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Archive for the ‘Public Policy’ Category

While the American preacher Harold Camping, who predicted the world would end in May, was mistaken it’s hard not to notice the huge number of natural disasters hitting mother earth.

From the Japanese tsunami, through to the Chilean volcano and increase in tornadoes, it’s been a frightening few months.

Two weeks ago my Wellington- to-Sydney flight got re-routed through Christchurch to avoid the Chilean ash. Just as we were coming in to land, the pilot pulled out as a result of the 5.0 earthquake.

Fifteen minutes later he got the all-clear to land, meaning I was in Christchurch for the 6.3 shake that happened soon after.

Like most Wellingtonians I’ve had a sort of misplaced guilt about Canterbury’s shakes. Having now experienced a glimpse of what it’s like to be in a decent shake, my guilt has turned to self-centred appreciation that my family aren’t going through what thousands of Christchurch families do on a regular basis.

There’s nothing like the smell of one’s own mortality to focus the mind.

A natural disaster may also have started to affect Mark Zuckerberg’s Facebook empire. The seemingly unstoppable social media behemoth has just suffered its first month of negative American growth in May.

According to Inside Facebook, the social network lost six million users in the US, 1.5 million in Canada and 300,000 across Britain, Norway and Russia. Total users were still up 1.7 per cent but a loss of almost 8 million in core territories is a mite queer, especially after a sluggish April.

Whether it’s the cavalier attitude to privacy, their misguided plot to defile Google’s reputation or Zuckerberg’s exceptional ability to annoy the heck out of people, it’s noteworthy. Locally Facebook is still strong, overtaking every other social media site to make up 79 per cent of all New Zealand social media activity in 2010, according to Nielsen Online; it also has similar social media dominance in Australia.

The Australian Defence Force recently got a damn good lesson in how not to handle social media when a recruit secretly filmed sex romps with other recruits and aired it via social media.

The result was widespread condemnation by everyone from Prime Minister Julia Gillard through to the Defence Minister Stephen Smith who commissioned a review of the Defence Force’s social media policy. In announcing the review Mr Smith promised it would “harness opportunities to improve Defence’s work and reputation”.

It was at this stage that things got seriously unstuck. Sydney- based hipsters George Patterson Y&R Advertising was chosen to conduct the review, a firm that positioned themselves as “digital social” experts. When the Australian news media took a cursory look at this firm whose mandate was to sanitise the Defence Force’s laundry, they found a steamy pile of clangers dropped by George Patterson Y&R’s own social media team.

On the company’s Facebook page, and their own sites and profiles accessible from the advertising company’s homepage, were a sobering collection of colourful posts; ranging from some describing Julia Gillard as a lesbian and Kevin Rudd a loser, through to links to acceptable stalking and how to make your own sex toys. Remarkably, the bulk of the offending was conducted by members of the firm’s social media team, likely to be the very people who would be advising Defence.

Herein lies the challenge of social media. The only two commodities with any serious currency in social media are truth and humour. Both are extremely contextual, and thrive on intimacy. If you take either out of context or transpose them into a formal environment they can bite you on the bum.

To many it was further evidence that on the internet you really can’t control what is said about you. To others it was a convincing argument for the need for more control. Whichever camp you fall into, social media and the web more broadly is inspiring in that you don’t need to ask permission to make a tweet, to throw up a hyperlink, or make a complete dork of yourself and your brand.

When the father of internet jurisprudence Larry Lessig reviewed the movie The Social Network, his main beef was that the film failed to get the message across that the key enabler to Mr Zuckerberg’s success was the free and unfettered nature of the online distribution platform.

To Mr Lessig this defining characteristic of the net is under threat. His research (as a professor of Law at Harvard and founder of Creative Commons) has led him to the belief that policymakers and old world powers are collaborating to bargain away net neutrality in favour of regulation through software coding. In his book Code 2.0, Mr Lessig argues that rather than the net being uncontrollable, it allows more regulation than is possible in an offline world.

This week Mr Lessig is in New Zealand for the first time, delivering the key note presentation at Internet New Zealand’s Nethui. For more information check out http://www.nethui.org.nz

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A couple of weeks ago the news came out that directory business Yellow Pages Group was being taken off the sales block.

The marketers of the business pointed to the current economic climate in justifying the decision to can the sales process, while others identified bank pressure as the key motivator. However at a digital level, I reckon the business has experienced killer jabs from consumers and Google that it has failed to recover from.

Back in March 2007 Yellow Pages Group was sold by Telecom to a joint private capital and pension consortium for $2.2 billion, in what was the largest ever local leveraged buyout. Even in the heady pre-global financial crisis times, it was a sobering amount of money.

Clearly the buyers were factoring in significant growth to justify the price, but this failed to eventuate. In the sales collateral circulated by the sales agent earlier this year reported annual revenue was quoted as being $297 million, while “pro forma” EBITDA was $166m.

Word on the streets was that the owners were seeking offers in the $600m to $900m range. The fact that this sum would only go about halfway to meeting the $1.7 billion owed to more than 20 banks and lenders, speaks volumes about the pressure the owners felt to sell.

The information memorandum circulated by the sales agents identified two main business segments, the directory business and the 018 assistance business, with the former making up the vast majority of income.

A directory business makes money in two core ways. First it seeks to upsell listers into larger listings with bells and whistles.

In the media game this is known as “lipstick” as it portrays the person or business in more glamorous light.

A second source of income is the display advertising it can bundle up with the actual listings, in the same way newspaper websites run advertisements around news copy.

While arguments can be made about whether or not Yellow Pages did a good job of selling lipstick and display, I would argue a core reason for its downfall in the online space is that it forgot about consumers.

It figured brand alone would result in it owning online directories, to the point of forgetting that one needs to earn the right to offer services to consumers.

Street wisdom is that a punter will suffer a poor user experience two or three times on a website before they simply give up and go somewhere else. This is what I figure happened to most users of Yellow Group’s two flagship websites.

If you have ever gone to http://www.yellow.co.nz or http://www.whitepages.co.nz then a few things become apparent.
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Firstly, the search engine is dreadful. There seems to be no fathomable rhyme or reason to the results you will get. Rather than using smart algorithms to work out what a person is likely to be looking for, they seem tightly targeted on verbatim search terms. So if you search for “David Smith, Christchurch”, it won’t return listings for D Smith.

The frustration experienced when you search for a person whom you know is there but stays hidden courtesy of a dumb search engine can push normally sane people right to the edge.

Secondly, the default search order for businesses is nominally based around those businesses it holds the most information about. Not only is this not intuitive for users, it looks suspiciously like advertising spend determines placement. Not a great way to build trust.

And thirdly, the search cards for businesses don’t actually list the phone numbers, you need to click off to another page. Damn frustrating.

A usability expert could have a field day on these webpages. Sadly it will be too late if many online consumers have already given up on the two directory sites.

Meanwhile Google got a lot better. And I mean a lot better. Not only did it launch Google Directory and Google Streetview, but its content indexing got a truckload better for phone numbers. It’s fast and mobile friendly. Plus it does a pretty mean reverse phone number search.

Then last year Google introduced multi packs of local business listings, based on geolocation.This is where it displays contact details for likely businesses along with a source map, after working out where you are. So if you search “pizza” and are in Christchurch, you get seven local pizzarias offered up. Last year searchengineland.com found that the organic referral visits of many big business directory sites’, including Yellow’s US equivalents http://www.yellowpages.com, http://www.whitepages.com and www. superpages.com, dropped in the wake of this change.

Yellow Group had a huge headstart with its online directory business, with trusted brands that went back generations. The business was its to lose and a combination of lousy usability and the Google monster may have seen that come to pass.

The sobering news is that the same thing could happen to your business. There are a swag of companies looking decidedly unsustainable in the face of Google’s profound ability to examine, index and retrieve information.

If you rely on ownership of data, obscurity of information or a tilted playing field, then Google will likely challenge your long-term sustainability. The weaknesses I perceive in Yellow Group’s flagship websites is a salient reminder to any business owner to ask how Google-proof they are.

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The most surprising aspect to the conviction of blogger Cameron Slater (better known as Whaleoil) two weeks ago, was the audaciousness of the defence council’s argument.

In violation of court name suppression orders, Slater had identified several high profile Kiwis on his website in connection with a range of offences.  Slater has long argued for the reform of name suppression law and his decision to publish and be damned was in line with these beliefs; that and a laudable desire to stick it to the privileged.

Under New Zealand legislation, it is unlawful to publish the name of any person who has been granted name suppression.  So to me it seems Judge Harvey only had to confirm two things before delivering his finding.  Firstly that it was Slater who defied the court orders.  Secondly that putting this information on his blog site amounted to publishing.  There was no argument against the former, so it came down to a decision as to whether putting that information on a blog was publishing.

But what was surprising was Slater’s defence counsel suggesting that a core issue was whether the suppression orders should have been applied in the first place, and that it was the duty of Judge Harvey to reassess the validity of the original order.  This was effectively asking one Judge to question whether another Judge’s decision should be complied with, and was never going to be a flier.

More amusing was an additional line of defence suggesting that suppression laws only referred to direct reports of court proceedings, and the way they were published did not contravene the precise orders of the court.   In other words a rose by another name is not a rose.   Again, not really a winner.

Beyond the amusement level however, there were three interesting things to come out of the Whaleoil case.

First, blogging is publishing.  While few sentient beings would doubt such a thing, this is the first local decision that confirms that if you write down your opinions and make them available via web log then you are unmistakably publishing.

Second, playing silly bugger games around text speak, pictographs or cute code doesn’t cut the mustard.  Don’t say you haven’t been warned.

Third, if you put a hyperlink on your website to offending material on another website then this also amounts to publishing.  Harvey even predicted the first such local prosecution along these lines.

The Elephant in the room however is what caused Slater to defy the name suppression ban in the first place.  Namely whether name suppression is either desirable or practical in the internet age?

As Judge Harvey noted in his finding, if a person overseas decided to post information on their website that was subject to a non-publication order, it is unlikely to be caught by section 7 of the Crimes Act.  And once the existence of this information becomes known to others it’s able to be spread virally by individuals or groups, indexed by autobots, cached for eternity by servers and located instantly by search engines.  All of this arguably makes the prosecution of a local offender largely a waste of time and energy, albeit mandatory under section 140 of the Criminal Justice Act.

This is far from just an academic discussion.  Justice Minister Simon Power has a passion for simplifying the criminal justice system and he’s in the process of giving glacial justice officials a damn good serve.  Power has set up a joint Law Commission/Justice Ministry project called the Criminal Procedure (Simplification) Project with the aim of giving people easier access to courts and simpler criminal procedures.  While the main thrust is aimed around reducing unnecessary court delays, it also includes controversial changes to name suppression laws.

Ten months ago the Government released what amounts to a draft bill for consultation. It included a blank clause to be written on name suppression.  You can get your last pint of virtual whale oil that he will be getting a truckload of submissions on this, and a key point will be whether it’s worth trying to close the stable gate long after the horse bolted and posted the details of his escape up on his Facebook page.

Power has also expressed his interest in having a national register of court suppression orders.  This is such a blindingly good idea it should just happen.  If you are some poor sod running a web business or overseeing an online community there’s no easy way to find out what suppression orders are in place, potentially putting you at serious risk given last week’s finding.  Even if you want to do the right thing, it’s tough getting information to act on.

Good compliance is easy and transparent compliance. Having a national register would make it easy for any local website operator to ensure they did their best at complying with the law, at least for the period it takes for the law to catch up.

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It’s official.  The Prime Minister has too many friends.  At the recent TRENZ tourism conference in Auckland, John Key let slip that he had maxed out his allowed number of Facebook friends, hitting the magical 5000 figure.

The problem here is more significant that you would think, as it means that Mr Key is not able to be “friends” with either of his teenage kids, as the Facebook commissars have chosen 5000 as the ceiling number of friends you can have.  And speaking from personal experience, while hell hath no fury like a woman scorned, it’s chickenfeed to the damage a dumped teenager can wreak.

The Prime Minister’s dilemma has come at a time when Facebook has just passed 500 million members.  Certainly the site has come a long way since Harvard computer student Mark Zuckerberg built the site in 2004 to allow fellow students to get to know each other.

Zuckerberg based it on a printed document his old prep-school used to distribute with photographs of all students and staff, which was unofficially called “the facebook”.

Early growth was strong, with the site growing to 100 million by August 2008.  But that was peanuts compared to the last two years when membership increased five-fold to a staggering 500 million last month.  But if you think that’s staggering then consider that the business only became profitable in September 2009.

With the possible exception of British petroleum companies, where else but the internet could you have a business with hundreds of millions of customers but still be revenue negative?

In grabbing the social networking crown, Facebook systematically took out Friendster, Second Life, Bebo and Myspace over the last five years.  But it doesn’t rule every roost, as evidenced by Yahoo!’s Wretch in Taiwan, Mixi in Japan, Google’s Orkut in India and Hi5 in Latin America.

The questions on everyone’s lips are how long will it last, and what will kill it?  The internet is no respecter of hierarchy or history.  Last month Bebo provided a superb example of how the distance from hero to zero is breathtakingly short.  In its short five years this former shooting star navigated its valuation from $0 to $1 billion, then down to $10 million.

As it stands right now Facebook faces threats from four main quarters – privacy, data-mining, commercial imperatives and generational creep.

Of all the internet giants, Facebook appears to have the most problems with privacy.  From mistakenly displaying millions of private online chats and friend requests, to unilateral privacy policy changes and Zuckerberg’s own declaration privacy was no longer the norm in the modern world: Facebook has become privacy’s anti-hero.  If you have any doubt just ask the EU’s Privacy Working Group.

Allied to privacy concerns is the data-mining practice of Facebook.   The company’s 5888-word privacy policy gives the company permission to collect information from other users to learn about you and market things to you.  It also gives them the ability to provide members’ aggregated data to private companies for promotional services.

Data-mining is about transforming data into information and providing it to companies for profiling, marketing and surveillance.  Not only does Facebook have huge data, and the technical ability to transform it into information, it also has a privacy policy that is flexible enough to complete the process.

One of the genuine benefits that Facebook provides businesses with is the ability to engage directly with their customers and opinion formers in a meaningful way.  Certainly it has real value in initiating useful conversations about issues and opportunities.  This has seen most progressive corporates invest time and money into social networking.

But the global financial crisis has caused many corporates to look beyond mere soft engagement to hard return on investment.  This has seen many businesses looking to more effective platforms for product distribution, with Twitter being a real winner in these stakes.  Consider Dell who last year sold more than $3million of product through Twitter.

But the biggest threat to Facebook isn’t any of these things, it’s nana.  Some of Facebook’s biggest growth right now is among the oldies – Mums, Dads and grandparents.  And this is far from cool.  Some recent research out of the United States by Ketchum found that 42% of teen influencers hated it or were annoyed when they found their parents on the same social networking site.  If you’ve ever had to drop your kids off a block from school because you’re not cool then you’ll know this feeling.

So the good news for the Prime Minister is that pretty soon his kids won’t want to be his Facebook friends, so he won’t have to delete any of his 5000 friends.

That’s good news for Mr Key, but not such good news for Facebook.

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The good news from the bad year that was 2009 is that the Government opted for more moderate motorcycle levy increases than ACC had recommended.  Thanks in no small part to the thousands of motorists and bikers who delivered loud and clear messages to government.

Mopeds 50cc and under will pay $129.24; motorbikes up to 600cc will pay $327.70; and bikes over 600cc will pay $426.92. Petrol cars will pay $198.46 and diesel cars $311.38 (can’t see the logic of that one myself).

The new levies take effect from 1 July 2010.  So this means in June you should get your ass down to the Post Office, VTNZ or online at http://www.nzta.govt.nz and buy 12 months of rego at the old rate.

There are two other options available that may also mitigate the impact of the new rates on your back pocket.

The first is to seriously ask yourself if you want to put a vehicle’s rego on hold for a while.  So long as you do this before your rego runs out, it costs you nothing and you can put rego on hold for up to 12 months.  For those people with a second or third vehicle they seldom use, this is actually a pretty good option.  Its also very practical for those people who have an older or classic vehicle they are working on.

The second option for those of the faithful who harbour a love for vehicles is to give serious thought to investing in a veteran or vintage vehicle.  These puppies also experienced an ACC increase – but at $69.46 it’s a whole different ballpark from a big bike or a car.  What’s more these vehicles typically have very benign insurance rates as bad people don’t tend to have the IQ to steal them.  Sounds win-win to me.

So there you are, the silver lining to the cloud is you now have a convincing reason to go out and buy yourself a Vincent Black Shadow, MG TC or ’55 Chev.

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