Wonga is not the sort of fintech we want thank you

By Neil Patrick

Does technology have a moral compass? I guess most would say it’s morally neutral. It is the people creating it who must carry that responsibility. But technology and big data is the great power of our age. And with great power comes great responsibility.

When someone tells you big data is the answer, it’s smart to look beyond the data

This week Wonga.com went into administration. It’s a business I’ve watched with interest since its foundation in 2006. But not with admiration, rather a growing unease that its business model wasn’t just unethical, it was fatally flawed. It was bound to have a messy ending.

Wonga was the UK’s biggest payday lender. Payday loans in the USA remain illegal in 14 states yet created several multi-millionaires there in a few short years. And as is usually the case, when that happens, the idea travelled across the Atlantic very quickly to the UK.

Not very long ago, Wonga was a posterboy for the fintech sector. They invested in lavish TV commercials. They sponsored Newcastle United Football Club for £8 million a year. And they were once courted by investors eager to share in their profits.

Papiss Cisse of Newcastle United.
 Photo credit: Dudek1337

And Wonga's founders would be the first to admit that they trusted data and algorithms more than people. Couple big data with a fast and simple internet-based application process and Wonga were sure they would be the next big thing in money lending. They would take a proven business model from the US and turn it into a data-driven internet giant in lending. Tech is so much cheaper and more reliable than people after all. Or is it?

It all went horribly wrong for reasons which are not the same as the ones talked about in the mainstream media. They give you the headline facts. I’m more interested in what created those facts…

A short history of payday loans in the United States

Banking deregulation in the United States in the late 1980s caused many small community banks to go out of business. This created a void in the supply of short-term microcredit, which was not supplied by mainstream banks due to their unprofitability. That unprofitability was easy to explain – banking regulations wouldn’t permit the ultra-high interest rates needed to cover the high default levels that such loans inevitably create.

The payday loan industry sprang up to capitalise on this void and to supply small short-term loans to the working class at very high interest rates. But how was it that they were able to make these loans when banks could not?

W. Allan Jones, the 'father of payday loans'

In 1993, Check Into Cash was founded by Allan Jones in Cleveland, Tennessee, and became the largest payday loan company in the United States. He’s known as ‘the father of payday loans’ - I am unsure if this is a tribute or an indictment - and his business was made possible only after he donated to the campaigns of legislators in multiple states, convincing them to legalize loans with such high interest rates.

And thus a massive new industry was born…

Subsequently, the industry grew from fewer than 500 storefronts to over 22,000 and a total size of $46 billion. By 2008, payday loan stores in the United States outnumbered Starbucks shops and McDonald's fast food restaurants.

And this was the point at which two entrepreneurs named Errol Damelin and Jonty Hurwitz envisioned an internet-based payday loans business in the UK. Both had previous internet start-up experience; but critically neither had any experience of retail banking. I could see exactly how Wonga would make money. I had no doubt about that. What I could also see was that the business model was completely unsustainable.

What exactly are you disrupting?

Wonga claimed and possibly believed they were disrupting big banks. They were not. They were actually disrupting doorstep money lenders and loan sharks; some of the most odious and exploitative businesses you will find.

And guess which other online sector is also in trouble today? Online ticket sellers. They claim they are making event tickets more easily available. But they are actually using all sorts of devious online trickery, enabling inflated prices not to mention a raft of fees and charges which are added to the bill. If they are disrupting anyone, they are disrupting ticket touts and making a killing in the process.

And just like the payday loans sector who became the target for heavy intervention by the Financial Conduct Authority, so too are the secondary ticketing websites, including Viagogo, StubHub, GETMEIN! and Seatwave. All are now under similar legal and regulatory threat by the Competition and Markets Authority.

So when new businesses say they are disruptive, that’s not automatically a good thing. What matters is that the disruptors are challenging an expensive or exploitative sector, remedying the fundamental failures of that sector, not amplifying them through mere digital deployment.

Investors loved this business – at first

In 2008, when Wonga was still an early stage start up, I was doing the rounds of venture capital firms in London, capital raising for another fintech startup. I distinctly recall one venture capitalist telling me that what he really wanted was another Wonga.

Wonga had already raised £3.7m to fund its initial platform development. In July 2009 Wonga raised a further £13.9m of funding through other VC firms (including the one I talked to). These investments enabled Wonga to complete their first platform and begin lending money.

The point here is that investors are looking for a quick return on their investment. Usually a sell out or exit after 3 - 5 years. They want a deal they can buy into cheap, and sell fast with a big return. This rapid rate of buying in and selling out enables them to avoid possible regulatory trouble because:

Regulators are far too slow to intervene to remedy exploitative practices

As I was watching the growth of Wonga and other payday lenders, I was also watching what regulators were doing. One of the first to take any notice was the Office of Fair Trading. Yet in their initial reviews they claimed that they had too few complaints to merit any sort of intervention. Instead they opted to merely keep an eye on things. It wasn’t until 2012 amidst explosive growth of payday lending and mounting criticism, that the Financial Conduct Authority decided to intervene.

The Financial Crash of 2008 was great news for payday lenders

Although when Wonga was founded, the financial crash of 2008 was still ahead, when it came, this event was to ensure that payday lenders were to benefit. Banks and other mainstream lenders stopped lending to virtually everyone. But people’s need to borrow didn’t diminish, which left Wonga with suddenly much less competition from more traditional lenders. Moreover, the economic doldrums which ensued in the Great Recession created new customers in their droves.

Screenshot from Wonga.com showing the cost of borrowing £100 for 30 days as at 17 Nov 2013

In 2012, a typical loan from Wonga had an annual percentage rate of 4,214 per cent. This equates to a charge of £42.96 for borrowing £100 for just 36 days. The debate still rages about this. Payday loans are by definition very short-term. And small. But most traditional loans are bigger and long term, so historically, the annual percentage rate of interest (APR) was a convenient and appropriate way to measure the cost of a loan. Not so much when the loan is for just a few days. My view was and remains that APR is not relevant when assessing the cost of ultra-short-term loans.

No-body wanted to buy Wonga because other predators were eating it…

In September 2012, Wonga reported profits of £45.8m for 2011 from revenue of £185m. But the threats and cracks were already showing. Not least of these was the Financial Conduct Authority’s new rules and ongoing investigation into the whole payday loans sector.

Already anticipating a new financial compensation opportunity, legal claims management firms saw that payday lenders would become their next carcasses to feast upon. And they were right – payday loan regulation created a whole new raft of claims opportunities. Coupled with the capping of the fees that had originally made Wonga so profitable, these claims grew and grew until the business became unsustainable.

Last week in a desperate last hour bid to save the Wonga from collapse, the shareholders stumped up a further £10m. But it was not enough.

Never leave the techies in charge of the business

The mainstream media, politicians and even the Archbishop of Canterbury have complained endlessly that Wonga’s business was exploitative. I agree, but that’s not how the business made so much money. The key to business’s early profitability was NOT through its high interest rates, but the fees and charges it applied to every borrower that failed to meet their repayment terms faultlessly and the rolling over of these charges into new loans.

Before regulators stepped in to tackle this in 2012, if a customer failed to repay the loan in full on the due date, a default fee would be charged and interest would snowball the debt endlessly thereafter. The debt would then be ‘rolled over’ into a new and bigger loan. Such things would involve a lot of letters and phone calls of course. And every letter and phone call would also incur a large fee which was also added to the debt. In the matter of a few weeks, a smallish loan could be transformed into a debt many times larger. This was insanely profitable.

Regulation is inevitable but is always too late

On 28 November 2012, following concerns that small loans, intended to be short-term, could become prohibitively expensive, the government announced it would give the Financial Conduct Authority powers to prevent indefinite rolling over of loans and effectively limit charges.

By this point, Wonga had already made millions in profits. But from this point, their business model couldn’t work. It was just a matter of time until the whole thing crashed. The only thing that surprises me is that the business was able to limp on for another six years.

When the body falls, the vultures complete the kill

The coup de grâce that finally finished Wonga ironically wasn’t it’s business model. True, this had become fatally wounded by the imposition of regulations to prevent their loan roll overs and excessive fees for defaulters. What finished them was another group of predators – the claims management companies. In 2014, the firm introduced a new management team and wrote off £220m worth of debt belonging to 330,000 customers after admitting giving loans to people who could not afford to repay them. But even this was not enough to deflect the inevitable.

The endless cycle of financial ‘innovation’, profiteering, regulation and collapse

Wonga is more than just a tale of dubious morality. It is a perfect demonstration of how a purely technological vision, lacking depth of understanding of the industry sector and its unique characteristics, inevitably wrecks the lives of customers, investors and staff alike.

I am pleased that Wonga is no more. But I am not optimistic that we won’t see this cycle perpetuating again and again in other business sectors. It’s not entrepreneurial innovation or disruption, it’s a perfect storm of lack of morality, self-delusion, arrogance and greed, going unchallenged until long after the damage is done. And as usual the biggest victims are those least able to bear it.

Are we getting too fixated about the gender pay gap?

Can you spot the missing person here?

By Neil Patrick

Pick up any mainstream media today and you’ll likely find another article about the gender pay gap. Media interest has been stirred up again because we have now passed the deadline for gender pay gap reporting to the government by employers. Many firms’ gender pay gaps are being brought into embarrassingly sharp focus and whether they can be justified or not is largely irrelevant; if you’re out of kilter, it’s going to ensure egg on faces and corporate embarrassment at the very least.

Just this week, the UK headlines included the news that the BBC’s twelve most highly paid presenters were all men. This ranked as less of an important story than the football (which I choose not to interpret as a sexist fact, but I’ll take your counsel on that). It was widely reported nonetheless. The BBC is conceding that they have got it wrong and are protesting that they are doing everything possible to remedy it. Not a great piece of PR for the BBC, but it demonstrates that rectifying this particular injustice is a concern for them.

While pay disparities by gender are being endlessly wrangled about, another legally protected characteristic is virtually ignored. I am not taking about sexuality, ethnicity or religion all of which are also protected characteristics and benefit from staunch lobbying and widespread public support.

I’m talking about age. Age is also a legally protected characteristic. Yet ageism is the last of the ‘isms’ to remain socially acceptable. For some reason there is little equality amongst ‘isms’.

Yet I’d argue that age is the most important of all the legally protected characteristics. Age is the most important characteristic because unlike gender, ethnicity, sexuality or religion, it applies to 100% of people all of the time.

Age and experience generally confer more not less skill and competence. Research has consistently shown that older employees are more reliable, more conscientious, better communicators and even more creative than their younger counterparts. And contrary to common myth, they are also less absent. While I’ve not found data proving that boozy late nights tend to diminish with age and maturity, I do have a lot of empirical evidence pointing to this as fact.

So something is just wrong when age discrimination goes unchallenged. It’s illogical.

Ageism manifests particularly in the area of recruitment and hiring. Whilst it is illegal to specify age as a requirement, it’s so easy to fudge that it happens almost universally.

Ageism in the workplace involves equality of opportunity being denied to millions of people. And in the west, where we have generally ageing populations, many compelled by their financial circumstances to work into their 70s, this economic exclusion is punishing people of all genders, ethnicities, sexualities and religions. It is also making older people more of a burden on everyone else, because they contribute less to the economy and society than they would otherwise do.

So why is so little attention paid to this and why is neither the law nor public anger mitigating against this greatest of all injustices?

The age and pay differentials are starkly different when we compare public and private sectors. First, the public sector pays significantly higher than the private sector at all ages except for a small age cohort between 40 and 50. In the private sector, pay peaks at around 45 years of age and declines steadily thereafter. In the public sector, pay is almost flat from the age of about 32 right through until 60:

So the public sector, which of course contains all those people who are responsible for the setting and enforcement of rules and retributions for infringements of regulation and law, experience little negative impact of pay discrimination by age. Meanwhile in the private sector, it’s a free for all.

This aggregate data conceals the fact that older workers below the highest positions in the private sector are earning much less than the chart suggests. That’s because their age cohort also contains senior people in organisations at the very highest levels of pay. These people may not be numerous but their exceptionally high levels of reward obscure the modal experience, by making the average pay for their age group much higher than it would otherwise be.

Ageism also compounds the gender pay gap. Whilst the gender pay gap has been steadily falling in aggregate, older women are especially disadvantaged. Ageism is punishing women more than men.

Prof Malcolm Brynin found in the 2017 study for the Equality and Human Rights Commission that:

“The pay gap widens with age: older women experience a larger pay gap compared with their male peers than younger women with their male peers. This is primarily because women are more likely than men to take time out of the labour market to care for children. This may slow career development. The statistical analysis found that women's shorter job tenure, a likely consequence of starting a family, is a factor driving the pay gap.

While younger married women earn more than unmarried women, this advantage reverses with age. From their 40s onwards, married women experience a pay disadvantage compared to unmarried women. This is likely to be linked with childrearing: the analysis found that having a child increases the pay gap considerably for women. Married men, by contrast, earn substantially more than unmarried men in all age groups. The ‘wage penalty’ for child-rearing, as a proportion of women’s pay, has increased slightly over time. However, as with the gender pay gap generally, the pay gap between men and women with children has also declined over time.”

The prevailing mainstream media narratives are obscuring the real injustices around work and pay and are not fit for purpose in the 21st century. Ideas such as a patriarchy bent on the economic exploitation of women by men might have been credible 30 or 40 years ago. But today they are past their sell by date. If we look at the data instead of the news headlines, this fact is in plain sight.

Applying the patriarchy conspiracy theory narrative to gender alone creates an illusion of social justice. The real injustices are not defined purely by gender. They are rather the unchecked growth in income inequality across all genders. The persistence of a mythology about youth trumping age and experience. The debt burdens placed on the young to secure university educations that deliver worthwhile careers to ever fewer of their number. And the unwillingness of corporations to invest in people at all stages of their working lives.

None of these structural failures of fairness in the world of work have anything to do with gender. They punish everyone more or less equally regardless of gender, ethnicity, religion or sexuality.

If you want to make a difference and lessen the injustices in the world, don’t default to the #MeToo bandwagon. There is a much bigger and more damaging discrimination going unchallenged. It’s ageism and it unites everyone, because everyone is or will be a victim sooner or later.

The real implications of GDPR for marketing

By Neil Patrick


GDPR isn’t over; it has only just begun. GDPR may lighten your mailbox of spam, but it also has huge repercussions for business that no-one is talking about...

Yes I know. Data protection regulation is a dull topic. But I'm writing about it anyway in this post, because GDPR has some profound and far reaching consequences for everyone.

For the last few months, just about every post about GDPR has been about what businesses need to do satisfy this new set of data protection regulations. And the enormous fines that can be levied upon those who fail to comply.

As the deadline approached, we all had our mailboxes filled with emails desperately begging us to give consent to receive communications from firms we bought things from possibly years ago, or maybe never. Some even from firms that we never knew had retained our email address for their own use.

I am not unhappy about GDPR. It kills the abuse of email for a start. It will force businesses to take a hard look at their marketing, which has been a race to the bottom for far too long. Why would I or anyone else who bought a wheel barrow, tennis racket or dining table want to get emails about more wheel barrows or tennis rackets or dining tables every week for the rest of our lives?

This sort of marketing might get a few takers, but it alienates many more. So most people have ignored these last ditch pleas. The result will inevitably be that our mailboxes will revert to a more modest overloading especially if you are in Europe.

Finally on 25 May, the regulations came into force. There are big repercussions for business and this post outlines some of them. It will change digital marketing activities for the better I hope. It will force brands to invest more sensibly in building real customer relationships. It will also deliver even more power into to a handful of huge global digital businesses.

First it will decimate a huge business sector which almost no-one has heard of

Behind the scenes, GDPR has caused the decimation of a huge industry sector which almost no-one knows about.

The sector is called ad-tech. LUMAscape has made it their business to map this vast and sprawling network of firms who have built their businesses to provide personalised data to those who want to sell us stuff online. And it looks like this (or rather it used to):

Ad-tech businesses mushroomed because the internet’s default business model is advertising. Advertising works on the principle that targeting specific ads at the right people is more cost effective than randomly advertising to everyone. And because our internet browsing data in aggregate is so much richer and more detailed than any other form of data, the people in ad-tech anticipated there was huge money to be made by delivering the data and tools to assist this targeting.

And at first they were right; VC investment and revenues poured into these firms until 2011, since when it has declined. It is absolutely no co-incidence that it was 2012 when the EU announced that GDPR was coming:

The whole ad-tech sector was predicated upon one massively flawed assumption. The ad industry thought that consumers would welcome ‘relevant’ and targeted ads. They forgot or at least ignored that hardly anyone actually likes advertising. We just hate targeted advertising a little less than we hate untargeted advertising.

But pre-GDPR, this dislike of advertising was not enough to stop the exponential growth of the sector. Which ironically gave rise to another high growth sector – ad-blocking software.

Some ad-tech companies have pulled out of Europe altogether. All have effectively had their oxygen of data cut off because post-GDPR, they require positive consent from us to hold and process our data. And almost no-one in their right mind will knowingly grant this consent. According to independent research by PageFair, only around 3% of people give this willingly and many of these are not eager customers, they are competitors, regulators and other snoopers. Suddenly around 97% of firms ‘prospects’ are reduced to zero or as close as makes no difference.

Without active consent, the value of an email address is zero

The targeting data created by ad-tech firms brought about a transformation that no-one liked. Coupled to an email address, this became gold dust in online marketing. Combined with the ability to send emails to millions of people and almost free, the floodgates were opened. It didn’t matter if only 1 in 10,000 people actually took up an offer, because the costs of communicating it were almost zero; it created a free for all and our mailboxes groaned under the strain. Email open and click rates have unsurprisingly been in free fall for years.

This was because many businesses adopted more or less the same flawed model in approaching online marketing. Email addresses appended to other data were key to this. It’s what marketers call the ‘top of the funnel’. This metaphorical funnel has personal data tipped into the top. And prime amongst this data is the email address. This was the data that would enable a business to send us emails to buy more of their stuff. And opting out of retailers’ email lists wouldn’t solve the problem if even one retailer was unscrupulous enough to pass on our details to someone else. Everyone knows this but no-one likes it.

GDPR will change this (at least amongst companies that care about acting within the law). They will be forced to completely rethink how they market themselves online.


Why GDPR will fill Google, Amazon and Facebook’s pockets 

These changes will confer even greater power to the tech giants such as Amazon, Google and Facebook. These firms have secured their positions because they have an entirely legitimate reason and our consent to hold our personal data. And because targeted ads are not their primary form of ad revenue. Just look at Amazon's share price surge post the advent of GDPR:

The collapse of the ad-tech sector will create growth at least initially in other forms of online advertising, less emails and less targeted advertising. It will also I suspect lead to less scrupulous firms adopting devious tactics to secure consent to receive emails. The model for this is that at every step of engaging with a business online, we will be faced with craftily hidden email consents. This is in breach of GDPR which prohibits ‘implied consent’, but it won’t stop some people trying to work around it.

An unintended consequence of GDPR is that it has ensured the recovery of Facebook’s share price is complete. A combination of the weakness of the governmental interrogations from the US and EU and the impact of GDPR has enabled Zuckerberg to make a full recovery from the Cambridge Analytica crisis:

This is the unforeseen consequence of GDPR. It has comprehensively disarmed some enfant terribles of the advertising world only to confer more power to a handful of giant tech firms and those who for whatever reason will flaunt the rules.

I still think GDPR is actually good news for business

Most businesses are sitting back now breathing a big sigh of relief that they have completed their GDPR compliance project. Thank god that’s done. But it’s not. It’s not even started really, because now the challenge is how to grow businesses online in a post-GDPR world, where suddenly they have consent to email just a tiny fraction of the people they used to.

Businesses need now to take a hard look at their online strategies. The lazy marketers’ fall back of emailing thousands of people with offers is finally dead. Now it’s time to get back to real marketing and figuring out how to make your customers really love you online.

The internet wasn't built in a day, but the barbarians are already at the gate

Hubert Robert: Vue imaginaire de la Grande Galerie du Louvre en ruines

By Neil Patrick

The greatest challenge the internet faces isn't what it can make happen. It's what it can stop happening. And right now, it's not stopping enough from happening.

The online world has become one in which deceit and deception are running riot and out of control. Caught in the middle of the cross-fire, businesses and brands are under pressure from fraud and regulation simultaneously.

Increasingly, the only way to gain advantage online is to cheat. If you are a business that plays fair and by the rules, it is increasingly difficult and costly to win online.

We have a perverse situation emerging in which legitimate businesses are having to spend millions to defend their businesses on the internet, while armies of digital pirates are cheating their way to win online sales. The internet has become a new Wild West for fake goods, fake sellers and now fake reviews. This descent into online anarchy threatens business and society alike.

Against this tide of trickery we have a thing called the General Data Protection Regulation or GDPR. Compliance with this has been estimated to cost every legitimate business an average of $100,000. Few will risk non-compliance as penalties for so doing are 4% of annual global turnover or €20m, whichever is greater. Six years in the making, GDPR perfectly illustrates the ineffectiveness of conventional law-making to tackle the problems that the digital world creates. It's like the cops arriving in town six years after the bank has been robbed.

Instead of creating a level playing field in which free, fair and open competition is supported, the internet is creating its own distorted markets where caveat emptor is a more vital consumer watchword than ever before.

This is a far cry from what the original internet visionaries had in mind. The open, transparent and fair digital marketplaces their dreams envisioned are manifesting instead as nasty neighborhoods full of muggers and criminals. And even the boundaries between the good and the bad guys are getting blurred.

So what’s my evidence? 

I could cite dozens of examples to evidence my assertion, but to save space, here's just one more or less random case.

In December 2017, the boss of German shoe brand Birkenstock accused Amazon of a failure to tackle fraudulent sellers flogging cheap knock-off versions of its sandals. Chief Executive, Oliver Reichert accused Amazon of acting as "an accomplice" to sellers of cheap copies of their sandals. He said, "The truth is that Amazon makes money with these fakes. As far we're concerned, Amazon is an accomplice."

Birkenstock terminated its business relations with Amazon's European website on January 1, 2018 because of "a series of violations of the law on the marketplace platform". Reichert said: "If you sell dodgy merchandise on your market place, you have to answer for that."

Guess what? There’s an app for that…

Several entrepreneurial businesses recognised early on that the growth of online business would inevitably create numerous marketplaces where an independent measure of product quality and customer satisfaction would be beneficial to businesses and consumers alike.

Businesses like Trustpilot recognised the opportunity and soon established themselves. And platforms such as Amazon, Ebay and Trip Advisor promptly integrated their own customer rating systems so that consumers could see independent opinions from other buyers.

Sounds good in principal, but in practice, these systems are just not working. They are being gamed on a massive scale. Some US analysts estimate that half of the reviews for certain products posted on websites such as Amazon are fake.

"Sellers are trying to game the system and there's a lot of money on the table," said Tommy Noonan, who runs ReviewMeta, a website that analyses online reviews. "If you can rank number one for, say, bluetooth headsets and you're selling a cheap product, you can make a lot of money," he said.

Three quarters of UK adults use online reviews and almost half believe they have seen fake reviews, according to a survey of 1,500 UK residents conducted by the Chartered Institute of Marketing. The government's Competition and Markets Authority estimate such reviews influence £23 billion of UK customer spending every year.

Fake Amazon reviews are being openly traded on the internet.

The BBC found online forums where Amazon shoppers are offered full refunds in exchange for product reviews. The platforms are well aware that such fakery is going on, but evidently have not managed to eliminate it.

In 2016, Amazon introduced a range of measures to combat what it called "incentivised reviews". Instead of solving the problem, this effectively drove it underground, leading to the emergence of Facebook groups where people were encouraged to buy a product on Amazon and post a favourable review in exchange for a full refund.

This is the insidious nature of the online economy – controls recognise a problem and clamp down, only for it to adapt, reconfigure and re-emerge elsewhere in the system.

Pandora by John William Waterhouse, 1896

Amazon says:

"We do not permit reviews in exchange for compensation of any kind, including payment. Customers and Marketplace sellers must follow our review guidelines and those that don't will be subject to action including potential termination of their account."

Fair enough, but no policy such as this will deter those who can gain from breaching it. They simply increase the sophistication of their deceit. This is a war which the platforms and brands are not winning because the stakes are just too high, the available remedies too feeble and the villains too fast moving.


In the final irony, can Trustpilot be gamed too?

Responding to adverts posted on eBay, the BBC was also able to purchase a false 5-star review on Trustpilot. Trustpilot say they are “committed to being the most trusted online review community on the market. We have specialist software that screens reviews against 100's of data points around the clock to automatically identify and remove fakes”. I can be committed to anything I choose, but that commitment doesn't make it manifest. If even Trustpilot can be gamed, that's like vote rigging worthy of a rogue state.

So I'll say again - the greatest test the internet faces isn't what it can make happen. It's what it can stop happening. 

Consumers are being conned. Brands are being hijacked. Online marketplaces are being corrupted. Internet markets are not delivering their promises. And the war on this banditry is being lost. This is not so much the Wild West where a marshall’s posse would hunt down the miscreants, it’s more like a digital Mafia state.

And GDPR will do absolutely nothing to deter even the smallest gangs of bandits.

Gibson, Eurovision and the disruption of music

No Substitute: Keith Moon's memorial plaque at Golders Green Crematorium
Photo credit: BlueRaspberry

By Neil Patrick

The digital revolution is eroding rather than enhancing creativity. The idea that waves of digital disruption will unleash spectacular creativity is just not living up to its promises.

If we want to truly understand how digital technology changes the world, then we can learn much from an examination of the very first industry it disrupted. And the industry with the longest timeline of digital degradation is music.

Today, the music industry is not only financially shrivelled, it has been denuded of its vital creative life force. We’ve never listened to more music, in more ways, in more places. Yet after reaching a peak in 2000, the music industry now earns half the money it used to. It has lost over $7 billion of revenue since the dawn of the internet.

Anyone who was alive between 1950 and 1980 can recall that music then was in a golden age. Yet these were difficult economic times for the UK. Burdened with a disintegrating empire, faltering manufacturing, the rise of militant trade unionism and the costs of surviving rather than winning two world wars (it was the USA which ‘won’ WW2, at least economically speaking), things in Blighty were pretty bleak.

But in the 1960’s against this unpromising backdrop, Great Britain gave birth to a whole host of world beating music superstars whose like we will never see again. The Beatles, Deep Purple, Led Zeppelin, The Who, The Rolling Stones, Pink Floyd, Yes, Genesis. In the 1970s and early 1980s, this creative torch was carried on by a new generation; Queen, Black Sabbath, David Bowie, U2, Judas Priest, Iron Maiden and Def Leppard.

To see the sort of brilliantly creative controlled chaos I am talking about, just watch this clip of the Who playing live in 1978 including Keith Moon, just weeks before his untimely death:





Everything here is analogue. No digital enhancement or aids. No light show. Just raw talent, spontaneity and naked musical energy unleashed.

Every one of these bands sold millions worldwide and still does. Every one is cited by today’s contemporary artists as being influential. None of them began with anything other than their own passion, talent and determination. And they needed it, because whilst plenty of live venues existed and record contracts were generous by today’s standards, getting anywhere at all required dogged persistence for years to become established. I know the histories of every one of these bands and they all began by slogging it out with no money, playing in dingy clubs and pubs, slowly building their fan base from the bottom.

The internet and the concurrent explosion of media options was the catalyst for the comprehensive destruction of this creative powerplant in Britain’s economic engine. The internet’s first salvo was free file sharing. The second was the consequent demise of radio and live music venues. Next was Amazon and iTunes extermination of music retailers. Finally we now have an overwhelming flood of material – the replacement of carefully crafted work with a deluge of mediocre mass market music amongst which, the best new things are hard to find.

When the internet began, most musicians rejoiced. It was seen as the great equalizer. Through free global reach, the best talent could reach bigger audiences and rise to the top regardless of whether or not they had the support of a record company. The punk DIY ethic would empower all musicians in a new musical democracy. But as The Wall Street Journal describes, that dream did not materialise – instead it created an unforeseen consequence:

“It has never been easier to listen to vast quantities of music, discover new artists and create, distribute and promote your own tunes. But there’s a downside: It is harder for artists to break through the cacophony of today’s global pop-music machine.

“The music business is pumping out more music than ever before, industry experts say, the result of cheap digital-production tools, round-the-clock social-media marketing and the prodigious output of hip-hop stars. Both artists and fans are feeling submerged.”

The internet has ensured we are drowning in music. And it’s not just artists who are struggling with this. Just last week, a business which is one of the very few I actually and genuinely love, filed for Chapter 11 bankruptcy – Gibson guitars.

Gibson's factory in Memphis
Photo credit: H. Michael Miley 

Gibson lost the plot and the struggle to redefine itself for the 21st century. Its management decided that it wasn’t simply the greatest guitar maker in the world, but rather a ‘lifestyle brand’. This redefinition would build on its immense heritage and grow by debt-funded acquisitions away from the core of the brand. But this wasn’t transformational innovation. It was a layering of bad decision upon bad decision, piling up to wreck a business that as recently as the early millennium could lay fair claim to being a world leader. Today, Gibson is carrying around $500m of debt and its future looks decidedly uncertain.

Unlike say Polaroid, Gibson has not been blindsided by superior digital products and shifting consumer preferences. Certainly, their premium pricing, slipping quality control standards and poor staff treatment didn't help. But Gibson is nonetheless indirectly a victim of the internet because it sells new guitars when consumers want used ones which the internet delivers in droves:

“The market has softened. It’s not as vibrant as it was in say the early 2000s,” according to Brian Majeski, editor of Music Trades. “We think that an enormous factor…has been the improved availability of used product, and the rise of a generation used to buying things on the internet.”

Reverb.com, an online clearinghouse for musical instruments, will sell between $400m and $500m worth of guitars in 2018, Majeski estimated – “and almost all of them are used”.
There’s a further great irony here too. Music isn’t something people love less than they did. Musicians still love music and so too do audiences. It’s not as if something came along which suddenly made music obsolete.

On one hand, digital technology has enabled musicians access to equipment and media capabilities that their forbears could only contemplate if they were the most famous and successful performers. On the other hand, the fragmentation and demise of radio, record labels and touring venues have taken away the vital infrastructure which supported and enabled hundreds of performers and their multi-million pound contributions to retail, jobs and ultimately GDP.

The music industry globally may not be dead, but it is a shadow of what it used to be. Not just commercially, but also creatively speaking. And the ways it survives at all are often truly tragic. Only last weekend I watched the Eurovision song contest (or rather the first thirty or forty minutes of it – because I could bear no more). This is a sad manifestation of music indeed. It’s an over-produced, politically correct, mush of mediocre performers. It’s not even a pure talent contest – it’s a sanitised mashup masquerading as a beacon of increased international understanding. It is fundamentally contrived and has little or nothing to do with talent or real music.

In case you've never seen it, here is a sample of what's on offer. And despite the video title, I'd contend that this isn't the worst, it's actually a pretty representative sample:




Instead of spreading peace and love around the world, Eurovision actually embodies some of the worst characteristics we complain about in the rest of society – it is highly creative only in the ways it generates money by leveraging nationalistic pride and prejudice. Even Terry Wogan, the UK’s presenter of Eurovision since 1980 stood down from the BBC One's broadcast in 2008 saying "The voting used to be about the songs. Now it's about national prejudices. We [the United Kingdom] are on our own. We had a very good song, a very good singer, we came joint last. I don't want to be presiding over another debacle".

This is what the digital revolution does to creative industries; it sanitises, it packages, it expands quantity but erodes quality. Essentially it devalues everything it touches. Eurovision certainly shows no signs of throwing up the next David Bowie or Queen. But I guess it might just manage an Ed Sheeran or Beyoncé clone.

Why people are a better brand investment than machines

Today, TSB's 'local bank for local people' claims are looking like a sham.
Photo credit: Gnesener1900

...especially if you are a bank.

A crisis is the one thing which is guaranteed to expose the reality of a brand versus the contrived and manicured fantasy which is used to promote it.

By Neil Patrick

TSB’s chief executive, Paul Pester admitted this week, ‘we are on our knees’, following a failed server migration of 1.3 billion customer records. This has gone disastrously wrong leaving hundreds of thousands of customers unable to pay their bills. Worse, some customers have been able to log into other customer's accounts, see their data and even make payments with other people's money.

The bank's employees have been working day and night to try and help customers solve the resulting problems like paying for their rent and utilities. But as the week came to a close, and despite a team of IBM 'experts' being parachuted in as an elite shock force to assist, the problems were still not completely solved.

Business customers have faced consequential losses such as non-payment of suppliers and non-delivery of goods. TSB staff have been so stressed and frustrated in their efforts to help customers that some have collapsed in tears, saying it's the worst experience of their working lives.

This situation is more than embarrassing and stressful for everyone involved. It demolishes the carefully constructed brand that TSB has been investing in, positioning the bank as one which places people at heart of everything it believes in:



TSB's regulator, the FCA, is now investigating the issue and the Information Commissioner says she wants to know more about potential data breaches. The Government has asked for assurances and wants answers to its questions to TSB. Even when the IT problems are solved, the pain will not be over for TSB.

This sorry tale will eventually become a footnote I am sure, but today, right now, it is fraying nerves and spreading havoc in TSB's customers’ lives. And it seems inevitable that many customers will leave the bank at their first opportunity after this crisis is resolved. For TSB, this disaster looks likely to cost them much more than the £100m of savings the migration originally promised.

Meanwhile in China, the world’s first robot-only bank branch has just opened. This is heralded as an exciting step towards a modern, tech enabled future; a homo-sapien free environment, cleansed of the inconsistencies and inefficiencies which are allegedly the hallmark of humans.

The irony here is that it is the people at TSB branches that are keeping the bank from sinking when faulty technology has dragged the whole edifice almost into ruin.

Banking and IT have an old and awkward relationship.  Banking IT systems are not like apps where glitches can be smoothed out over time. They demand 100% reliability and complete accuracy from the get go 100% of the time. Anything less is a big problem. Building or significantly changing any banking platform is a high risk and demanding challenge.

As we've seen with TSB, government and regulators are today emboldened, swift and merciless when it comes to punishing banks for errors and misdemeanors. After years of a light-touch attitude, post 2008, the climate has changed and banks are today probably the most closely regulated and scrutinized business sector in the UK.

Thirty years ago, banks were early adopters of what we now call data harvesting. This was decades before Facebook managed to finally wake the world to the importance of data security and privacy. Sure, we had Data Protection legislation and regulators. And banks were generally compliant with their data protection obligations. Regulatory enforcements were few and the public’s greatest annoyances were telephone sales calls and junk mail.

But this customer irritation at some of the earliest (ab)uses of technology by banks ought to have provided early warning that a very human-based relationship demanding and rewarding trust was unlikely to be entirely substitutable by anonymous automation. In fact, I’d argue that trust is the number one most essential requirement for a customer’s relationship with their bank.

Yet, this fundamental truth seems to have been ignored in the relentless drive for ever lower costs. The endless push for greater speed, and cheaper services seems to have trumped every other aspect. Especially trust.

In areas such as marketing and loan application processing, banks were some of the first businesses in the world to decide that IT could make faster, more accurate, more consistent and cheaper decisions than their human employees. This led to the steady removal of middle managers and the downgrading of staff until a bank branch was staffed by people who had little more skill than supermarket checkout operators (and similar pay and conditions too).

Now these last remaining humans in bank branches are facing imminent extinction as they too are replaced by robots which don’t go on holiday or demand pay increases (or any pay at all for that matter).

Meanwhile, banks (always some of the most unpopular and complained about businesses), are shutting branches, removing staff, and turning everything digital. This cost cutting is justified in the name of customer convenience and modernisation. And to cement the argument, every senior bank spokesperson will tell us that this is what most of their customers want.

But most is not all. And the duality where banks are simultaneously some of the least-loved businesses while moving ever closer to completely people-free service, is not a recipe to build any sort of customer love and affection.

There is and has been for decades, a space in the market for a bank which recognises that customer service delivered by people to people is an untapped and growing market. TSB recognised this and decided this was their opportunity to command a unique market position. Unfortunately, they forgot that occupying this position demands not just that you proclaim it, but also that you live by it.

Most people require relatively little from their bank. Strong security. Error free payment processing. Good and caring advice. Easy access. Fast and painless resolution of problems. It is hard to see how a combination of branch closures, increased automation and demoralised, low paid staff help deliver these things.

And 'adding value' (sic) by dubious marketing adds insult to injury. Hardly anyone really cares about an extra 0.1% of interest, or free travel insurance, or fancy TV advertising. They do care about being well looked after.

Banking for most people is service they cannot live without. And whilst I don’t think banks can or should be backwards looking, there is a stronger argument than ever for a bank which truly understands they are in a people business. And that investing in people might just be a safer bet than investing in their replacement by machines.

In these days of no trust

Students are rightly getting mad, but for the wrong reasons
Photo credit: BillyH

By Neil Patrick

Universities are failing our young people more than ever.

I have always believed that there are some key parts of society where Britain can be proud to rank amongst the very best in the world. Our emergency services. Our armed forces. Our artists and musicians. Our scientists. Our legal system. And our educational establishments.

But, the last few months have not been good for higher education’s reputation in the UK. Recently, Channel 4’s investigative journalism programme Despatches went to town with an exposé of the expenses claimed by university vice chancellors.

The Guardian was not slow to voice its righteous indignation about the expenses claimed by vice chancellors that Channel 4 uncovered from a Freedom of Information Act disclosure:

https://www.theguardian.com/education/2018/feb/24/flowers-drinks-and-a-dog-vice-chancellors-claimed-8m-in-expenses-over-two-years

But expenses are just the latest round in this ongoing reputational crisis. In recent months, as vice chancellors’ pay packets have become public knowledge, universities have been hard at work defending these on the basis that pay is set by independent panels and that these jobs involve the administration of large organisations with multi million pound budgets. Ironically enough, this is the same well-worn argument used by banks to defend their executive pay; that to attract and retain top talent, these people have to be paid huge salaries.

The UK’s higher education institutions are facing a crisis of trust. And for every criticism, come  denials, rebuttals and rationalisations.

But vice chancellors' pay is not why higher education is in crisis…

In the UK, universities have become corporatised and politicised. Higher education is now funded mainly by student debt. It is this debt which has enabled the massive (over) expansion of higher education and salaries for those at the top. This debt is gilt-edged because it is underwritten by the government. But as debt has a tendency to do, it is now spiralling out of control:

Yet universities are still significantly funded from the public purse. This means they are morally accountable to the public. And the public doesn’t like what it sees.

Personally I do not consider that a chauffeured car for a busy vice chancellor is unreasonable. Neither is extensive overseas travel. Nor is entertaining key contacts at top restaurants. Not when we consider the potential gains which can be made. So I think Channel 4 and the Guardian are picking the wrong fight here.

But to students and the public alike, these things reek of self-interest, of corruption, of a loss of moral compass. The problem is not one of defensibility, it is one of perception and trust.

Vice Chancellor’s salaries and expenses are the wrong target…

…because this is not the problem, merely a symptom of it. The real problem is that our higher educational institutions have become more detached than ever before from the very reason for their existence. Rather than facilitating young minds to investigate, question and reason about the world, they have adopted a new raison d’etre, namely the brainwashing of their charges to eliminate ideas which for any reason they find unlikeable or politically unacceptable.

Free speech within university campuses is now actively policed so that only those who support approved ideologies are given a voice. Anyone who might potentially challenge those views is kept out. No platform for them. Worse, if they even set foot on campuses they risk verbal and even physical assault by masked and hooded representatives of the student body, as Conservative MP Jacob Rees-Mogg discovered recently. One of the most articulate, rational, reasonable, courteous and unthreatening MPs you will find, he was jostled about while masked students screamed ‘Bigot’ at him.

Even his political opponents such as Shadow Education Secretary Angela Rayner, condemned his treatment by the thugs:

Such shenanigans are not new. Students have always tended to the left in their politics. What is new is that universities have built walls to keep out anyone who might challenge their new and incongruous positions as both guardians of knowledge and huge money making machines. Anyone who might engage them in civilised debate. And anyone who might, heaven forbid, question their self-appointed ownership of moral as well as educational authority.

So instead of exposing young minds to diverse thinking about the world, campuses are erecting barriers to some ideas. All ideas should stand or fall on their own merit, not be whitewashed because they are banned. Or because someone might find them offensive for whatever reason.

But all of this is a sideshow. It is an aspect of education; it is not what education should be fundamentally about. Education should be preparing the next generation to embark on successful careers, and by so doing, enriching themselves and the whole of society. The hard truth is that higher education should be pushing our GDP, trade surpluses, and household incomes higher.

Yet the reverse is happening. The output of universities in the form of worried young graduates, is creating a new class of disenfranchised and impoverished young people whose disproven faith in their educational investment has led them not to the beginning of glittering careers, but instead to the hell of internships, zero-hours contracts and low paid service jobs in a gig economy.

So we have more young people than ever questioning quite rationally whether they really want to take on £50k of debt, when they have little confidence that they will find a good job after graduation. We have employers moaning about the low quality of recent graduates. We have current students demoralised by the paucity of tuition hours. We have professors not teaching but spending most of their time working on research and academic papers, while the actual teaching work is sub-contracted to poorly paid visiting staff. And we have highly politicised campuses which tolerate only those with the 'correct' political point of view.

Higher education in the UK displays all the elements of a classic bubble about to burst…over inflated and debt-funded revenues, self-indulgence by those at the top, emerging scepticism about sustainability, denial of the problem.

And most telling of all, the collapsing of trust. This is the real betrayal of our young people’s lives and prospects. Bubbles always burst when trust evaporates. And trust ebbs fastest when denial is strongest.


Update: Just nine days after I wrote this, assuming no-one else felt universities were obstructing free speech, a cross party panel of MPs and peers published a report saying they also think they are. Fear I am unconsciously becoming connected to mainstream group think...;-)

Zuckerberg snatches victory from the (false) teeth of his nemeses

The disarming face of the man who sold the world.
Credit: Lukasz Porwol

By Neil Patrick


Zuckerberg's triumph of timidity signals no change soon.

Tuesday this week was billed as the ultimate showdown between the analogue world and the digital. A colossal Congressional panel (average age 62) deployed to call to account a small and nervous looking 33 year old boy called Mark Zuckerberg.

The old media delighted in the spectacle; Zuckerberg is the embodiment of their nemesis more than any other. This boy and his Facebook money making machine have humbled their own media empires and taken billions of dollars worth of advertising revenues that in decades past would flow unchallenged to them.

In my last post about this I opined that politicians and the legal system would be wrong footed and far too slow to act to remedy the distortions of power that Facebook has created in our society. And that a multi-billion dollar business like Facebook could easily resist the challenges from a bunch of old people who have only the faintest grasp of how the digital age is turning their world on its head.

Over the course of Tuesday and Wednesday’s hearings, we could watch Facebook’s share price react in real time to the questions and Zuckerberg’s fielding of them. He may have needed a booster seat to get his arms on the table, but during the course of the hearing, Facebook’s market cap increased by $4bn.

Not a bad financial outcome for an event which had the potential (a now totally disproven theory)  to send Facebook's market value into collapse. The markets never lie about confidence. The irony was that Zuckerberg's obvious nervousness and expressions of contrition, inspired and revitalised market confidence. But it wasn't so much that he played a blinder as that his army of opponents couldn't even see the ball, let alone run with it.

The politicians lost massively on points. There were some entertaining moments such as when Mr Z was asked if he would like to disclose the hotel he stayed in last night, or the email addresses of the last people he had sent emails too. These were smart and meaningful questions, but they did nothing to address the critical and fundamental matters of what and how Facebook would change in future.

Zuckerberg deflected many questions by kicking the can down the road with responses such as ‘ I don’t know, but I’ll get my people to come back to you about that’. This is hardly a confidence inspiring answer, but the markets reacted with relief because it was a sure sign that Facebook was more likely to survive with cuts and bruises than fatal injuries.

Zuckerberg had prepared intensively for the hearing with a team of consultants and lawyers grooming him so that instead of his robotic and hollow sounding delivery of norm, he conveyed a humility and likeability that seemed to charm some senators. They reacted like indulgent parents, wooed by the contrition of a wayward child.

But I didn't buy any of it. This is a man whose outward appearance of geeky frailty conceals a mind which is entirely committed to the exploitation for his commercial gain of any and every human weakness, whether we are a leader of government or a dishwasher in Detroit. In that sense, his mission is truly egalitarian.

He was able to duck answering questions he didn’t like. His preparation and the ignorance of his interrogators ensured that none were able to press him to the point where he became visibly uncomfortable.

But despite his appearance and demeanor, Zuckerberg is not a child and neither is he undergoing a transformation from inadvertent miscreant to redeemed character. He, by design and no small amount of luck, leads one of the most valuable business enterprises on earth. He is at the helm of a business which enables digital lawlessness more than any other. 

His preparation and demeanour of vulnerability successfully blunted the assault of an array of America’s most senior and powerful people, because they were completely under equipped to effectively challenge him. Most displayed a complete void in their understanding of how the internet works, let alone how Facebook works.

The format of the hearing didn't enable any genuine insight. Every time it got even half-way relevant, such as when South Dakota senator John Thune asked about the technical and linguistic difficulties involved in programming AI bots to discern hate-speech, the exchange was abruptly terminated as each successive legislator ran up against their four-minute time limit. Their world and Zuckerberg’s are so different as to be unable to communicate effectively. That is no fault of Zuckerberg’s; it is the fault of a generation of leaders who have comprehensively failed to keep in touch with the world they are supposed to be leading. The tragic irony here is that both politicians and social media claim to be all about open communication and building a better world.

These increasingly unrelated world views retain one common aspiration; the building and protection of wealth and power. And now these two worlds are in collision. Those with directly vested financial interests in Facebook sensed this was a stalemate and were thus relieved of their deepest fears. The markets could see this event was now unlikely to damage their financial interests and that their investment was no longer looking as shaky as it did just a week ago.

That Zuckerberg and Facebook should triumph in this encounter proves I think that the power held by the owners of digital real estate is unlikely to be dented anytime soon. Or at least not until government gets to understand what their role is in a digital world.

Prepare yourself accordingly.

Cambridge Analytica: Datakreig is upon us

Photo Credit:  Bundesarchiv, Bild 101I-646-5188-17 / Opitz / CC-BY-SA 3.0

By Neil Patrick

The new Agents of Fortune have emerged from the shadows

In the summer of 1940, the Nazi Blitzkreig overran the whole of Western Europe. Blitzkreig was a revolution in warfare. It used the concentration of forces, speed and communications to outwit the bigger and better armed allied powers of Western Europe. I use the word ‘speed’ advisedly; German troops used a lot of amphetamines, but that’s another story. Great Britain and France had prepared for a traditional war. They were outwitted and outmanoeuvred at every turn.

Over seventy five years on and Datakreig is on the rampage. The Cambridge Analytica and Facebook scandal has remarkable similarities to the 1940 Blitzkreig. It represents a revolution in how power is acquired and disseminated (or more likely sold) by a new breed of digital data warriors. With or without the use of amphetamines, they are running rings around a complacent and out of touch old media, government and judiciary.

Yesterday I observed how this scandal was unfolding and how the public were reacting. Most used the situation to voice their political prejudices, citing this case as proof of the correctness of their viewpoints. In my opinion:

The fact that the now ex-CEO of Cambridge Analytica, Alexander Nix went to Eton is not evidence of a global elite intent on enslaving the rest of us.

The (big) dent in Facebook's share price doesn’t mark the beginning of the end for the big digital media firms.

The fact that Facebook holds an immense amount of personal data is not a crime IF it is gathered fairly and transparently and only shared with our full knowledge and explicit consent.

Nonetheless, there is something deeply unsettling emerging here. Lines must be drawn. But where?

Use of our individual and personal data for political purposes is unacceptable in a democracy

The way that the Trump campaign used social media data would be recognised and well understood by any marketing specialist or military strategist. But this doesn't make it acceptable within the political process.

Better intelligence and targeting than your competitors or rivals provides a serious tactical advantage. And Cambridge Analytica’s strategy worked better than probably even they had expected. A previous attempt to use it with Republican nominee Ted Cruz had disappointing results. Nonetheless Cambridge Analytica were surely not exactly grief-stricken having pocketed $5.8m in fees for this work.

The pooling and utilisation of personal data in this way is probably at least tacitly accepted by social media users as a fair exchange if it is just being used for advertising products and services. Irritating perhaps, but a reasonable price to pay for an essentially free platform. After all, most people would accept that old media advertising is fair and reasonable, provided it can be clearly identified for what it is, ie. not cloaked within editorial content.

But politics is not about commerce. It is about power. And personal digital data is not old media. It is or should be private. When our data is being passed to political groups, a line is crossed. Yet Cambridge Analytica may well not have broken any laws however unacceptable their actions may be – because the law is completely out of step with the nature and pace of the digital revolution. If and when legal actions and government interventions occur, we can fully expect that by the time they are enacted, the game and its tactics will have moved on.

This is a very unequal struggle

Data regulators are not adequately empowered to act independently of the judiciary. The UK Data Commissioner has a team of ten people working on this case. That’s ten UK civil servants with their hands tied behind their backs vs. a corporation with total assets in 2017 of $84billion.

The power and capital amassed by Facebook is more than monopoly power; FB had a revenue of $40.6bn in 2017, which is greater than the entire GDP of many countries.

Because the UK Data Commissioner cannot raid premises without a court order, the whole world knew they intended to examine Cambridge Analytics' servers long before they actually gained access. Facebook on the other hand entered Cambridge Analytica's premises on Monday. We can conjecture that both Facebook and CA will have erased without trace any evidence of possible malpractice long before the civil servants arrive.

And it has now emerged that Cambridge Analytica used ProtonMail accounts set to self-destruct without trace within two hours of being delivered. This fact alone suggests that they were intent on establishing a cloak of secrecy over everything they did. There will be no paper trail here…

Remember though that the whistle blowers have a deeply vested interest

The media forces which have ranged themselves against the new agents of fortune are the old agents of fortune. The New York Times, the Observer and Channel 4 Television News. The old guard are used to having the power to influence events. Usually in favour of their own proprietors' political and business allegiances.

So we should also recognise that the whistle blowers are not without their own motives. Old media has been losing billions in revenues to digital platforms for years. They have tried every trick to get in step with the digital revolution and have mostly failed. The Cambridge Analytica situation is possibly the best news old media has received in years. They can fully expect that in the coming weeks and months their digital nemeses will likely have their wings seriously clipped.

Datakreig deploys pace and opaqueness to assure its goals are accomplished

Tech knows it can easily exceed the pace at which government and regulators can respond. Digital media owners know that their opaqueness, resources and pan-national organisations make them able to out run and out gun regulatory controls.

Cambridge Analytics represents a new revolutionary guard. Whether they acted legally or not is a moot point. Data regulations and enforcement are hopelessly out of step with digital media. The big digital media firms can afford the best lawyers and tech heads to ensure the not very digital regulators are outwitted at every turn. Just like blitzkrieg, they use speed and camouflage to leave the forces of justice choking in their dust.

If we wish to live in a democracy, we can and should demand that legal lines are drawn over how our personal data can be used. Government action requires though that we wait for their painfully slow next moves. I'd venture that a much more effective response is to vote with our consciences, our smartphones and our wallets...


For my views on Mark Zuckerberg's Congressional hearing click here