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Sharing equals stealing: busting a copyright myth

Consumers copy and share digital files. This has been blamed for a potentially catastrophic decline in certain markets. But why do consumers copy? And is it as economically harmful as often thought?

CREATe, the UK research centre for copyright, has put a decade of evidence to the test by reviewing studies published between 2003 and 2013. Applying techniques normally used in the medical sciences, articles on unlawful file sharing for digital media were methodically searched in academic databases, while non-academic literature was sought from key stakeholders and research centres. Over 54,000 sources were initially found and these were narrowed down to 206 articles which examined human behaviour, intentions or attitudes.

Professor Daniel Zizzo, an economist at the University of East Anglia, is co-author of the study, launched today. He said the research revealed that “current knowledge of file sharing is dramatically skewed by sector and method”.

Daniel added: “Most evidence is based on the unlawful file sharing of music, which has been subjected to far more research than movies and software, which themselves have been studied far more than videogames, books or TV. This means there is a real risk of designing policy which meets the needs of a specific industry, possibly at the expense of other creative industries which are less well represented in the literature. Also, the economic effects found in one medium may not apply to another and current knowledge of file sharing is dramatically skewed by method.

“The evidence on societal costs points in conflicting directions and our study shows that the impact of illegal downloading and file sharing remains unclear. Focussing on lost sales, and examining people’s hypothetical willingness to pay with and without the possibility of unlawful file sharing is insufficient. Regarding determinants of unlawful file sharing, there are many studies on self-reported attitudes, but few studies that observe behaviour. This is a problem, particularly as there is often a gap in findings between studies that use behaviour and studies that do not.”

An important contribution of the new study is the identification of five testable reasons (or utilities) why consumer copy: (a) Financial and legal utility (this is where the enforcement debate traditionally focussed: you can’t compete with free); (b) Experiential utility (unlawful file sharing may be influenced by a desire to sample new content, to access niche content, or to build a collection); (c) Technical utility (content is easier to access unlawfully); (d) Social utility (it appears to matter what our peers do: a kind of herding effect); (e) Moral utility (this perhaps motivates policy makers’ emphasis on the education of consumers).

(Click here to view theacademics cube graphic)

A commonly held belief is that unlawful file sharing costs the creative economy billions of pounds every year. But according to professor Martin Kretschmer, professor of intellectual property law at the University of Glasgow, and director of CREATe, “legislating without understanding behaviour produces lop-sided policies. The most useful evidence increases our understanding of how to turn infringers into customers”.

UK mortgage lending in February continues strong year-on-year growth

New CML data released today on the profile of UK lending in February 2014, including first-time buyer, home mover, remortgagor and buy-to-let lending, shows:

The dip in mortgage lending in February was primarily due to the expected seasonal factors associated with this time of year but year-on-year growth comparisons remain strong.

Total number of loans advanced to home-owners for house purchase remained practically unchanged in February compared to January but increased 33% compared to February 2013.

First-time buyers took out 22,200 loans in total in February, a modest rise in volume compared to January but up 41% compared to February 2013.

Home movers took out a total of 26,200 loans for house purchase in February, down 2.2% compared to January but up 27% compared to February last year.

The total number of loans taken out by home-owners for remortgage fell in February by 15% compared to January but still had a strong year-on-year increase up by 17% compared to February 2013.

Gross buy-to-let loans advanced decreased in February to 14,300 compared to 15,700 in January but there was a strong year-on-year increase in volume of 46% compared to February 2013.

The Bank of England reported earlier this month gross UK mortgage lending was £14.8bn in February, a 8% fall compared to January, but 40% higher in value than February last year.

Lending for home-owner house purchase

Despite the predicted seasonal dip around this time of year, lending for home-owner house purchase in February remained steady. The total number of loans advanced to home-owners for house purchase was 48,400 loans, only a slight difference to the 48,500 loans in January, but an increase in volume of 33% compared to February last year. Overall, the value of the loans advanced in February totalled £7.8bn, which was only slightly lower than £7.9bn in January but a substantial increase of 47% compared to February 2013.

DB pension costs research and comparison tool launched

The Pensions Regulator has today published the findings of research examining how defined benefit (DB) schemes of different sizes are impacted by administration and other running costs.

It shows that nearly a quarter of trustees of private sector defined benefit (DB) pension schemes could not identify what they were paying in investment charges, even though these represent the second largest expense for such schemes.

The study also reveals how small DB schemes pay on average nearly four times as much per member in running costs, compared to large schemes.

The regulator has developed a charges checklist and a web tool to help trustees assess how the costs of their scheme compare with those of a typical scheme of a similar size. The information it provides should offer a starting point for trustees who wish to assess the value they get from their pensions professionals and service providers.

The research, costs comparison tool and checklist can be viewed here.

Stephen Soper, interim chief executive at The Pensions Regulator, said: “These findings will act as a mirror to DB schemes – for the first time employers and trustees can see the quantitative position they occupy in the context of similar schemes in the market. We are not trying to tell DB pension schemes what their charges should be. Our aim is to put the information out there in order to start a dialogue on costs and help trustees and employers assess whether they are receiving value for money. I’m keen to gather expert views and insight from the industry that will help us shape our regulatory approach in the future.

“This research clearly demonstrates the huge variation in what employers pay for their scheme expenses. There will be many reasons for this, including quality, quantity and pricing.

“Many trustees are struggling to understand what they are paying for, particularly in the investment arena. There is a compelling mutual interest for employers to engage with trustees about their approach to scheme investment, and the regulator’s forthcoming DB code will set a clear direction for just this type of collaboration.”

Key findings of the research include:

The average cost per member of running a small scheme stands at £1,054 per annum – nearly four times higher than that for a large scheme (£281), and nearly six times higher than that for a very large scheme (£182).

Scheme administration represents the greatest proportion of costs – 37% on average, ranging from 41% for small schemes, 31% for large schemes and 35% for very large schemes.

Investment costs represent the second largest cost for schemes – 22% on average, ranging between 20% for small schemes, 27% for large schemes and 43% for very large schemes.

Despite this, 23% of schemes surveyed could not identify all the costs and charges which they pay in relation to investments (such as investment management charges).

This trend was more pronounced among small schemes where over a third (38%) could not name all costs, compared with 4% in large, and 9% in very large schemes, being unable to do so.

The regulator is publishing the research to encourage trustees and employers to understand what they are paying and then ascertain whether or not they are receiving value for money from their providers and advisers. It is also aiming to start a discussion with the pensions industry to inform its future approach to value for money in DB pension schemes. As part of this approach the regulator would like to hear feedback from the industry which can be emailed to: stakeholder@thepensionsregulator.gsi.gov.uk

Overseas Travel and Tourism, provisional results for February 2014

This bulletin contains provisional Overseas Travel and Tourism estimates for January 2014. Revised, final estimates will be published in Travel Trends – 2013 in 2014. The monthly Overseas Travel and Tourism estimates are produced using provisional passenger traffic data to inform the weighting process that is then revised for production of the quarterly estimates, and final data is then used in the production of the annual results published in Travel Trends. The title of the monthly Overseas Travel and Tourism bulletin was renamed in December 2013 to “Overseas Travel and Tourism, Provisional Results for [Month] 2013” to clarify that the data contained in these bulletins are provisional.

Visits to the UK by overseas residents rose in February 2014, continuing the pattern noted at the end of 2012 and 2013. The number of visits to the UK in the three months December 2013 to February 2014 was 5% higher than a year earlier.

Holiday visits to the UK continue to rise and are up 9% in the three months December to February compared with the same months a year earlier.

Visits abroad by UK residents are up 3% over the past twelve months and their expenditure has increased 5% in the same period.

Retail footfall on the way back up

The latest figures from Ipsos Retail Performance show an improvement to average weekly shopper numbers in March. The retail traffic index, which measures the number of shoppers entering over 4000 non-food retail stores across the UK, rose by 4.5% on February, better than the monthly lift of 3.8% in 2013, despite Easter falling into March last year. For this reason the year-on-year figure saw a decline in March, down 3.7% on last year.

Dr Tim Denison, director at Ipsos Retail Performance, said: “Compared to last year, March 2014 has been low key. We suffered from heavy snow fall and cold weather last March, but we also benefited from the Easter holidays. It is difficult to interpret just how good the latest footfall figures are, but it is fair to say that we had expected year-on-year growth to return in March and that was not the case. Certainly the de-seasonalised trend is stronger than it has been since last July and there is no reason to expect this to falter. Consumer confidence is up there with the skylarks, reflective of good news stories outnumbering the bad.”

For householders there is growing cause for optimism over their financial wellbeing. Inflation is below 2% for the second month on the trot and on a par with wage rises, energy price freezes are being actioned, an income tax threshold rise is pending and more people are in employment; these are all contributing to a belief that real disposable income levels are now moving in the right direction and that individuals are beginning to feel better off once more. Interestingly though the mending economy is less about consumer spending than perhaps thought in recent months according to the latest government statistics. Other elements of the service sector have been growing quicker than consumer spending which only grew by +0.4%.

Tim continued: “Shoppers will be stepping out over Easter with more certainty and intent than they have done for a while. We forecast that footfall levels to be 4.1% higher over the holiday fortnight than they were last year. If proven this would be an indicator that demand is strengthening non-food retailing is returning to better health.”

Footfall change: March 2014 vs March 2013

Scotland & Northern Ireland -4.7%

North of England -5.4%

The Midlands -0.3%

South West England & Wales -7.8%

South East England & London -2.4%

Footfall change: March 2014 vs February 2014

Scotland & Northern Ireland +1.7%

North of England +5.5%

The Midlands +5.4%

South West England & Wales +3.7%

South East England & London +6.7%

Businesses urged to maximise export opportunities

Businesses need to maximise opportunities for growth offered by export markets, says leading trade credit insurer Atradius.

To coincide with the UK Trade and Industry’s Export Week on 7 April, Atradius is urging British businesses to take advantage of the nationwide support available for trade overseas which is central to economic growth.

Marc Jones, head of sales, said: “The Chancellor has made clear that the UK needs to increase activity when it comes to exporting and within the Budget, measures were taken to support businesses to export. With all eyes now on exports to boost the UK economy, there has never been a better time to capitalise on markets.”

Export growth in the UK is forecast at 3.3% according to the IHS Global Insight, helping to drive a predicted increase in GDP of 2.7% by the OBR. To support exports, the UK Government has doubled the amount of lending available to exporters to £3bn as well as cut interest rates to exporters by a third.

Marc continued: “The UK is a strong partner for trade within overseas markets which can provide greater new business opportunities than in the domestic market where demand may be limited. With low-cost communications and improving infrastructure, millions of potential new customers in both large and small markets, in all trade sectors are within reach.

“Export trade is essential for successful business growth as well as to the wider economy but the limiting factor can be the fear of the unknown. Trading within new markets can bring with it new risks, particularly for businesses which are looking to new territories for the first time. Overseas markets often have different trading conditions, unfamiliar practices and unique local customs. Without adequate preparation and protection, exporting can potentially expose businesses to a new world of risks.”

However, support is out there. As UKTI Export Week aims to promote exporting, Atradius has issued its top tips for new exporters:

– Become familiar with political and socio-economic situation as well as local trade customs by developing relationships with foreign embassies, trade bodies and business forums. Your credit insurer is also a huge source of information here.

– Do your groundwork: identify your customers, market size and potential share, and use up-to-date information to do so as market dynamics change frequently.

– Research your customers’ position and credit history in advance and stay alert for warning signs of financial difficulty. Again your credit insurer will be of huge assistance here.

– Set realistic targets and create a contingency plan if you’re not meeting them. Be prepared to alter strategy as things change.

– If you don’t have in-house resource to manage the risks, analyse local trading conditions and collate business intelligence, outsource it.

Atradius sponsors the UK Government’s Export for Prosperity campaign, which profiles markets around the world and unearths opportunities relevant to British businesses right now.

A complete guide to export is available free on the Atradius website, alongside detailed reports on individual countries and sectors, visit www.atradius.co.uk

C2FO digital marketplace has the power to unlock billions of pounds of finance for SMEs in the UK

KPMG in the UK has announced a strategic alliance with C2FO, the online marketplace for working capital. Participants are buyers and their suppliers who use the marketplace to increase profit and accelerate cash transfers between themselves. C2FO is already a huge success with more than one million current global market members.

Founded in 2008 in Kansas City, a well kept secret as a Midwest tech start up hub in the US, C2FO currently delivers more than $1bn in early payment for suppliers each quarter. C2FO is being used by a number of Fortune 1000 companies including industry leaders in retail, transportation, medical, logistics, and manufacturing. In the UK, where many SMEs continue to struggle to access finance in the wake of the credit crunch, the new platform has the power to be a game changer for the industry.

Simon Collins, KPMG UK chairman said: “KPMG and C2FO have formed the alliance to respond to a number of challenges faced by many businesses in the UK today.

“The traditional bank lending model has changed, perhaps forever, as a result of the 2008 crash. We know from some of our smaller and medium-sized clients that they continue to struggle to borrow from the banking high-street. However, myriad alternative sources of finance, such as asset-based lenders and crowd-sourcing platforms, are filling the gap. C2FO will provide a much-needed non-bank source of working capital finance to suppliers and will help many small firms stabilise their supply chains. I believe this will prove a really interesting addition to the increasingly diverse mix of funding available to businesses, particularly SMEs.

“The alliance is also representative of our commitment to developing services which meet the needs of the SME sector – the backbone of the UK economy and its future growth – as well as harnessing the power of transformational technology.”

C2FO is the latest addition to KPMG’s expanding Digital Innovation Network and follows the announcement of the partnership KPMG agreed with Xero (on 31 March) to provide select online accounting and tax services, such as accounts, bookkeeping, payroll, VAT and corporate tax to small and medium sized enterprises using the cloud.

The UK government, which is encouraging UK corporates to play their part in supporting economic growth, is backing the new partnership.

Skills and enterprise minister Matthew Hancock said: “I am very excited by this strategic partnership between KPMG and C2FO.

“Working capital is the lifeblood of all business and supply chain finance is an excellent way of ensuring the UK’s smallest businesses have access to the finance they need. Combining KPMG’s experience with C2FO’s market-leading technology will improve access to working capital for suppliers of all sizes and allow large companies to put their cash piles to work in the economy.

“The collaborative approach at the heart of C2FO’s market-based approach will improve the relationship between buyers and sellers, making the supply chain more efficient and both suppliers and buyers more internationally competitive. This is a clear demonstration of the power of digital technology to disrupt and improve the way UK companies operate and I look forward to following the success of this partnership in the coming months.”

Alwin Magimay, KPMG’s head of data and analytics, said: “The UK economy is undergoing fundamental changes with a record number of small businesses being created every year. Today, companies can attain FTSE 100 status in less than five years. Small businesses are the lifeblood of the UK economy and need a digital platform to help them get access to capital on their terms. I am pleased that KPMG, working with C2FO, is bringing this new and innovative digital capability to the UK. I believe it will transform and optimise the way working capital is deployed and make this process more efficient, thereby creating a win-win situation for small and big business alike.

Dru Shiner, C2FO’s chief sales officer: “C2FO is excited to partner with KPMG as we expand the presence of our dynamic early payment marketplace in the United Kingdom. Companies of all sizes around the world have realised the unique advantages of receiving early payment through C2FO including low cost funding without credit underwriting or paperwork. We are looking forward to improving the working capital health of companies throughout the UK.”

Both parties have signed a three year agreement to work together in the UK. No consideration has been paid and the deal does not include any equity stake.

M&A expected to make a strong resurgence by mid 2014

Global M&A deal volumes are forecast to reach 8,000 deals in the second quarter of this year, according to Deloitte’s M&A Index. This is an increase of nearly 10% from 7,250 deals a year ago. The forecast also puts deal volumes for the first half of this year at approximately 15,700, the best start to an M&A year since 2011.

Iain Macmillan, head of M&A at Deloitte commented: “The M&A markets are bursting back into life, with over $500bn worth of deals announced in the first two months of 2014 alone. Strong economic growth forecasts in major western economies and greater confidence in policy is having a positive effect on M&A market sentiment.

“However, while the S&P 1200 share price index is at an all-time high, revenue growth has declined by 3% since 2012. Under pressure to stem this fall, M&A activities are seen increasingly as providing a compelling way to enhance revenues and profits.”

European companies were involved in 35% of all global deals by disclosed values in the first quarter of 2014, up from 27% during same period in 2013. This trend is consistent with the 15% drop in cash reserves of European companies from $930bn to $822bn.

Meanwhile, the technology, media and telecommunications (TMT) sector saw the most activity in the first quarter of 2014 with total deals worth $174.3bn, compared to $105.7bn in the first quarter of 2013.

Iain Macmillan concluded: “With the ongoing revolution in digital, it is not surprising that the TMT sector is at the forefront of deal making activities. We have seen cross industry convergence as TMT companies look outside of their current business models for growth. We expect this theme to drive significant transaction volumes for the rest of 2014 and beyond.”

The Deloitte M&A Index is a forward-looking statistical indicator that forecasts future global M&A deal volumes and identifies the factors influencing conditions for deal activities.

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