Curated by Stuart Fogarty stuart@admaticallycom for AFAO'Meara Advertising, Streamabout The Video Agency and Admatic Ireland.
All comments will be posted - promise!
The growth of ebooks, especially after all those gifts of Kindles after Christmas, is destined to continue. Much like music, the ability to easily download tunes has actually led to a dramatic increase in the sale of music. It's reckoned that 50% of all books sold will be ebooks by 2016. Digital hasn't stifled book reading or music listening, but rather, has increased access and usage of it. Thanks to Amazon's kindle, more people will end up reading, not less. Digital is the delivery system that's easier, faster and better than driving/parking/shopping at a bookstore so it means more people buy books than before. However, those of you who use ebooks, know the importance of reviews as a method to help choose a book. Much like the "staff pick" cards in the bookstores of old, online reviews are like friends telling you what to read. However, it's a system that has been corrupted and Amazon has rightly started deleting the reviews. It has also banned writers on reviewing their peer's work. Some authors have recently has 50 reviews deleted without notice producing their criticism of Amazon, on blog posts. However, Amazon are simply trying to put right a system that those very same authors have abused. RL Ellory, for example, the best selling British writer of crime, was exposed for posting fake reviews about his own "magnificent genius" whilst criticising his rivals. He also tried to remove negative stories about him on Wikipedia as well as giving his own books 5 stars. Mind you, he probably thinks they're worth it. Actually, using the name "Jelly Bean", he posted a review of his own book 'A quiet belief in angels' that it was "one of the most moving books I've ever read". And maybe it was when he went back and read it....(embarrassing or wha?) And he went on...."It is so beautifully written I felt as though it enabled me to be a part of that era even though that can never actually happen. I would highly recommend this book to anyone who really wants to experience a class read." He also appears to have been posting as ‘Nicodemus Jones’, who described the same novel as a ‘modern masterpiece'. But when it came to another writers book, he posted anonymously, "This is the 2nd of this author's books I read, and to tell you the truth (sic), I can't be bothered anymore". Authors are well known to publish positive reviews of their own work and scathing reviews of their competitors, because they know the star review system sells books. These fake reviews (and there's thousands of them) mislead and Amazon is only starting to deal with the situation whereas the authors, are up in arms because they've lost a way to cheat to sell their books. Just look at the amount of 5 star ratings supposedly for books and writers no one has ever heard of! So don't pay them any attention really. Better off Googling online about the book and see what's being said. And if you haven't, buy yourself a Kindle. The greatest invention since the Iphone. (Thanks too to the many reviewers of this blog who not only gave it 5 stars but also said, "I cannot believe how good looking Stuart is in real life to have such an incredible mind and body". Thank you. I appreciate it. Shucks.)
On foot of my blog about the ongoing tax avoidance issues yesterday (which follows below), I was amazed to read the very brilliant Colm Keena's story in today's Irish Times newspaper - http://www.irishtimes.com/newspaper/finance/2013/0102/1224328327411.html I'm actually getting tired of blogging about what has become a tax avoidance issue but for some reason, the information just keeps coming to me. There's that much of it about. Shocking.
So it was interesting to see changes at Facebook and Zynga's Irish operation. I'm sure they're completely unrelated to the tax avoidance issue..... Colm reports that Facebook are moving all its non-US revenues to a new Irish subsidiary. Facebook Payments International Limited, a new Irish company, will now take on the billing from Facebook Ireland Limited, which showed revenue of 1 billion euro in 2011 - up from 229 million in 2010. What's interesting too is that it lost 18.7 million on that revenue of 1 billion and why you might ask? Because largely, of payments it made to its parent Facebook Ireland Holdings Limited owned by Facebook entities in the Cayman Islands. These are exactly the same type of controversial charges by parent companies to create losses (and thereby, meaning they pay little or no tax) and are very similar to the devices used by Starbucks and others - so highly criticised. What's also stunning is that Facebook has a registered company in The Cayman Islands ultimately - one of the great tax shelters of our time after Ireland. Interesting still, is that it's an unlimited company, meaning it can avoid prying eyes from journalists and not be subject to the usual company rigours. Which is really quite shocking for a PLc. In fact the whole thing just stinks. One of the ways Facebook generates these revenues is by way of "game credits" from gaming company Zynga. And it would seem, Znyga is another Irish company success! Zynga Game Ireland Limited (I kid you not) reported a pre-tax profit of a meagre 4.8 million on revenues of 369 million. This small, poor profit is because of.... yes you've guessed it.... payments to other Zynga companies. Exactly as Facebook/Starbucks and them all, are accused of, in order to avoid tax. By making payments to parent companies elsewhere, they avoid tax when those payments either exceed the income or practically wipe out any profit. So for example, of that 369 million revenue, a stunning 191 million for example, was paid in "royalties" to another Zynga company with registered offices at Solicitors in Dublin. That very company in turn, despite revenues of 191 million and no employees, reported a loss of 35 million! Get the pattern? Because....wait for it....it paid 50 million to its parent company in "royalties" and a further contribution of 174 million in R&D which is 224 million paid out after only generating 191 million. Funny too that only in November, Znyga's finance chief, David Wehner, left to join...Facebook as vice-president of corporate finance. Doesn't surprise me anyway.... Avoiding tax isn't illegal, just immoral. And it seems it's widespread. In fact with Google, Facebook, Zynga, Amazon, Starbucks, Microsoft all getting a mention already and so many previously "respected" names, it's hard to imagine that it's just not common practice.
However, it would seem that a lot of other companies with a lot of advisers, are involved in this style of doing business despite being sheltered by an appearance of integrity. On the scale of billions, which these activities are, would require the active involvement of a myriad of professionals. And yet again, they all have one thing in common, one thing that's bringing these stories to light. Ireland.
Well welcome back and indeed I hope your 2013 is as good as I plan mine to be! I think the great thing about Christmastime is that everyone else is off so you don't come back to lots of emails and messages. Social media and Business shuts down too - I think this year more than most because things have been so tough, everyone needed the break from it. Equally of course, there was little point in staying open given the general lack of activity. So although I was keeping an eye, not a lot happened during the break you can be assured....although the march over The Fiscal Cliff in the USA, is pretty scary in itself. One of the more major issues that I blogged many times towards the end of 2012 was the tax avoidance issue and where Ireland now facilitates widespread European tax avoidance. The Google Story is here http://streamabout.blogspot.ie/2012/12/the-tax-controversy-continues-now.html. Microsoft's shameful governance and use of Luxembourg and Ireland's help in doing it is here http://streamabout.blogspot.ie/2012/12/starbucks-try-to-sort-it-microsoft-now.html Starbucks story here http://streamabout.blogspot.ie/2012/12/starbucks-are-we-seeing-death-of-brand.html US senate view of Ireland as a tax haven along with Costa Rica/Belize is here http://streamabout.blogspot.ie/2012/12/now-dropbox-comes-to-dublin-for-greatly.html Amazon, WPP and others appalling tax behaviour is here http://streamabout.blogspot.ie/2012/12/starbucks-amazon-google-microsoft-wpp.html In particular, Ireland has become Europe's "biggest tax haven" in the view of the US Government no less and gets mentioned in the same breath as Costa Rica and Belize. Imagine. Although this tax avoidance controversy was sparked by the poor corporate behaviour of Starbucks, it quickly extended to Facebook, Amazon, Dropbox, LinkedIn and most notably Google with most having their European HQ in Dublin - largely to facilitate the tax avoidance through the infamous "transfer pricing". It's a story that is so bad it's not going away any day soon and I did wonder if the bad publicity would reflect on the brands themselves. And it has. Clearly it has nearly destroyed Starbucks and no bad thing either. They behaved badly in doing what they did but worse following a "faux" PR attempt to make amends by offering to pay tax. And in doing so, cut into their staff incomes to achieve it. A company that's being exposed for what it really is rather than what we thought it was. Google has also come out thus far, as being pretty poor too and therefore I was interested to see the annual 'Brandindex Table' by YouGov in the UK which asks 2,000 different people a day about good/bad things about brands, that Google has itself fallen off a brand cliff. Google have dropped out of the top 10 altogether. It has dropped from a 26.7 rating to 11.7 which is about as dramatic it can be in the short time and largely, according to BrandIndex, because of the tax issue. Another avoider to also feel the wrath on the same issue is Amazon. Amazon dropped from first to third - 32.1 rating down to 24.1 and again it's been late to the controversy so it will suffer more. Here is the Top 10- The top brand was The BBC Iplayer (remember this is a UK survey); John Lewis (big Department store with terrific advertising); Amazon; Money Saving expert; Marks & Spencer; Ipad/Apple; Sainsburys (retail grocery); BBC.co.uk; Samsung and lastly, Cathedral City (a cheese I think). So there's no doubt, brands that have been involved (and there's a lot) in this tax avoidance 2012 issue, will see damage in 2013 unless they put it right. However, countries that are associated with it and that actually contribute to it, will feel the damage too. Most notably those countries that terrorise their citizens into paying tax and at the same duplicitous time, help large corporates shamefully avoid it. Ireland beware.
