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Don Christie - Brandon Keepers

Don Christie writes in the New Zealand Herald Global IT companies are taking profit here and putting nothing back:

An organisation I co-chair, NZRise, has been looking at the problem. We represent New Zealand owned digital companies who generate jobs and good incomes for tens of thousands of Kiwis. Our research shows Facebook, Google, Amazon and many other global digital companies are engaged in similar tax avoidance schemes to Apple.

Most revenues that accrue to those companies from New Zealand simply don’t get reported. They are the result of an online transaction and the money flies out of the country in the blink of an eye. No tax. No multiplier effect. No 41 per cent investment into our society.

From a business owner’s perspective it also represents a huge disincentive to invest in R&D, which is already at shockingly low levels by international standards. We find ourselves at a disadvantage to our multinational competitors.

Why create software and technical services in New Zealand when we will always be facing uneven tax playing field?

New Zealand has had a problem with multinational companies and transfer pricing for decades.

Yet the problem Christie writes about is on a different scale.

While the old multinational would shuffle money to minimise liabilities in New Zealand, they still paid some tax. They employed people, trained people and contributed to the economy in other ways. They funded university chairs, sports clubs and other worthy causes. If the new breed does any of that, it’s invisible.

Little contribution

The new multinationals pay next to no tax. They employ next to no New Zealanders. They contribute little to the economy.

Sure, you can argue that Apple products make New Zealanders more productive and that’s a positive economic contribution. The net positive economic contribution may even be greater than Apple fails to contribute in more direct ways.

That is an argument against banning or boycotting Apple products. No-one is suggesting that.

It is not an argument against taxing Apple.

After all, our roads carry Apple products to market. Our schools give people the skills people need to use Apple products. Our health system keeps Apple’s customers alive and healthy. In some cases our tax dollars buy Apple products.

Google this!

You could argue something similar about Google. Some believe Google software makes workers more productive than they would be with other software. Maybe.

Some think that Google’s activities in the advertising sector has an economic benefit. Try saying that to a New Zealand journalist or someone who works in the media.

Again, these are not arguments against taxing Google.

Google is quite happy to sell its products and services to New Zealand government departments that it doesn’t help fund.

It’s harder to argue Facebook offers any economic benefits to New Zealand. If anything it undermines productivity. It is the digital equivalent of an all-sugar diet.

Christie has a good point

There’s little change Apple, Facebook and Google will stop selling in New Zealand if we force them to pull their economic weight.

Until recently the problem was limited. Most of the non-contributors were technology companies. That’s changing with services like Uber muscling in on our markets. If things continue our economy will be hollowed out. Let’s not allow that to happen.

It’s been said that what the companies do is legal. That’s true. It doesn’t make it right. We have the power to change that. We have left this problem in the too hard basket for too long.

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facebook-ads

For years publishers, broadcasters and anyone else in the media business have wondered if Facebook could be their salvation.

The old publishing business model has crumbled. Building mass audiences with entertainment or information then selling advertising no longer delivers rivers of gold.

Some saw Facebook as an answer. Perhaps not the answer, the question is too complex for a single response. And anyway, Facebook has always been part of the problem.

Yet for a moment it looked as if the social media giant could breathe life back into the advertising-lead business model.

Mighty empire

After all Facebook is a mighty empire. It has greater reach and more influence than any organisation in history.

Yet it turns out the emperor has no clothes. Well, fewer clothes.

The Wall Street Journal reports Facebook has misreported its viewing figures for the past two years.

Advertisers have been given numbers that overestimate the amount of time Facebook users watch video by between 60 and 80 percent. This comes after the social media giant talked about the rapid growth in its video numbers.

Advertiser fears

There’s a growing fear among advertisers that Facebook and Google hide too much of this kind of information. That’s ironic, because one reason advertisers tell traditional publishers they prefer online media is ‘accountability’.

This isn’t the only bad news Facebook has for traditional publishers. In June there was an algorithm change which saw Facebook prioritise material from human accounts while decreasing the number of posts users would see from media companies.

Those publishers who depend on Facebook to deliver readers get less traffic as a result.

Many publishers feel they have no choice but to throw in their lot with Facebook. After all, it is the largest source of traffic for most big media companies. And Facebook has consistently pushed itself to publishers in a bid to fill its pages with their, free-to-Facebook, material.

Fickle, unsympathetic

Yet Facebook has proved a fickle and unsympathetic partner. Its relationship with traditional media is asymmetric.

It’s not clear if Facebook’s recent misreporting was deliberate or accidental. The difference doesn’t matter much to publishers, either way they suffer.

Facebook’s business is all about building compelling services that win large audiences. It then sells that attention to advertisers. Google is the same.

Scale

In many respects both are following the traditional media-advertising model, although there are huge differences of scale and neither invests heavily in producing original material. Instead they let other people do the heavy lifting.

You can see this as a parasitic way of making money. Despite all the goody-two shoes rhetoric about extending the reach of the internet into the poorer areas of the world or bringing people together, the pair are vast empires that care little for what goes on down at the grass-roots level.

Facebook is not the answer to publishers’ prayers, it is yet another nail in their coffin.

Facebook MessengerIf you need to contact someone in a hurry, don’t use Facebook or other social media. That is, unless you know the person is happy getting messages that way. Many do, many do not.

Facebook is huge. It has 1.6 billion users. Facebook and its assorted apps account for about 30 percent of all US internet use.

Given those numbers, your message stands a good chance of getting through.

With a billion people spending 20 minutes a day on the site, statistics say your message should reach its target sooner rather than later.

Yet not every person is on Social media. Not even in the world’s rich countries . Not all the people with Facebook accounts are frequent site visitors. Many users are, to use the popular jargon, not engaged.

So unless you know your target will read your message before too long, social media is not the best way to send important messages. It can be hit and miss.

 

If I used an ad blocker Wired’s pop-up screen would be annoying but deserved. Publishers need to sell advertising. Ad blockers undermine their business. You can’t argue with the logic.

Sure some publishers abuse readers. They serve inappropriate, even offensive advertising. Many ads overstay their welcome. Others disrupt viewers with noisy video. Or they get too much in-your-face.

Online ads can make reading an ugly, disjointed business. And yet they pay the bills.

Wired isn’t guilty of those bad things. Or at least not in recent memory.

Journalism is not free

It’s reasonable for publishers to ask for readers to contribute something in return for journalism. That something could be seconds of attention to an online ad or it could be a form of pay-per-view.

But here’s the other thing Wired; I don’t use ad blockers.

My browser doesn’t have one installed. If Wired let me past the front gate, I’d see its advertising in all its glory. From that point of view, I’d be a good reader. Maybe even a lucrative one, because I read a lot of tech stories. Back in the day I’d buy the printed version of Wired if the cover story appealed enough.

I may not have an ad blocker, but I do use a browser extension to block intrusive data collection.

There’s a Ghostery in my house

At the time Wired’s pop-up message appeared, I was using Ghostery. I’ve switched since to Disconnect.

These extensions aim to stop companies from collecting data. I’ve no objection to Wired knowing I’ve seen a page or an ad on its site. I’ve every objection to the commercial snitches watching all my online interactions then selling that data to bottom feeders so they can make my life a misery.

When Ghostery was installed, I didn’t use all its blockers. I customized the settings first to protect against possible malware injections and second to stop tracking firms I’ve never heard of from spying on me. I also object to Facebook knowing what I’m up to away from its site.

But that’s it. So it appears Wired’s pop-up message is doing something naughty.

Zealous

Either it is over-zealous and springs into action at the merest whiff of a user taking back control of their online experience. That’s the benign interpretation.

Or, it’s more evil and Wired has a commercial arrangement with one of the nastier data collection outfits and damn well wants to intrude on my privacy if I visit the site.

The other option is Wired’s coders are incompetent or its business managers are too clueless to discriminate against different types of blocking activity.

Whatever the reason, it’s not good business to punish your customers. No doubt I’ll return to Wired again, but until this is fixed, it’s going to get less, not more of my traffic.

starry night

Scientists say a meteor hit the earth 66 million years ago and wiped out most dinosaurs.

Journalists know how they felt. A meteor crashed into our world in the 1990s.

The internet’s effect wasn’t immediate. Now, two decades on, mostformer journalists work in other industries. The media companies that employed them have either gone or are shadows of what they once were.

After the apocalypse

A handful write on. At times it feels like life in post-apocalypse science fiction.

Some ex-journalists eke out a living in what remains of the media. A few adapted to the new conditions, new rules, new demands and disciplines [1].

A decade or so after the first meteor hit, a second one arrived. Facebook threatens to kill off what’s left of the independent media.

The Empire strikes back

The cover story of this week’s The Economist nails it: Facebook is an empire. That’s no metaphor. The social network’s power and reach rivals that of the USA.

Facebook has more inhabitants than China. It owns more souls than any religion. It makes more money than almost anything. It knows more about you than the CIA or any other spy agency in history.

The numbers are daunting. There are 1.6 billion users. The Economist says around a billion of them use Facebook every day. On average they each spend 20 minutes at the site.

As a result Facebook is the sixth largest company in the world. And it continues to grow. Founder Mark Zuckerberg isn’t done yet.

Facebook is impressive. It appeared almost overnight. It innovates, takes risks and adapts to external changes at internet-speed.

Welcome to the new internet, not like the old internet

In some third world countries Facebook is, in effect, the internet. It controls the networks delivering services to users.

Facebook wants to have the same dominance elsewhere. The business is spreading into entertainment, artificial intelligence and virtual reality. There has never been a walled garden like this before.

Because Facebook knows so much about you and everyone else, it can target advertising with precision. This makes it valuable to advertisers.

Today Facebook is only second to Google in delivering online advertising. Together the two companies account for half of all mobile advertising. Their share is growing.

Advertising

Advertising is the media industry’s oxygen. With Facebook and Google sucking up an ever larger share, there is less, far less, left for publishers. And that means less to pay for journalists. In turn that means fewer valuable stories, less information, a less informed public.

Many media companies stopped fighting cat Gifs and click-bait. Instead they fill their channels with their own junk content in an attempt to protect market share.

Last year Facebook moved directly into the media space by launching Instant Articles. It is a technique to push out content faster. Instant Articles means media companies have to play ball with Facebook to make it work. That means sharing the thin advertising gruel with the online giant.

Media response

Many publishers have, in effect, yielded to Facebook. They are no longer masters of their own destiny. That’s risky, Facebook has its own agenda. It changes policy and strategy overnight. It does what it damn well pleases. It has never been a good partner.

Another risk is that Facebook acts as a censor. It has a prim approach that plays well with America’s mid-west, but doesn’t translate to other cultures. It gets to decide what is and isn’t allowed. Far right and extreme left views may not be acceptable. Conservative social opinions may not be tolerated.

Whether you agree with the censorship decisions or not, this leads to bland, homogenised media. It could mean important new ideas don’t get a proper hearing. It could send dangerous ideas further underground.

Until now, freedom of expression has always been a given online. That could go.

Facebook not friend

Facebook has a low reputation for trustworthiness by big company standards, mainly because it makes money from selling personal data to advertisers. It changes its own rules to suit its needs. Overnight private data can be made public. This is not the best organisation to filter and distribute news or other timely information.

It’s hard to avoid Facebook. But we need to stay wary and critical. I post my story links there, not being on the site isn’t a practical option. I wish it was. Perhaps even thinking that way makes me a dinosaur. If so, it’s a badge I wear with pride.


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