Box Set Culture

I was first introduced to the box set phenomenon in 1974, when I received a collection of novels by J G Ballard for my birthday. This led to an on-off interest in sci-fi (Asimov, Aldis, Bradbury, Dick, Spinrad, Crichton et al). It also made me aware that curators (like librarians) have an enormous influence on the cultural content we consume, and the way we consume it. Even more so nowadays with streaming and on-demand services. Welcome to the binge society.

Welcome to box set culture (Image sourced from Unsubscriber)

With network TV being so rubbish (who needs more “reality” shows, formulaic sit-coms or re-hashed police procedurals?) I am slowly being drawn back into the Siren-like charms of Netflix. More on that in a  moment.

Box set culture has been especially prevalent in the music industry, despite or even because of downloading and streaming services. It’s possible to buy the complete works of particular artists, or curated compilations of entire record labels, music genres or defining eras of music. It’s a niche, but growing, business. In recent times, I have been lured into buying extensive box set retrospectives of major artists (notably Bowie, Pink Floyd, The Fall, Kraftwerk), as well as extended editions of classic albums (Beatles, Beach Boys), and first time releases of exhumed and near-mythical “lost” albums (Big Star, Brian Eno, Beach Boys again). I like to justify these acquisitions on the basis that they are significant works in the canon of contemporary music. But only die-hard fans would attempt to embrace the monumental box set put out recently by King Crimson – comprising a 27-disc compilation of just TWO(!) years in the band’s history.

Death (and/or lapsed copyright) has become a fertile ground for box set curators and re-issue compilers, whether in literature, film or TV, as well as music. I’m sure there are publishers and editors maintaining lists of their dream compilations, waiting for the right moment to release them (a bit like the TV stations and newspapers who keep their updated obituaries of the Queen on standby). Sadly, in the case of Mark E Smith of The Fall, his death was immediately preceded by a significant box set release (tempting fate?). And as for Bowie, he had no doubt planned his legacy (and now posthumous) retrospectives prior to his own demise.

On the other hand, streaming services create the false impression we are in control of what we listen to or watch. Unless we meticulously search, select and curate our own individual playlists, we are at the mercy of algorithms that are based on crowd-sourced behaviours that are imposed upon our own personal preferences. These algorithms are based on what is merely popular, or what the service providers are being paid to promote. And while it is possible to be pleasantly surprised by these semi-autonomous choices, too often they result in the lowest common denominator of what constitutes popular taste.

And so to Netflix, and the recent resurgence in pay TV drama. Binge watching (and box set culture in general) has apparently heralded a golden age of television (warning: plug for Sky TV). But depending on your viewpoint, binge watching is either a boon to shared culture (the normally stoical New Statesman) or results in half-baked content(the usually culturally progressive Guardian). Typically, the Independent is on the fence, acknowledging that binge viewing has changed the way TV is made (and watched) but at what price? Not to be left out, even Readers Digest has published some handy health tips for binge-TV addicts. Meanwhile, Netflix itself has released some research on how binge-watching informs our viewing habits (and presumably, our related consumer behaviours). And not everyone thinks this obsession with binge watching is healthy, or even good for business – presumably because it is not sustainable, as consumers will continue to expect/demand more and more at lower and lower subscription fees.

Meanwhile, for a totally different pace of binge-watching, SBS recently tested audience interest in “slow TV”. The free-to-air network screened a 3 hour, non-stop and ad-free documentary (with neither a voice-over narrative nor a musical soundtrack) featuring a journey on Australia’s Ghan railway. So successful was the experiment, not only did the train company’s website crash as viewers tried to find out about tickets, but SBS broadcast a 17 hour version just days later.

Next week: Infrastructure – too precious to be left to the pollies…

What should we expect from our banks?

As I have written elsewhere, bank bashing is a favourite Australian pastime. In recent months, this has struck a new crescendo. There have been various allegations, legal cases and regulatory investigations surrounding such misconduct as mis-selling of products, rate fixing, over-charging and money laundering, all culminating in a hastily announced Financial Services Royal Commission.

Cartoon by David Rowe, sourced from the AFR, published November 30, 2017

The banks had tried to get on the front foot, by abolishing ATM fees, reigning in some of their lending practices, and appointing a former Labor politician to help them navigate the growing calls for a Royal Commission (largely coming from her former colleagues in the Labor party). But the (Coalition) government clearly decided enough was a enough, and sprung their own inquiry into the industry.

For the benefit of overseas readers, Australia has a highly concentrated banking sector, which is also highly regulated, highly profitable, and in some ways, a highly protected market oligopoly. There are only four major banks (also know as the four pillars, as they cannot acquire one another, nor can they be acquired by foreign banks), and a few regional banks. There is a smattering of non-bank financial institutions, but by their very nature, they don’t offer the full range of banking products and services. As an example of this market concentration, the big four banks traditionally account for something like 80% or more of all home loans.

Aside from the Royal Commission, there are a number of policy developments in play which will inevitably change the banking landscape, and the dynamic between market participants. In addition to the growth of FinTech startups aiming to disrupt through digital innovation, there are four key areas of policy that will impact traditional banking:

  1. Open Banking – giving customers greater access to and control over their own banking data
  2. Comprehensive Credit Reportingmandating the hitherto voluntary regime among the big four banks
  3. The New Payments Platform – designed to allow real-time payment and settlement between customers, even without using bank account details
  4. Restricted ADI Regime – to encourage more competition in the banking sector

The major banks have tried to laugh off, rebuff or diminish the threat of FinTech disruption. They believe they have deeper pockets than startups and just as good, if not better, technology processes. Moreover, customers are traditionally so sticky that there is an inherent inertia to switch providers.

But with banks having to set aside more risk-weighted capital to cover their loans, they may be vulnerable to startups focussing on very specific products, rather than trying to be a full service provider. Banks no longer have the technology edge, partly because of the legacy core banking systems they have to maintain, partly because they lack the know-how or incentive to innovate. And changing demographics will influence the way new customers interact with their banks: “mobile first”, “end-to-end digital”, and “banking for the gig economy” are just some of the challenges/opportunities facing the sector.

So what should we expect from our banks? I would say that at a minimum, a bank should provide: trust (but with Blockchain, DLT and trustless, zero-knowledge proof solutions, banks are no longer the sole arbiter of trust); security (linked to trust, but again, with biometrics, digital ID solutions and layered encryption, banks do not have a monopoly on these solutions); capital protection (although no bank can fully guarantee your deposits); reasonable fees (still a way to go on account keeping fees and some point of sale transaction fees – while disruptive technology will continue to challenge legacy costs); and an expectation that it will not bet against the direct interests of their customers (like, shorting the housing market, for example). The latter is particularly tricky, when banks are mainly designed to deliver shareholder value – although of course, most Australian bank customers also own shares in the banks, either directly, or indirectly through their superannuation.

In recent months, and based on personal experience, I think a bank should also know its customers. Not just KYC (for regulatory purposes), but really understand a customer as more than just a collection of separate products, which is how most banking CRM systems seem to work. Given how much banks spend on consumer research and behavioral data, and how much they talk about using big data, artificial intelligence and machine learning to anticipate customer needs, it’s a constant frustration that my bank does not really know me – whenever I contact them, for any reason, I always feel like it’s a process of “product first, customer second”.

Moreover, I can’t think of a single new product that my bank has launched in the past 15 years of being a customer. Sure, they have rolled out mobile apps and online banking, and they may have even launched some new accounts and credit cards – but these are simply the same products (accounts, loans, cards) with different prices and a few new features. Even the so-called “special offers” I get for being a “loyal” customer bear no relation to my interests, or even my spending patterns (despite all the data they claim to have about me). And because banks are product or transaction-driven, rather than relationship-driven, their internal processes fuel silo behaviors, to the extent that the left hand very often does not know what the right hand is doing.

Finally, with more and more of the working population becoming self-directed (self-employed, freelance, portfolio career, contracting, gig-economy, etc.) banks will have to innovate to meet the financial services needs of this new workforce. Bring on the disruption, I say.

Next week: Box Set Culture 

 

 

 

 

The year ahead in Blockchain, crypto, FinTech….

I’m approaching my second anniversary working within the Blockchain and digital currency sector, but already it feels like a lifetime – such has been the pace at which the industry has grown and evolved.

The number (and size) of Initial Coin Offerings (ICOs) in 2017 was staggering. The cryptocurrency markets were equally breathtaking for their price gains (and corrections), matched only by the speed and extent to which some regulators responded. It was a rollercoaster ride, but by the end of the year, it’s fair to say this new asset class had finally arrived.

(For a round-up of 2018 forecasts and predictions for the sector, my colleagues at Brave New Coin have been publishing some handy guides.)

My personal (but far from unique) view on cryptocurrencies in general is that they represent a new asset class. As such we are seeing huge opportunities for investment and innovation, backed by Blockchain and other decentralized and distributed ledger technologies (DLT), as well as some truly innovative and disruptive solutions. There is still some hype, and considerable asset price volatility, plus pure investor speculation; but there are some great projects out there building solid business models; and sound investment cases for network protocols, industry utilities, scalable solutions and core platforms.

In 2018, I expect to see one or more of the following developments:

  1. A fully deployed, government-backed Blockchain project that will change the way citizens engage with public services
  2. A truly decentralized autonomous organisation that learns to make decisions for itself  (based on a set of dynamic, self-replicating governance rules) as to how resources are allocated, stakeholders are rewarded and participants are incentivized (for all its faults, the DAO was possibly the first new corporate structure since the joint stock company)
  3. Following Japan’s lead, more governments will recognise cryptocurrencies as legal forms of payment, while at least one Central Bank will issue a public digital currency as a form of legal tender (not just an inter-bank instrument)
  4. Traditional securities (equities, bonds, commercial paper, asset securitization) will be issued in the form of digital tokens (via a new form of Token Issuance Program) leading to wider distribution, fractional ownership and reduced cost of capital raising, plus streamlined share registry and custodial services, thanks to DLT
  5. Likewise, “traditional” digital tokens will be issued as formal securities, backed by new types of financial products, allowing for greater financial innovation and funding flexibility
  6. At least one crypto-backed ETF will list on a major exchange, along with more crypto-derivatives such as swaps and options.
  7. One or other crypto-currency will be adopted as a day-to-day payment solution for micro-payments

Only two or three years ago, none of the above seemed very likely, or at least not in the short-term. Today, there are multiple initiatives working across each of these trends. So this is not a case of “if”, but “when”.

Enjoy the ride!

Next week: Bring Your Own Change

 

Token Summit II San Francisco

While in the US this month, I attended Token Summit II in San Francisco, courtesy of Techemy, the parent company of Brave New Coin.

Apart from Bitcoin’s latest all-time highs (and of course, CryptoKitties), the main topics on Blockchain solutions, cryptocurrency trading, token issuance programs and digital asset management were:

Governance – bringing transparency, oversight and standards
Scalability – how to grow the technology in a sustainable way
Interoperability – compatibility and connectivity between chains
Regulation – especially of securities as tokens, and vice versa
Decentralized exchanges – making P2P trading truly viable
Metronome – the “first cross-blockchain cryptocurrency”
Messari – “EDGAR for cryptocurrencies”
Transaction computation vs verification – getting the balance/distinction right
Custody – what the institutional markets are looking for in this new asset class

Demonstrating the demand for access to industry thought leaders and information about the best and brightest projects, Token Summit could have filled a venue twice the size – a growth trajectory befitting the asset class.

Next week: MoMA vs SFMOMA