Commodities – Buyer Engagement

From a seller or a seller mandates point of view, the biggest time waster is the illusion that we are actually talking with a buyer, an authorised buyer mandate or agent.

Note all agents for publicly listed companies have to be lodged with the appropriate judiciary, the SCC for the USA or ASIC for Australia

However, normally we are taking to someone who says they are one of these, the end buyer, the authorised mandate or agent, but isn’t.

To combat this we have instituted a simple change, when asked we simply follow the process below.

1         Yes we can supply Crude and refined Oil products.

2         Yes we supply products CIF delivery at a discount (usually quantity dependant) below a local  benchmark (Except for Mazut which is generally sold at a fixed price)

3         But No, we won’t send an offer until the buyer has approved (in principle) our Conditions of contract

4         We then send out a file which includes our conditions of contract, upon which on agreement in principle to, we generate a fully authorised offer.

Silence usually follows, and Yes I would rather have silence than a full inbox and many deals, none of which are real.

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Clear evidence of the end of the USD$ as dominant International Trading currency

This caught my attention recently …. an interesting read

http://www.sovereignman.com/finance/another-kick-in-the-groin-more-european-allies-join-china-led-bank-despite-us-frustration-16618/

After the UK announced that it will join the new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well….

This is part of an important transition from the old domination of the USD$ in Internal Trade, particularly in commodities, where up to now, the USD$ has been dominant. Recently there has been an increasing trend to trade commodities in the buyers or sellers currency – for instance in the case of transactions in the Chinese Yuan and the Russian Ruble.

These changes may well be detrimental to the United States in how it pays for overseas debt, that isn’t held in US Dollars. In that case it can no longer just print the necessary currency, it would have to buy the overseas currency at the prevailing exchange rate …. and with the liquidity of the United States already in question, with a estimated net solvency of approximately minus USD$60 trillion – the long term view is not positive, especially when the financial speculators start selling the USD aggressively.

The USA has no way of paying out its current deficit of in excess of USD$18 trillion dollars, accumulated by putting wars on credit card so to speak.  The United States, financially speaking is like a dead man walking …. I am not a financial specialist, but I cannot see a way out for them, unless they seriously cut their spending and increase income currently avoided through taxation loopholes. Surely if corporations are people then like the normal citizens of the USA, they should be taxed on the world wide income, regardless of the tax evasion strategies which they have in place.

A personal strategy would be not to leave funds in USD$ … to ruthlessly minimize your debt, and to put what funds you do have into “safe” (if there is such a thing) currencies, but preferably into hard assets like real estate or gold / silver, the actual metal not the paper equivalent. My personal strategy will be primarily real estate and keeping a minimum amount in liquid assets – and in setting up a simpler life style, whatever that means for you.

One thing that has had a marked effect on the value of the USD$ has been the confidence, Yes confidence that the world has in the currency, everything changes, that perception has changed in no small way due to the war that the American Republican party has been waging against President Obama, holding the USD economy as hostage … this in my view has been a major reason for the loss of face which has led to the loss of faith in this currency.

Good Luck .. just know everything changes and we are always in transition from what was, to what will be.

Introduction to Issues surrounding Engagement Consulting

I was recently speaking on chat to a friend of some problems I had with trying to impress on 
the company, the seriousness of their disconnect with their end clients who were, after all, you know real people… (like them?) it sort of went like this..

We are all much more creative than we give ourselves credit. Sorry for my disconnection with you … I have been trying every which was I can to relate and communicate to non-creative (C level Operations & Executive personnel ) to get them to comprehend what I consider as real business concerns … they consider as irrelevant emotive concepts like customer experience, engagement, feelings, and other more tangible concepts such as sustainable growth (that they understand) and future growth strategies that require innovative and out of the box thinking .. any real growth without innovation is a fantasy .. future real growth will come from disruptive products and services that fracture and re-define the markets

I am certainly passionate about those areas …. where the corporate world think they are operating in a vacuum …. the psychological aspects of individual C Level career success restricts focus, narrows perspective & may break engagement & understanding of customers – I think it more than breaks the connection with the customers … except for those very rare people who have their feet on the ground – not too many of those …
Its amazing the mess that this one issue is causing the likes of News Corp, HP, Netflix, Yahoo and the obvious one is the looming changes facing Mass Media … you know Film, Mass Media (TV)+ Cable + Newspaper + Magazines .. Amazon must be loving this ..

I am been quiet on the blog, because I have been trying to process the so many changes since the uncloaking of the morally reprehensible behaviours of News Corp and a separate free lesson on how to damage your brand and lose over a million of subscribers courtesy of NETFLIX, Yahoo and the bickering … and the fork in the road that HP find themselves — put there through their own bad strategic planning … and lets not forget Delta who are without doubt the singularly worst client and customer culture I have ever observed in a company ….. and finally what the death of a truly inspiring creator, Steve Jobs will mean for Business in general but for Apple in particular, so I will come back here … give me a while to compose my thoughts and we will get at it.

PerhapsI can point to a letter sent by a recent passenger of Delta by my friend Sandra Maxey … here is the link … @sandymaxey Letter to Delta Airlines CEO – http://bit.ly/qcPxoK

But a couple more points while  we are here, I am wondering if we are all in the mess because of the MBA Program … it may make business understandable, but business is not a thing, each company is a life, made up of their own dreams and aspirations, full of individual people whom it might be nice to think are actually going in the same direction as the company, (most aren’t because of flawed Corporate cultures) and the most important aspect, their customers, who are all real people, who want to be valued and engaged … and refused to be categorized and sorted just so it makes it easier for the company to dissociate themselves from this truth .. companies are people … so are customers, people even own it … (maybe not directly) people manage it, operate in it, and who they sell their product or service to … you need to value them or basically become irrelevant .. you will cease to exist.

One last observation, the large aspect of the MBA attitude is one of expedience .. which is kind of abhorrent to me .. however that aside, recently I heard that Harvard and Wharton Schools were adding ethics classes to the MBA .. what a total wast of time, ethics, principles and integrity is not something you can teach, it is something that has to be part of your values, the actual make-up of your personality – if not, when you are put under pressure they (ethics) will not be your go to code of conduct.

So I would say again, to change the way the world thinks we need to teach our children what is really of value – and guess what its not money .. more later

Motion Picture / Content Production & Distribution – the next 5 years

My experience is in content production, distribution, Broadcasting and electronic Media.

Just doing some more research on the current “issue” or alleged issue of Piracy for the motion picture industry. The major players of which is primarily represented in the by the Trade Organisation the MPAA (Motion Picture Association of America, http://www.mpaa.org).

Now until recently I was aware of the issue, but not of the financial details, now after looking at the issue I am actually wondering if there even is a real issue, with the effect of the Global Economic Crisis being seemingly felt across every market segment imaginable, except the motion picture industry, which has according to their own figures had a 15% domestic increase and an International increase of 30% over the years between 2006 and 2010 … wow ! This despite the fact that the number of actual releases in theaters increased just 10.1%.

The price of the admission ticket, rose by 39.4% from 2001– 2010 and yet the cumulative cost of the CPI rose just 27.95% …. ?

OK all that aside …. the rise in the income 2008 –  2009 for theater sales can be expected, as if we go back to the depression, even in harsh economic times (because of the times in fact) the industry has been pretty much recession proof.  The major demographics for the audience goes from 12 to 39 year olds, it is a very niche audience which in these harsher than normal economic times seem to be the only ones that actually have any access to disposable income.

I could go on and on .. however the point is essentially this …. Yes there is a problem with Pirating ( a small one ), but it is not serious, how can it be when year on year the income from sales of theatrical releases has increased far in excess of the CPI … the figures for loss of income presented by the MPAA are not believable.

The following from the immediate past interim CEO, of the MPAA, Mr. Bob Pisano is basically unsubstantiated rhetoric, more commonly known as spin, how can there be a serious problem with over time the income to the industry has increased 30% … such statements as “We will continue to work with our industry partners to fight for common sense ways, through legislative, enforcement and legal avenues, to vigilantly protect the creativity at the heart of our industry from theft.” These kind of statements are making the industry look ridiculous.

I do not agree with piracy, however, this mis-information, is on going and has not been substantiated, they are beat ups by what is essential a trade organisation with a big voice – these statements are not showing the industry in its best light … there are many other industries that employ far more people and families in the USA and worldwide … that actually are in serious and dire straits .. because they don’t have access to the Hollywood Media their voice is lost.  Many families on main street, also have no disposable income to currently invest in any sort of recreation, except free to air TV and maybe cable … remember cable, content on demand and it new variances will be the ever increasing choice for the distribution of content to the wider market.

There are a few issues that the MPAA and the industry in general needs to address… urgently.

The price of tickets is not sustainable, bearing in mind that on top of these are the travel, parking, food etc .. taking your children is not the escape it used to be … I took my son to see Avatar at the local cinema and it cost one adult and one child over $40, not including parking, vehicle .. drinks etc…

The lack of growth is also a social one, and manifests as a result of the niche interests of the population, in their online lives – there will come a time, and it is not that far away where people will not go to the movies in anywhere near the same numbers, it is trending down in real terms and will continue to, for lots of reasons, some social, some concerning access, transport and financial to name just some, hopefully before then the studios will have come up with a way to reach people directly via Video Streaming in their lounge rooms, using the dreaded internet … this is here now – so change your business model or else basically … you have less than 5 years, probably less.  I wrote about the effects of technology on the film industry over 12 months ago, and it seems very much to be following the path and the time frame suggested then … in Australia with the NBN (National Broadband Network) this is supposedly designed to provide fibre access with data speeds from 100Mbps to 1 Gbps … this will have a major effect on  the access to On demand services including rich and video media content in Australia.

The Film industry, as with Television needs to start to make relevant stories – content that people will in the short term at least want to invest money in to go and see … perhaps the new business model is to make low budget movies that are truly an escape from the current meltdown and the huge pressures on families just to get by … but hopefully not too many more regurgitated sequels !!! – mind you that would not be too bad .. if they had a good story, as one can forgive just about anything if the writer and the Directors are at the top of their game –  unfortunately that is not the norm.

Also I have been saying this forever, content production is inseparable from content distribution and visa virsa  … you cannot have one without the other. if you have funds you need to have been or will be investing in infrastructure for program distribution – either in the historical bricks and mortar theatrical release or the new technology content distribution infrastructure, by Video on Demand, Bit torrent or similar technologies ..the future is not with the existing venues as now, if you don’t now make these strategic investments or at least strategic partnerships, the future is going to be a difficult place as you are going to be a poor position at the bargaining table when it comes time to negotiation in 3–6 years …. because then you will have no distribution infrastructure that you influence, control or own.

Note Change is the only constant, be flexible, be awake to the social & technologically driven  changes thaat are all around you, and respond to your market, your consumers – your consumers are not the distribution companies, or the theaters, your consumers are the people on main street … engage with them, find out what they want … if you do not listen to their feedback or even make a channel to listen (really listen) then I do not wan to be the one to say I told you so, while I cry over the carcass of the industry that help to inspire my imagination.

Future distribution will not be by a Bricks and Mortar Theatrical release, ultimately the distribution will be in the form of data perhaps via a Peer to Peer network such as a Bit Torrent data stream … think outside the box people .  Further the expansion of major releases will become a rarity, not the norm, and hopefully Hollywood will actually become a mature business instead of what it appears to be at the moment, an ego driven teenager with entitlement issues.

The uptake of new movies will have to have relevance to the actual market, talk to them, the real users, use the internet, that is its strength, where relationships and communities are the norm, not the exception .. also personally I am pretty tired of the predictability of the content coming out of Hollywood .. what about an original story please – also how about appealing to some level of standard and not the lowest common denominator.

To expand on the above via a personal observation, there are some unique and profoundly creative talents in the film industry, starting with unique writers that are true story tellers, their connection with the viewers illicit profound emotive responses, exceptional Directors with intuitive interpretation, timing and insight, fantastic Cinematographers, gifted actors and support staff … with so much raw talent to draw from why is it so hard to put it all into an exceptional film that does not necessarily follow the prescribed formula … but that creates a real connection, and is not just some faded copy of a something that was once a profound original work.

Mainstream mass media including film, is normally a passive experience (except in the case of that true creative work), this mass media model also includes Newspapers, Radio, Cable / Satellite and terrestrial TV …. there is normally little to no  interaction with the viewer, that is not where we are going, the future will trend …. in the longer term your content will need to illicit a emotive response, or if you cannot create a masterpiece then at the very least, interactive ….ultimately the technology and the data speeds will materialize to make this a reality … unfortunately, the current trends for content is that it will come out of virtual sets, and actors as we understand them now may be a thing of the past, computer generation will be much more prevalent than it is even now.

Concerning the future distribution model, basically the Telco’s that currently own the fibre, need content just as much a you will need their fibre for distribution, however I guess if there is no successful negotiation, between you, then I guess content of the ilk of “I love Lucy” and “A Wonderful life” will be the only content … for distribution … funny that.

I realise that if I was again actively involved with the industry, that is back in the club, after a while, perhaps as little as three years, this type of objective perspective would be nearly impossible for me to create, as unfortunately those in the industry have an total inability to be objective and relate to their viewers, their users .. they are too busy doing, but doing what actually ?

A revelation, perhaps even a epiphany will be come to light and be forced upon the industry sooner or later, as they clearly don’t get it … change is here, recognise it, or suffer the inevitable changes that will be forced upon you, which you won’t like so much – it’s like I say “Change is the only constant, how we experience it, is up to us” ….

Here  is the link to the MPAA Theatrical Report 2010 PDF ….

Is Bit Torrent really a threat for Old Media ?

Whilst on the surface the Bit torrent application using Peer to Peer technology has the capacity to do harm , again I look at the response to this in a productive viewpoint, how can the studios benefit from this obvious market potential …

For software applications, it is only a threat if the license key operates with the software –  this comes back to the software providers own encryption and licensing software system.

For Video, it is obvious, from the numbers of users, it is well proven point that there is a market for TV shows and Movies … this can be shown by the number of Torrent participants in the data stream … why isn’t it an option to pursue, that the content producers offer a legal stream of product, such as the Australian ABC does when product is broadcast within Australia, OK it is downgraded and in Mp4 Video format, but for those who have missed the show, or want to keep it for their amusement, what is the harm ? – it is a domestic only quality. Alternatively I can view the content in high quality using the i-View program replay service … for a limited time ?  This is excellent interactive strategy for a transparent relationship with your customer.

For those outside of the studios primary market, which is primarily that of the continental USA, it is impossible to gain access to the content legally –  due to the Networks own licensing restrictions, people outside the studio zone, cannot view the product on-line … so the Bit torrent Software was born and is used as a response to this limitation. I am speaking primarily here of TV programs, the software allows someone to upload a program that was in the Public Domain, as it has been broadcast, so they can viewed in another geographic zone … In Australia none of the Video Streaming services allow access to the content for users in Australia, due to licensing issues, why is this ? Surely if I was subscribing to a US content provider –  streaming content, my own internet id (Geo location) would identify what geographic zone I was in, and thus my licensing region, and thus the content licensee for this zone … in my view the money I pay for access could be quite easily sent to the applicable country license holder for a particular content, by the i/p address as a subscriber … you guys need to start thinking outside of the box, and there is a substantial  increase in income that will flow once you do something so simple, for no appreciable increase in costs, as well as the increase in net due to increases in good will and lack of a confrontation relationship and the lack of a divisive enforcement arm – which lacks any credibility.

Stripping of a DVD to obtain the Video Stream is something that is another kettle of fish all together, as it was a licensed program, for one viewer only (household) –  I can see the harm here, all though it is no way to take as credible the loss of income the studio pundits claim, you cannot view the numbers and directly equate them to lost profits. However I do not agree with the commercial use of the Bit Torrent service where people pirate these streams to produce pirate copies to DVD’s …. however from the research I have undertaken, talking to users past and present, for a single user .. I have been told by many people I have spoken to actually go onto to buy legitimate licensed products, using the downloaded product as a trial if you like.

The content creators themselves have used the Bit Torrent facility, in the recent past and continue to do so. Recently there was the much heralded release of almost the final installment of a major franchise – (one more to go) … a program full topped and tailed (a teaser .. less than 40 minutes long) was released onto the Bit torrent before the theatrical release date … I have written about this as a use by the studios, when it suited them as a “legitimate marketing channel”, they used the Bit torrent facility, that obviously created interest and did make a positive difference at the box office.

However, by creating scarcity, the studios, the content creators / providers have created a secondary market that is so substantial –  what is their response, instead of being constructive and transparent, and working with the internet, to provide a access channel to provide access to this content, they go to these facilitator organisations that further exacerbate the situation, they troll the internet for alleged offenders. I have been so informed that the content providers / studios supposedly farm out their enforcement to self styled cowboys who I have been told send out unsubstantiated claims of infringement … for which they have no way of gaining anything positive from, except that it creates distance between the two parties and a them and us mentality. Nothing will be resolved … hopefully though, we are looking for a solution here … right ?

Surely if the studios, created a way whereby people could legitimately download a copy of the content, a downgraded quality for free or via something like an i-store or similar content provider at a reasonable cost of say $1 per TV episode (bear in mind there is no medium and the user pays for the data downloaded), the problem would essentially evaporate ….. or provide a encryption licensed video feed on something like a i-View format file, to provide the content …. or invest in a new Video file format that could not be hacked with a one user only encryption key.
Further to these claims of loss that is put forward by the license holders and their cowboys, this is substantially a fallacy, as it looks at the numbers of downloads and equates them to sold product at a sell price, this is such manipulation, as those downloads will not transfer to income unless the studio actually puts a 21st century procedure in to capitalise on this … if those that are seeking content could legitimately source product from the studios, free for a lower quality downloaded copy of pay for it at a reasonable price for a quality product then I believe the problem, much of these I am a victim mentality the content providers, particularly the spin the TV studios are pushing, is substantially a beat up and the problem would essentially evaporate.

If we view the actual financial performance of studio licensing, in context of the United States Balance of payments for 2008, 2009 and now in 2010 –  you can see increases in licensing income for overseas content sales which has increased over these years, the is further explained in another post I will do on Content Production and Distribution .. the need to be ready for the future and the change now.

Incidentally there is only one major TV network in the USA that gets it … and coincidentally only one in Australia … that is making an attempt to provide access .. unfortunately the worst network is someone who should know better and I thought that they did

I wrote about this and other aspects of the affect of the internet on Old Media models in a white paper as far back as 2008 … with different ways to re-structure their business models even then, it is obvious that no one is yet ready to see a solution here and start thinking outside of the box now or then.

My view of the Internet and Older business models, is a couple of things, (1) The internet user demands a different relationship with content providers & (2) Use the internet to form communities, and build a sustainable interactive relationship – this is its strength (3) Please think outside the box … you cannot win this – make some money by approaching it another way … and what you can do best, that is to produce excellent content .

My advice to the studios, capitalise on the opportunity …. focus on your craft instead of sending all your profits to the lawyers.

Rothschilds – another flawed non-sustainable business model

This is an old post of mine on another site …. but I thought it was worth a reprise here

Inspired by an article by Jesse Riseborough and Simon Casey NATHANIEL Rothschild’s the future 5th Baron Rothschild says he now plans to build one of the world’s largest coal producers. A member of the Rothschild lineage that helped bankroll Britain’s war against Napoleon, he is leading a $USD 3 billion ($A3.12 billion) takeover that will create the biggest exporter of coal to China So what do you think the motivation of this is … perhaps greed and control …. by suggesting he could corner the control of the coal exports to China …. when China’s apparent strategy is to use all the worlds coal before they have to touch their own …. because its cheaper …. and makes excellent strategy … because then they will have the option to burn their own coal totally within their own borders … and so much for the worlds need to reduce burning of fossil fuels. Most Indonesian coal (there are exceptions… yes but few) is generally not preferred for China in any case due to its high water content – so what is the real strategy behind this …? perhaps it is to subtly ( though there is nothing subtle about this) apply pressure to China to just suggest that he can for another advantage or have China as a partner in this venture .. mind you I work in commodities … I think he has a snowballs chance in hell of ultimate success .. going up against a sovereign state in this fashion with their essentially unlimited balance sheet – but as I said … perhaps this is the opening gambit, and this is merely a vehicle for another strategy, yet to be revealed. If China even considers such a block possible, does he really think that China will let someone outside of China control – where importing coal is seen by China as part of an overall strategy … people have to stop thinking that China thinks as we do … they don’t …. their vision runs in decades not our baby steps, in other words the next 3–12 months where most of the western world seems to reside. If we continue down this road, China will have the last laugh …. they are using our greed and lust for money to win this particular battle … and the war … (as they see it) … please wake up and understand.

If this article is true, I would be surprised, as I really would have thought that the 39 year old Nathaniel Rothschild would have come up with a more innovative and technologically savvy strategy … such as control of essential earth minerals … necessary for us in today electronics or perhaps tomorrows energy sources or perhaps research into a sustainable way to make hydrogen .. which could provide a portable essentially non-polluting power source from fuel cells …. but no … with this dated coal strategy which would have been innovative 50–100 years ago .. I so don’t think so – as it has so little vision and is so passe’ ….. do get with it mate, remember what century you are in.

News Limited – the "Daily"

I know that it is the essence of business to explore every option, but this niche opportunity that News is exploring to me verges on wishful thinking.

With the introduction of a new product for a very limited closed product market, namely for the Apple iPad. A very niche market … So what happens when a new hardware tablet is produced, a new “Daily” ?

A brave new venture to say the least, in my humble opinion the likelihood of payback and ultimate success is remote, when there is so much other content out there (all accessible via RSS and free),as well it harks back to the old media mentality of a closed channel for information. This is not how it works, and it is not viable to think that way anymore. Nor are pay walls … but that is seriously another discussion about flawed market strategies and tactics altogether.

In their favour News Limited / Fox will be able to provide a very wide and diverse content from news, comments and media content, but will that be enough, my view is that you cannot transpose old media structure on the internet, its about time that Fox and News Limited actually woke up to this. The internet is not about closed systems., something also which Facebook will learn, if it doesn’t evolve.

Concerning the future, if there is one, The Daily itself, will News have control over content –  or will Apple have some say ? Is it going to be skewed or politically biased like other News Limited content ? Also advertising on a subscription service will be needed to create long term viability –  would you pay for a subscription and at the same time be bombarded with advertising ?  Or turn it around, offer the subscription to the magazine without Adverts or no subscription with adverts… and why only for the iPad .. ?

The only good things that I see here is that News is doing it at all – it will have to evolve or die (after MySpace and their fiddling and controls .. what of this ? ) the thing that is innovative about this new venture, is that a subscription service actually exists to provide content under the Apple iTunes / Apps store, now that is a a new horizon to explore.  Good luck with that.