardism into a mix that is the more impressive the more you listen to it. The worthy successor to "OK Computer", which may have been the album of the 1990s.

6. Julia Gillard

A polarising choice perhaps, but one that has to be made. After admirably keeping her cool on Channel Nine when Labor won in November 07, she is the best Parliamentary performer on the Labor side since Paul Keating, and is particularly good when she tears into the myths of Costellology. She has always looked comfortable in the big chair whenever Kevin 007 has jetted off again to advise the Bolivian Government on medium-term monetary policy targeting.

7. Nate Silver's 'Five-Thirty-Eight' US election blog

Transferring a knowledge of baseball statistics to election prediction in the fantastically complicated US electoral college system, Nate Silver's blog had three great innovations that lifted it above the pack: (1) a real understanding of statistical probability (e.g. if John McCain didn;t win Pennsylvania, he had a 3 in 10,000 chance of victory); (2) gauging the momentum of each campaign by photographing which offices still had the lights on in swing districts at 7pm (McCain's didn't; Obama's did); and (3) profiling the voting propensities of each state through indicators such as the ratio of Wal-Marts to Starbucks (high in Kansas, low in Oregon).

8. Manly thumping the Melbourne Storm 54-0 in the NRL Grand Final

More controversial than Julia Gillard at #6, this was an amazing vindication of a side that was nearly down and out after the Super League fiasco (remember the Northern Eagles!). One for my late father, who wore the slings and arrows of being a Manly fan with pride all his life, even if it probably annoyed the Rees NSW Labor government (see lowlight #5 below).

9. Season Six of The Sopranos

OK, this happened in 2007, but due to the unbelieveably crappy programming of Channel Nine (very lucky not to make the Lowlights Top 10 themselves, although I haven't seen Richard Wilkins NYE party show yet), I saw it in 2008. Serial televsiion as a medium for epic storytelling. James Gandolfini as Shakespearean hero-villain in a polyester shirt. Can talk therapy cure a sociopath? I think not.

10. Shane Warne: The Musical

I say this not having seen the show, but it seems a great resolution through live theatre of one of the great socio-cultural divides of Australian society. Every summer, Australia would divide in two. There were those who demanded harsh retribution for Shane's every personal misdemeanor as they objected in principle to his oafish occupation of the Australian public sphere, and wanted the national conversation to turn back to Radio National, Writers' Festivals or constitutional reform. And then there were those who revelled in Shane's outre displays of public bad behaviour, as he stood in for a number of other things the RN/Writers' Festival crowd disliked - SUVs, plasma TVs, alcopops, text messaging and, more generally, sports people being taken as barometers of the national psyche. Anyway, after Shane's gone, Ricky Ponting thinks that captaining a cricket team is like being CEO of a corporation, and look where we are now.

Lowlights of 2008

1. The Global Financial Crisis (GFC)

The GFC bundles a bunch of lowlights together, from the Bush Administration's handling of it in the US, the tanking of super funds (meaning that jobs in universities will remain hard to get for at least another five years), Iceland going bankrupt - and perhaps California next - and perhaps one million unemployed in Australia in 2009. One positive has been the return in a big way of Keynesian economics, which tends to work with the grain of parties of the left.

2. Telstra's no-show for the National Broadband Network bid

The idea that you get the money anyway even if you don't do the paperwork is not the experience of people who deal with Centrelink, Medicare or the Australian Research Council, and the idea that Telstra could just poo-pooh the whole notion of competitive bidding for a multi-billion contract for delivery of a service of vital national importance was indicative of just how adrift and insular the company has become under Trujillo and McGaughie. The probability that all of this will go through the courts in 2009 - which will involve a lot more time and paperwork than submitting a bid proposal for NBN would have done - is staggering, and inadvertently points to the merits of separating the network and retail functions of Telstra.

3. Robert Mugabe's presidency in Zimbabwe

A truly appalling situation, that deserves a particular dishonourable mention for former South African President Thabo Mbeki, who could have put a stop to this madness in May, and who has blemished the idea of anti-colonial solidarity forever by providing cover for this deranged tyrant.

4. The Federal Opposition

Being in Opposition after eleven years in government can;t be a great situation, but the Federal Liberal-National parties made extraordinarily heavy weather of it over 2008, making the Rudd government look considerably better than it actually is. At one point it looked like the balme could be pinned on Brendan "Emo Man" Nelson, as he would get ever more worked up and overwrought in public about the fate of truck drivers, Bundy & Coke drinkers, "ute men" (thanks Glenn Milne), and people who owned ten-year-old Toyota Taragos. But the period since Malcolm Turnbull came in has been just as ragged, despite the fact that he is a more obvious looking Opposition leader than Brendan Nelson was, with the various attempts to mug Treasury secretary Ken Henry in public and Nationals' leader Warren Truss describing the Federal government' economic stimulus package as "bulldust" being indicative of the quality of the contribution coming from the Opposition front bench. As someone who periodically finds myself listening to the Senate in the car, I can say that it is worse live than it comes across as through the media.

5. The NSW state Labor government

Cross-city tunnel, electricity privatisation saga, State Labor Conference, Iemma and Costa resigning, Reba Meagher leaving her driver at the car as she went home with an ex-Channel 7 journo, Matt Brown's 'pants-off' tenure as Police Minister ... the fun never stops, and may not stop for another 2 1/2 years. Nathan Rees and Eric Roozendahl proved to the financial markets how tough they were to eb with the budget by abolishing free school bus passes, and then proved they are listening to the electorate by backing down on the policy a month later (yeah, the electorate were going to celebrate the end of free bus travel for school kids). The Premier State: dazed and confused.

6. Corey Worthington

If you are going to do something stupid in Australia, do it in January. You can get condemned for it not just by A Current Affair, but by the Victorian Premier, the Police Commissioner, and the Police Minister. I'm surprised that Kevin didn't chime in.

7. Sports stars in rehab

I do genuinely appreciate the decisions made by Ben Cousins, Wayne Carey, Andrew Johns etc. to face up (eventually, after getting caught out) to personal drink and drug demons, but they have generated a cottage industry around them as well as a book publishing phenomenon that suggests they have taken over from the ever popular "Rock stars in rehab" genre.

8. Guns 'n' Roses "Chinese Democracy"

Fifteen years in the making. Out with Slash, in with Buckethead. Straight to the remainder bins. Sorry Axl, its Welcome to the Wal-Mart Stacking Shelves (or perhaps the kitchen at KFC).

9. Britain's display at the Beijing Olympics Closing Ceremony

Red London double decker bus offloads Jimmy Page, who plays "Whole Lotta Love". I'm surprised he didn't stop off for a carton of milk and a pack of ciggies on the way.

10. Mandatory Internet filtering

Symbolic policy and pointless pandering to the Christian lobby by the Rudd government at its worst. Will hopefully be the first policy to fall over in 2009. Special dishonourable mention to Professor Clive Hamilton, who co-edited a book in 2007 titled "Silencing Dissent", and seems to spend much of his public life trying to silence dissent with him. As The Who said in 1970: Meet the new boss, same as the old boss. We won't get fooled again.

And a fabulous 2009 to all of you.

Monday, December 29, 2008

At the Myer post-Xmas sales

Here I am at the Brisbane post-Xmas sales. Photo c/o The Courier-Mail, I am on the upper escalator, behind the woman with the red bag who is on the phone.

Boxing Day sales were up about 6 per cent on last ear, suggesting that if there is a recession, most Australians are not paying much attention to it yet.

Apparently the biggest queues were for an 81 cm plasma TV at Big W in Chermside going for $697, suggesting that the Green anti-consumerist message may also be taking a while to filter through.

FWIW, I didn't end up buying anything at Myer. I instead came home with two Nautica shirts, a Tommy Hilfiger shirt and Tommy Hilfiger chinos. A pair of Ben Sherman black striped pants were not purchased due to crappy fly button. All up about $300.

Did I get bargains? Probably not. Did I need these? Maybe. Was it fun being in the rush. Definitely - unless you needed to use the fitting rooms.

Wednesday, December 24, 2008

Valuing Australian copyright industries

A report released last month by PricewaterhouseCoopers for the Australian Copyright Council, titled Making the Intangible Tangible, the Economic Contribution of Australia’s Copyright Industries, found that Australia’s copyright industries in 2007:

• employed more than 837,000 people (8 percent of the nation’s workforce) – up 21 percent since 1996;
• generated $97.7 billion in economic activity (10.3 percent of GDP) – up 66 percent since 1996; and
• accounted for $6.8 billion in exports (4.1 percent of all exports) – up 6.3 percent since 1996.

According to Ms Libby Baulch, Executive Officer, Australian Copyright Council, copyright was vital for innovative businesses looking to develop new products for the Australian market and for export and that “research has shown that intangible assets, such as intellectual property, represent an increasingly significant proportion of most companies’ value ... The facts are that copyright industries have increased their share of GDP and employment over the past decade while other industries such as agriculture, forestry and fishing have gone backwards.”

These figures would place the copyright industries in Australia slightly below the United States in terms of overall economic contribution (10.3% of GDP as compared to 11.1%).

For more read here.

Tuesday, December 23, 2008

Anxiety about the Internet

Anxiety about the future of mainstream news media in the mainstream news media appears to be growing. Here is Melik Kaylan worrying out loud in Forbes magazine, and lamenting the good old days of gatekeeping and normative media:

The Internet Is Bad For The Truth
Melik Kaylan

The Internet's evisceration of the music business points to yet another kind of meltdown on the horizon, one that may reach a crisis in the Obama years: the meltdown of Big Media purveyors in newsprint, television, books and movies. We confront a bewildering sea change in mass communications, and nobody seems to have clue where we're headed.

In the music biz, easy download capability through computers meant that consumers preferred not to go out and buy CDs. They shared the music for free via the Internet. Now that they can download for a dollar a song from iTunes--a clear revenue stream has appeared but a little too late. Everything else has changed.

Soon after consumption became too easy to monitor properly, supply followed suit; anybody could create music and push it on the Web, thereby bypassing the music industry gatekeepers. Result: There was a Babel of options to choose from and--the already famous excepted--no way of knowing whom to choose because the new process destroyed the old one by which talent gradually evolved toward fame and recognition.

The gatekeepers had served the vital function of filtering, marketing and branding talent. By creating celebrity, they'd helped focus the attention of mass audiences toward shared tastes, shared cultural experiences and, ultimately, shared values (however dubious).

Many iconoclasts objected to the old system, and have been delighted with the changes. They talk of "democratization" and "proliferation of choice" and "pluralism."

This is especially true in the area of news media. Ann Coulter, for example, was recently asked in a public forum what she thought of the financial difficulties besetting mainstream newspapers. She was delighted that the monopolies had finally fragmented and new voices like hers could be heard.

In principle, she is right--but then she achieved fame just before the floodgates opened. She had Fox News on her side and a still-healthy book-industry distribution and marketing system, albeit one that largely found her views distasteful. When the monopolies fade, so will the role (and fame) of anti-monopolists like the leggy and feisty Ms. Coulter. (I have written about her before.)

Where are we headed? Here's a clue: Whenever I returned from reporting in Iraq, I was always asked by people at dinners and cocktails--informed citizens all--"What's it really like over there?" Ye Gods, I thought, you live in the most media-intensive environment, with so many sources, how can you still be asking?

At first I thought they didn't trust the media monopolies or the political slant in every report they read ranging from blogs to newspapers. But I've come to sense a profounder cause at work: the fragmentation of the very process by which we form opinion, or taste, or ultimately a sense of the truth.

I grew up in the U.K. at a time when the television offered two state channels and one commercial channel. It meant that mandarins with high taste determined the level of culture to be nightly consumed by the citizenry. It also meant that the country as a whole experienced culture, even counterculture, in unison.

Not a bad time to grow up--from high-minded documentaries like the 7-Up series to entertainment from the Beatles to Monty Python to Spitting Image, the system produced terrific results. Sure, one had to filter out the snoozy-left default ideology of BBC apparatchiks, but most people were intelligent enough to do so, and partly because the BBC didn't talk down to them. After all, the country elected Margaret Thatcher.

Never in doubt, though, was the nature of truth, what it looked and felt like. It was a whole and compact thing with a glue of certainty at the core, enough to act upon, and it grew out of shared reality, common experience. I am not talking about opinions here, political or otherwise, but the sense that it was possible to know what actually happened, to digest the knowledge and believe you knew the truth.

I speak here of the Western world. That sense of the truth was precisely what the Iron Curtain countries lacked, because they disallowed any and all alternative voices.

But there is a point at which multi-cultural, multi-ethnic, trans-national, infinite and contradictory sources of information simply confuse and bewilder the individual and fragment the perceptual consensus. Since no one has the time to wade through all the sources, one arrives at the same relationship to the truth as the Soviet citizen: knowing the truth is too much hard work--if it is even knowable in the end.

To take Iraq again--what your news source chose to report--what it chose to see, even--depended often on its political bias. Anti-war bias? Lots of car bombs to report. Pro-intervention? Lots of turning points in the long struggle. But with a zillion blogs and sources, even by local Iraqis, each with its particular political nuance, how could you know what was the "balanced" version, indeed what was the reality. So much for infinite pluralism in the media.

Recently, I went down to Miami Beach to report for the Wall Street Journal on the annual Miami Art Basel extravaganza. Watching the mega-moneyed collectors at the main art fair, I was fascinated to see that they were all watching each other. In a field where a bunch of cigarette stubs in a medicine cabinet by Damien Hirst can be worth $1 million, nobody knew what was good or bad art, indeed what art was.

Here is the reductio ad absurdum of endless "inclusivity" or "inclusiveness"--it ultimately destroys the category that contains it. Endless truths destroy the notion of truth. If anything can be art, you have no idea what defines art, and you start watching other people to get clues.

The Internet, by its nature, destroys that shaping experience by which countries or cultures live a "moment" together. It's not a normative medium as the BBC was in my youth. It simply feeds the consumer's pre-formed tastes, it doesn't form them. If you know what you want, the Internet is a great tool. But how do you develop your tastes, or political biases or moral code--the criteria that help you to choose--in the first place? My bet is, in the coming decades, it won't be through the media anymore.

Sunday, December 21, 2008

More on California fiscal crisis

From the Financial Times:

SAN FRANCISCO, Dec 19 - California Governor Arnold Schwarzenegger declared a fiscal emergency on Friday to call lawmakers into another special session to tackle the state’s weakening finances, and separately ordered state officials to prepare to furlough and lay off employees to cut costs.

His two actions mark a dramatic escalation in the budget battle waged in recent weeks in Sacramento, the capital of the most populous US state and world’s eighth-largest economy, as its revenues fall harder and faster than expected.

California’s state government now faces a $40 billion budget shortfall over its current and next fiscal years and is on track to run out of cash in February.

California’s Democrat-led legislature concluded its prior special session on Thursday by approving an $18 billion budget package, but Schwarzenegger, a Republican, said he would veto it because he wants lawmakers to both address the state’s budget gap and ease regulations to speed construction projects to help stimulate the state’s economy.

Assembly Speaker Karen Bass said the Democrats’ package would have provided for $3 billion in revenues for transportation projects, accelerated $3 billion in bonds for transportation projects and made it easier for hospital construction and expansion projects to move forward.

The dispute over which approach would better boost California’s ailing economy, underscored by its 8.4 per cent unemployment rate last month, comes on the heels of a decision on Wednesday by the state’s Pooled Money Investment Board to halt $3.8 billion in loans for public works.

The state government needs funds from the Pooled Money Investment Board to pay for vital services. The board’s action affects almost 2,000 projects, including highways, schools, levees, housing and parks.

The legislature now has 45 days to pass and send a bill or bills addressing the state budget to Schwarzenegger.

In the meantime, the state’s Department of Personnel Administration will under Schwarzenegger’s executive order adopt a plan that would go into effect in February to furlough state employees and supervisors for two days per month.

The order also calls for state agencies and departments to initiate layoffs and other ”program efficiency measures” to post savings of up to 10 per cent in the state’s general fund.

”Every California family and business has been forced to cut back during these difficult economic times and state government cannot be exempt from similar belt tightening,” a statement from Schwarzenegger office said.

Assembly Majority Leader Alberto Torrico and two other top Democratic lawmakers issued a statement that said Schwarzenegger’s order ”adds insult to injury for the state’s economy” and chided him for failing to win over either Democrats or Republican lawmakers to his budget plan.

”The governor has shown he can’t negotiate with Republicans, he doesn’t negotiate with Democrats, and now he’s refusing to negotiate with employees,” their statement said.

”It’s the same lack of leadership that has kept him from coming up with a single vote for any budget solution. And now that lack of leadership has resulted in his making a scapegoat of employees who are not the source of the problem.”

Friday, December 19, 2008

News and Information as Digital Media comes of age

The Berkman Centre for Internet and Society at Harvard University has published a series of papers, blogs, discussions, videos etc. around the theme of Media Re:Public: News and Information as Digital Media Comes of Age.

There are papers on international news, new media literacy, public broadcasting, digital media and democracy, mainstream news and the networked public sphere, as well as a series of case studies on the site. The underlying premises of Media Re:Public are:
• Public participation in the media, enabled by the Internet, is a burgeoning and evolving phenomenon that has both positive and negative effects.
• Dramatic changes in the traditional news media are occurring in parallel to the rise in participation, primarily due to the disruption of their business models by new distribution systems.
• Simple dichotomies—new vs. old, mainstream media vs. blogosphere—do not accurately describe the current environment, with its complex interdependencies among media entities with different structures and motivations. The distinctions between professional and amateur are blurring, and the definitions of commercial, public, and community media are shifting.
From the Overview paper, authored by Persephone Miel and Robert Faris, some key points are:
  1. Under pressure from falling revenues and the disruption of their business model, traditional media outlets are reducing and shifting the scope of their original reporting.
  2. Web-native media entities are not addressing all of the crucial reporting gaps left by traditional media. Current structures and mechanisms do not provide sufficient incentives for them to do so.
  3. In the changing media environment, news consumers risk relying on news sources that are neither credible nor comprehensive.
  4. Participation in the online media space is not evenly distributed; some populations and ideas remain underrepresented.
  5. There are elements of critically important journalism that have not yet found reliable sustainability models in the online media environment.
  6. Efforts to understand and address these issues are limited by a lack of solid empirical evidence, and must rely instead on incomplete information, anecdotes, and intuition.
For more read here.

Thursday, December 18, 2008

Crikey and LP on the ABC and SBS Submission

Margaret Simons has picked up on the 'Social Innovation' submission I posted yesterday at her Content Makers blog at Crikey.

One submission to the review has been made public by its authors, and makes interesting reading. It is co-authored by Queensland University academics Axel Bruns, Stuart Cunningham, Terry Flew and Jason Wilson, (shortly to be at the University of Wollongong). Cunningham, in particular, has a modicum of influence as part of the Austraian Research Council funded Centre of Excellence for Creative Industries and Innovation*.

You can read their submission here, key points are summarised here and there is a discussion about it public broadcasting going on here . You are encouraged to get involved.

But here is a key point the authors make, which has relevance for the idea of a restructure of the ABC based on content and target audience, rather than delivery platform. The authors say:

In the 21st century digital media environment, where all media outlets are multi-platform and digitised in their modes of content production and delivery, it is better to understand the ABC and SBS as public service media organizations, rather than public service broadcasters. This emphasises how it is the services provided, rather than the delivery platforms, that are at the core of rationales for public support of the ABC and SBS.

Now there are those within the ABC that are relishing the suggestion of a return to a management structure based around content. Some within the organisation think that a lot of problems can be dated back to former managing director David Hill’s moves in the other direction - removing executive power bases that were based on content, rather than around radio, television and so forth.

All this debate is, in the long and the short run, a lot more important than the stuff about individuals - Sue Howard and all that.

There has also been an ongoing discussion at Larvatus Prodeo, initiated by Mark Bahnisch:

The points made in Terry’s post might be enough to riff off, but I’d be interested in any case in opening a discussion on where public broadcasting should go. I think we’re at an interesting crossroads where some of the unintended consequences of the Howard government’s funding cuts to ABC and SBS can now be leveraged into something more interesting - particularly in light of some innovation overseas (especially in Britain). I have a feeling that in the less “big picture” areas of federal government responsibility some more interesting developments are likely to occur under the Rudd government than in the headline stuff. And public broadcasting is one arena that can potentially attract a lot of citizen input ... So, as they say, let it rip!

I'll aim to synthesise some of the main points over the weekend, and perhaps try to get something into the mainstream press in what is definitely a slow news time of year.

Wednesday, December 17, 2008

Social Innovation, User-Created Content and the Future of Public Service Media: Submission to the ABC and SBS Review

Perhaps fittingly, my last required task of 2008 was for the Rudd Government. More precisely, it was preparing a submission for the Review of National Broadcasting being undertaken by the Department of Broadband, Communications and the Digital Economy.

The submission was co-authored by my colleagues Stuart Cunningham and Axel Bruns from QUT, and Jason Wilson, to commence at the University of Wollongong in 2009. It will appear on the DBCDE web site shortly, but it can be accessed here for those interested.

Key points of the submission were:

1. The question of how national public broadcasters respond to changes in the media environment arising from digitisation, convergence and changing societal needs and expectations can be best understood as a question of social innovation;

2. In the 21st century digital media environment, where all media outlets are multi-platform and digitised in their modes of content production and delivery, it is better to understand the ABC and SBS as public service media organizations, rather than public service broadcasters. This emphasises how it is the services provided, rather than the delivery platforms, that are at the core of rationales for public support of the ABC and SBS;

3. There is considerable scope for both ABC and SBS to enhance and renew their Charter obligation as and social innovation remit through public service media through user-created content strategies, particularly in their provision of online services;

4. For the ABC, UCC strategies can make a considerable contribution to its provision of Australian content in news and current affairs, localism and diversity of news and information, particularly through the development of hyper-local content that exploits its network of broadcast media outlets throughout Australia and its unique presence in non-metropolitan Australia;

5. For the SBS, UCC presents new opportunities to harness its unique relationship to Australia’s diverse ethnic, language and cultural communities and its central role in the provision of international news and information, by enabling it to diversify its sources of news and other informational content material by reaching beyond the international news agencies to draw upon material sourced from ‘pro-am’ contributors around the world, and accessed locally through the Internet;

6. The ABC and SBS have the potential to be content innovators in the provision of news and information in ways that utilise UCC strategies, and to play a key role in growing international debates about the future of journalism and news media in an environment where media consumers are participants and content co-creators and not simply passive recipients of news and information. As public service media organizations, they are uniquely placed to enable new UCC opportunities in the online media space while also managing such content sourcing strategies with their policy, legal and Charter obligations, as well as questions of the accuracy and relevance of information, quality and credibility of news content and sources, and identity as highly respected news brands.

Saturday, December 13, 2008

Still watching California

The issue of whether the US state of California will go the way of Iceland is still on the agenda.

THE state of California, one of the top 10 largest economies in the world, will run out of money by February, causing "financial Armageddon", according to dire new budget projections.

As of yesterday, the state's debts were mounting at a rate of $US1.7 million ($2.54 million) per hour.

The de facto insolvency of the US's most populous state - home to such economic engines as Silicon Valley, the Central Valley agricultural region, Hollywood, Napa Valley, the Long Beach ports, and the defence research and production facilities of Los Angeles, San Diego, and the Mojave Desert - would represent a new scale of catastrophe in a year that has seen financial markets and economies across the world implode.

Bill Lockyer, the Treasurer of California, has given warning that $US5 billion of public works projects, including road and school construction, will have to be cancelled because the state's lenders are worried about an impending Iceland-style bankruptcy. California - which has a GDP of $US1.7 trillion - already has the worst credit rating of any of the US's 50 states.

"Without a budget solution, state financing of infrastructure projects will stop. It's as simple, and dire, as that," Mr Lockyer said this week.

For California's Republican Governor Arnold Schwarzenegger, the crisis represents a humiliating final act to his second term. Mr Schwarzenegger, 61, came to power in 2003 because of an almost identical financial calamity, which resulted in his Democratic predecessor, Gray Davis, being "recalled" from office.

At the time Mr Schwarzenegger promised an end to California's tax-and-spend policies and runaway expenses, yet over the past four years of his administration the state's budget has grown by 40 per cent to $US144.5 billion. Thanks to the housing crash, recession and credit crunch, the state can no longer afford this with tax collection.

As the crisis continues and California's credit rating deteriorates, the cost to the state of borrowing keeps rising - a process that could ultimately cause the same kind of deadly spiral that this week tipped the Chicago-based publisher of the Los Angeles Times into bankruptcy.

Mr Schwarzenegger is proposing the same kind of emergency tax rises that in 2003 turned Mr Davis into a pariah. He has suggested a 1.5 per cent increase in sales tax - the equivalent of Britain's VAT - and a tripling of the car tax. When Mr Schwarzenegger first ran for office, he did so on a promise to a revoke a similar car tax increase proposed by his predecessor.

So far, however, Republicans in California's legislature have refused to go along with the proposals and Democrats have refused to cut government programmes, hence the stalemate.

Mr Schwarzenegger has declared a "fiscal emergency" to keep California's legislature in session until a solution can be found.

"When you have a crisis the most important thing is to make a decision," said a clearly frustrated Mr Schwarzenegger at a hastily called press conference on Wednesday. There, he presented an electronic display showing how much the deficit is growing in real time: $US470 per second, $US1.7 million per hour, and $US40 million per day.

He put it outside his office in Sacramento in an attempt to get the state's legislators to reach some kind of agreement. "The worst thing is not to make a decision," he said. "The most costly thing we can do is not to take any action."

California's biggest problem is the precipitous decline in tax revenues over the past year. The state's property taxes - the equivalent of Britain's council taxes - are based on the value of a house when it was first bought, and can then rise by no more than 2 per cent a year. This means that by far the most tax revenues come from new property sales, and these have all but dried up.

Adding to the problem is the fact that many homeowners who bought during the bubble years are now successfully appealing against their property taxes, using evidence that the value of their home is less than it was when they purchased it.

Tax revenues have also been hit by the global recession.

Wednesday, December 10, 2008

More media trouble: Tribune and Fairfax

This item from Tuesday's Wall Street Journal via The Australian:

TRIBUNE Company has filed for bankruptcy protection, in a sign of worsening trouble for the newspaper industry.

In recent days, as Chicago-based Tribune continued talks with lenders to restructure its debt, the newspaper-and-television concern hired investment bank Lazard as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, people familiar with the matter say.

Tribune owns eight major daily newspapers, including the Los Angeles Times, Chicago Tribune and Baltimore Sun, plus a string of local TV stations.

A Tribune spokesman said the company doesn't comment on rumours or speculation. A spokeswoman for Lazard didn't respond to requests for comment. Representatives of Sidley Austin couldn't be reached for comment.

Tribune's latest actions underscore the deepening distress enveloping Tribune and other newspaper publishers. Their businesses are being battered by dwindling advertising sales, and many are carrying debt loads that are unmanageable in current market conditions. Industry insiders expect some papers will need to fold in coming months or seek protection from creditors to reorganise.

Tribune has been on wobbly footing since last December, when real-estate mogul Samuel Zell led a debt-backed deal to take the company private. Tribune has stayed ahead of its $US12 billion ($18 billion) in borrowings with the help of asset sales. Now, however, shrinking profits are tightening the noose.

The company's cash flow may not be enough to cover nearly $US1 billion in interest payments due this year, and Tribune owes a $US512 million debt payment in June.

One of Tribune's most pressing concerns: The company is likely to be in violation of debt terms that limit borrowings at the end of the year to nine times its adjusted profits. The ratio stood at 8.3 at the end of the second quarter, before Tribune reported an 83 per cent decline in operating profit for the three months ended September 28.

Violations of such debt covenants have become commonplace for newspaper companies as their profits have ebbed. Lenders so far have been willing to give the companies a pass in exchange for higher interest rates and other concessions, but Tribune has little wiggle room. Terms of the company's debt already are so loose and its financial standing so unsteady that a covenant waiver may not help.

Tribune's hiring of Lazard, meanwhile, brings it a firm experienced in debt restructuring, and one that has become a go-to adviser for newspaper companies in financial distress.

Even as its financial performance worsens, Tribune has some options. A sale of its Chicago Cubs baseball team is under way, and Tribune owns valuable stakes in businesses including the cable-TV channel Food Network.

Tribune already has auctioned off pieces of the company, including the Long Island, New York., daily Newsday to raise cash. Now, frozen credit markets have depressed sale prices.

Selling off more newspapers may not be a viable alternative because buyers are scarce and Tribune may be better off holding onto the profits from its papers.
And cost cutting is most likely afoot at Fairfax under new CEO Brian McCarthy:

SPECULATION is growing that likely new Fairfax Media chief executive Brian McCarthy could restructure senior management.

It is likely he will elevate more former key Rural Press executives to top positions in the Fairfax group.

It is understood Mr McCarthy will be formally anointed as CEO of Fairfax at a 9.30am board meeting in Sydney today.

The meeting comes after broking firm Goldman Sachs JBWere revealed last night that Fairfax's weekly page count across its main metropolitan newspapers, The Sydney Morning Herald, The Age and The Australian Financial Review, fell by about 5 per cent. This was led by a 20 per cent fall in classified ad pages across all mastheads.

Today's board meeting will also discuss how it plans to pay down $2.5 billion in debt. It will examine immediate options that include cutting dividends, selling off assets and more cost cuts. Mr McCarthy's former role as CEO of the leanly run Rural Press, taken over by Fairfax last year, is seen as the perfect training for Fairfax's necessary belt-tightening.

Fairfax is moving on from its expansionary phase of recent years -- which saw it clock up debt by making a number of takeovers -- to one of getting the best out of existing assets.

Speculation has centred on the possible elevation to more senior roles of a raft of former colleagues of Mr McCarthy at the regional newspaper group, all schooled in what has been dubbed the Rural Press "School of Cost Management".

As one media analyst at a broking firm put it yesterday: "Some of the Rural Press team have effectively been the shadow cabinet since the merger with Fairfax. But following the landslide election win of Brian McCarthy as Prime Minister of Fairfax, they are now likely to move to the front bench."

Those possibly in line for elevation under such a policy could include: Brian Cassell, currently Fairfax's group finance general manager; Allen Williams, head of community newspapers for the Hunter and Illawarra regions; and Allan Browne, CEO of regional publishing, southern and western.

Mr Cassell is particularly in touch with the McCarthy approach, having been his trusted finance lieutenant as general manager, accounting and finance, for Rural Press, a company famed for its lean approach.

Mr Cassell's current finance role at Fairfax sees him as No2 to the company's current CFO, Sankar Narayan. Mr Narayan was appointed in April 2004, under the former Fairfax regime of Fred Hilmer. Like Mr Hilmer, he had a management consulting background.

Mr Narayan is broadly viewed by analysts as a "strategic" CFO who was appropriate for the company's expansion of recent years. However, as one media boss put it yesterday, Mr Narayan is not regarded "as an operational CEO".

Alternatively, informed sources say, while Mr Cassell is viewed as a "numbers guy, not a strategic CFO", this could be an appropriate choice for the company in the finance area as it moves to a belt-tightening phase under Mr McCarthy.

Already, Mr McCarthy -- who for 20 months has been Fairfax's head of Australian operations -- has had another former Rural Press executive as a key right-hand man, with Lloyd Whish-Wilson CEO of Fairfax's NSW and ACT metropolitan publishing.

There have been suggestions of a restructure of roles at the top of Fairfax under a McCarthy regime. Mr McCarthy may look to restructure national and metropolitan newspapers to break down silos within the business.

One more radical scenario could see a return of Fairfax to a single national management structure, as opposed to the state-based silos now in place.

Late yesterday, it was revealed Fairfax's departed CEO, David Kirk, completed his term still owning a total of 1.97 million of the company's shares.

Tuesday, December 9, 2008

John Quiggan on US netroots (and why no Australian equivalent)

Very interesting post by John Quiggan on the rise of the 'netroots' movement of online liberal Democratic activists in the US, and why there is no Australian equivalent. I should say that I think he is wrong to say that the antipathy to bloggers from mainstream journalists is less in the US than in Australia.

Political blogging came into its own after September 11. In the past few years it has experienced phenomenal growth, including in Australia. John Quiggin tracks its rise. Artwork by Michelle Verghis. With elections approaching in both Australia and the United States, the role of blogs and bloggers is attracting increasing attention. Writing in The New Republic recently, Jonathan Chait described the netroots (the online community of liberal Democratic Party activists) as “the most important mass movement in US politics”.

He compared its significance with the conservative Republican movement that originated with the 1964 Goldwater campaign, and has dominated US politics since the election of Ronald Reagan in 1980. Chait is highly critical of what he sees as the party-line sensibility and excessive vitriol of the netroots, but he is in no doubt they are well on the way to displacing the old centrist establishment, based on such groups as the Democratic Leadership Council, and on pundits such as David Broder, routinely described as the dean of the Washington press corps. This development is striking in a couple of respects.

First, the whole phenomenon of political blogging is barely five years old. The central focus of the netroots, the Daily Kos blog, was established in 2002, and was receiving only a few thousand visits each day in 2003. This year, it is receiving 600,000 visits a day, a figure comparable with the circulation of the Boston Globe or San Francisco Chronicle. Over the same period, the total number of blogs has gone from thousands to tens of millions. Equally striking has been the shift in the predominant political orientation of blogs.

Political blogging first emerged in the wake of the September 11 terror attacks, and the dominant figures were strongly pro-war, with political orientations that ranged from libertarian to conservative Republican. Prominent figures included Glenn Reynolds, whose Instapundit blog remains at the core of the right-wing blogosphere, and Australian Tim Blair. As late as 2003, conservative bloggers held a lead of two or three to one over progressive bloggers in terms of audience, number of blogs and so on. The conservative blogosphere extended a period of internet dominance that began with sites such as the Drudge Report, Free Republic and NewsMax.

The first big shift in this pattern came with Howard Dean’s campaign for the Democratic presidential nomination in 2004, which was heavily backed by internet activists, and gave rise to the term “netroots”. Although Dean burnt out early in the race, his supporters remained active, and a pattern for the future had been set. By 2005, the political balance in the blogosphere had been reversed. Progressive blogs such as Daily Kos, Talking Points Memo and Think Progress now receive more traffic and, increasingly, more media attention than their conservative rivals. Moreover, the progressive blogosphere has been far more successful in mobilising new activists than its right-wing counterpart, though, of course, this reflected the much greater organisational strength of the Right at the time the blogosphere emerged.

Having bowed to pressure from the Right to correct perceived liberal bias, the centrist media establishment found itself increasingly attacked from the Left for seeking balance, in preference to factual accuracy, on issues such as the Iraq war, global warming and economic policy. On all these issues, the netroots claimed, the positions of the Bush administration were factually wrong, and the media was obliged to state this explicitly, rather than adopting the “he said, she said” style traditionally seen in the American media as the hallmark of objectivity.

How does the Australian scene compare? Adjusting for the smaller scale, there has been the same explosive growth, from a handful of blogs in 2002 to hundreds today. And the shift to the Left has been, if anything, even more marked. Although right-wing blogs dominated the scene early on, only a handful of note remain, while there are dozens of prominent left-wing and centre-left blogs. Individual blogs have largely been displaced by group efforts such as Larvatus Prodeo (leftwing), Club Troppo (centre-left) and Catallaxy Files (broadly libertarian).

On the other hand, there has been nothing comparable with the development of the netroots in the United States. Although most political bloggers make their general sympathies clear, few appear to be active members of political parties (an obvious exception is Senator Andrew Bartlett) and fewer still use their blogs for political organising or election campaigning. There are several reasons for this outcome. First, unlike the US system, where activists organising on the internet can easily become involved in Democratic party primaries and where election campaigns are heavily focused on the merits of individual candidates, the Australian system offers only limited opportunities for this kind of activity.

In Australia, participation in preselections is normally limited to party members, either in local branches or as elected delegates. Campaigning for preselections is a matter of old-fashioned canvassing, recruitment (or branch-stacking) and factional deals, none of which are readily adapted to the internet. At general elections, votes are largely determined by the appeal of parties and their leaders, rather than individual candidates. Second, whereas partisanship has increased substantially in the US over the past couple of decades, it has generally declined in Australia.

Although some issues, such as the treatment of refugees, have aroused real passion among people, the general temperature of debate is much lower. The most vitriolic political debates in the Australian blogosphere tend to be those surrounding George Bush and the Iraq war, where Australian bloggers are part of the broader international debate (Australia’s own military involvement being seen by both sides as largely tokenistic).

Finally, the antagonism between bloggers and the mainstream media, as a whole, is far less marked in Australia than in the US. Right-wing bloggers attack the ABC for its soft-liberal bias, while left-wing and environmentalist bloggers denounce The Australian for its treatment of global warming and the Iraq war, but these are just extensions of disputes taking place within the mainstream media.

Australian bloggers have been highly successful in gaining access to the mainstream media, and particularly its opinion columns. Tim Blair (an established journalist before he was a blogger) is now the opinion editor for The Daily Telegraph, while The Australian Financial Review regularly publishLinkes economist bloggers including Joshua Gans and Andrew Leigh.

Conversely, with a few notable exceptions, Australian mainstream media outlets showed much less of the hostility to blogs initially evident in the US and have now embraced the medium with gusto. News Limited has its own blogocracy site, run by pioneering Australian blogger Tim Dunlop, and most opinion columnists (including some of those who were initially very dismissive of the whole phenomenon) now have their own blogs.
This is taken from the Media, Entertainment and Arts Alliance's "The Future of Journalism" site, and was originally published in The Walkley Magazine. Perhaps the claim that there has been enthusiasm for adopting online open publishing models in Australia may be a complement to the Australia journalism community who receive this work.

Friday, December 5, 2008

Its now safe to go back onto a university campus

After receiving a grand total of 69 submissions, the Senate Committee established to investigate allegations of left-wing bias on Australia's university campuses found the claims were not substantiated. Established in the dying days of a Liberal-National party majority in the Senate, the Committee split along party lines.

What started as a campaign by the Young Liberals against left wing bias as ended with no recommendations, with the committee dismissing the evidence as anecdotal and unrepresentative.

But both Labor and Coalition senators expressed some concern over teaching quality.
In particular, the government members said the increasing numbers of casual and part-time tutors made it difficult to mentor inexperienced staff, and that the allegations of bias presented to it were more a function of poor quality teaching.

"There is evidence that in some very few cases an academic bias may be accentuated through poor teaching, and this should concern departmental heads and faculty deans," the report said.


Labor senator and committee chair Gavin Marshall mocked the Young Liberals submission that "outed" some left wing academics as having an "undergraduate tone" and said the committee had felt like it was being asked to play a part in a "university revue."

"In view of the relatively tiny numbers of submissions received from the hundreds of thousands of students who are said to be affected, there can be no basis for arguing that universities are under the control of the Left and that this is reflected in course content and teaching style," he said.

According to the Australian Liberal Student Federation, the small number of submissions reflects the fact that students are intimidated by the bias to the point where they are afraid to send a submission to a Senate Inquiry.

But the Young Liberals hit back. "What the government has failed to realise is that the very problem of academic bias stifles the will of students to protest about unprofessional conduct," said Byron Hodkinson, president of the Australian Liberal Students Federation said.

As Officer Barbrady would say on South Park, "Everybody move along now, there's nothing to see here."

When is it wrong to take photos?

Graham Young raises some interesting issues on his Ambit Gambit site about Labor MP James Bidgood taking pictures of a man threatening to set himself on fire outside Parliament House on Thursday. While Bidgood has been condemned by all sides for taking the photo and then selling them to The Daily Telegraph (the $1,000 went to a Multiple Sclerosis charity), Young argue that citizen journalism has been about citizens capturing events that the mainstream news media hadn't got to - the aftermath of the July 7, 2005 bombings on the London transport system are the most famous example.

Bidgood is an unlikely cause to champion. His recently announced beliefs that economic recession is somehow God's revenge may identify him as a religious nutter. And there is also the issue that he is an MP, not an ordinary citizen, and that perhaps he should not have ought to profit from the photos. But Young's point about whether it is the role of parliament to set rules about how others use the Internet and other media and to determine what are the universal codes of ethics is an interesting one. Indeed, the nature of ethical dilemmas alway relates to those who some would consider 'nutters' - if everyone was sensible and reasonable as defined by, say, Clive Hamilton, there would be little need to discus the relationship between ethics and rights.

Labor MP James Bidgood is in trouble for taking a photograph and selling it to a newspaper chain in return for a donation of $1,000 to a charity of his choosing. Perhaps I have a tin ear, but what has he done wrong? Or is this an extension of the principles that have led to the Net Nanny State?

Was the taking of the photo what is said to be wrong? Or was it selling (what he calls "passing") the photos to Newscorp for a donation.

If you read his statement to parliament, it is hard to tell. Here are his words:

Mr BIDGOOD (Dawson) (7.00 pm)—Mr Speaker, on indulgence: this afternoon at an event I took photographs of a serious incident. I later passed those photographs to a news organisation in return for a donation to charity connected to disabilities. My actions were highly insensitive and inappropriate. I am tonight writing a letter of apology to the family involved. I deeply regret my actions and I apologise once again for any offence that I have caused.

How can taking the photos be a crime?

The promise of the 'net, and the premise on which OLO is founded is that making the news, and analysing it, is not, and should not be, the preserve of professional journalists, many of whom have no expert understanding of the areas on which they report, and operate to commercial criteria which are frequently antithetical to good reportage.

For more read here.

Wednesday, December 3, 2008

Clock still ticking in California

The world's sixth largest economy is still in danger of fiscal insolvency. The ramifications of California going the way of Iceland are pretty dire to contemplate.

With time and money running out for California, Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called legislators into a new special session that won't end until they agree on a way to trim the state's $11.2 billion budget deficit.

"Without immediate action, our state is headed for a fiscal disaster" in which California could run out of money to pay its bills by late February, the governor said in a news conference in Los Angeles.

He compared the growing deficit, which could reach $28 billion by 2010, to an avalanche gaining momentum, and he slammed the Legislature, Democrats and Republicans, for not coming up with solutions during a special session that ended Nov. 25.

"Unfortunately for California, the legislators did not seem to appreciate the severity of our crisis," Schwarzenegger said. "In an emergency like this, we have to take quick action to avoid even worse problems, even if they include decisions we don't like."

For more read here.

Tuesday, December 2, 2008

Media jobs crisis

The downturn in media industries is really starting to bite in the U.K.

LONDON, Nov 28 (Reuters) - British media companies could cut tens of thousands more jobs in the coming years as the economic downturn hits an industry already ravaged by the Internet revolution.

British newspaper groups and broadcasters have announced a host of cuts in recent weeks as the downturn in advertising caused by wider economic problems eats into revenues.

But analysts believe this is just the latest wave from the troubled industry, and that worse is to come. They expect stabilisation in the advertising industry by 2010 and not a proper recovery until the London Olympic Games in 2012.

Claire Enders, founder of independent consultancy group Enders Analysis, told Reuters she expected about half of all UK media jobs to go by 2013 under current economic conditions.

"We calculated the total jobs in the media in the UK at about 400,000, that includes newspapers, radio, TV, production companies, advertising and so on, at the end of 2007.

"Between the beginning of 2008 and 2013 we're expecting half of those jobs to go. The big employers are the regional press, magazines, local advertising sales. Real numbers are in print."

For more read here. There is also wholesale belt-tightening in the US entertainment industries.

Interestingly, it is predicted that it is those services rely most upon subscriptions (such as BSkyB) that will fare best, and those most reliant on advertising (free-to-air broadcasters such as ITV) will do worst.