Winners, whiners, losers

Winners, whiners, losers

In an industry looking for bad guys, Terry McBride's customer focus is a breath of fresh air

The record industry's battle with downloaders–the catalyst for the recent notoriety of Terry McBride, industry heretic, co-founder of Vancouver's Nettwerk Records, and the subject of our cover story by Andy Holloway (see page 54)–is one of the more depressing chapters in the history of the interaction of commerce and technology. It's hard to know whose side to take. Who's in the arms of the angels (as Sarah McLachlan might say)–the music lover who avoids paying for the product of musicians' hard work and record companies' financial risk, or a record industry that was slow to embrace new technology while it squeezed an easy buck out of its consumer base? One suspects that the answer is neither.

Let's put aside the question of the declining morals of audiophiles for a moment. You don't have to support copyright infringement to see that users of Napster (or any of its latter-day equivalent peer-to-peer networks) got something beyond free music: they also got a service that was convenient and quick, in a place where it was fun to hang out and where they could sample the wares before making a not insignificant commitment of time and bandwidth. The most convincing criticism of record companies is that they should have been there, with their customer base, rather than crying foul from the sidelines and, in the U.S., doling out lawsuits. That response may well be remembered not only as questionable public relations, but, even worse, as ineffective: from 1999 to 2005, music sales in Canada declined by 44%.

Think what you will about Terry McBride, but at least he has the candor to point some of these issues out–and to put his company's strategy and his money where his mouth is. Granted, Nettwerk is a small and therefore flexible player in an industry dominated by global behemoths. But McBride's story isn't just about music. It's about the need in a rapidly changing marketplace for creativity–not only in products, but in revenue models.

And on a more fundamental level, it's about how blaming the marketplace for bad business is almost always bad business.

A LITTLE HEAT came out of the resource boom in the first half of May (see John Gray's story, page 63), but maybe that shouldn't have surprised anybody.

Consider that the Latin American states of Venezuela (share of population in poverty: 47%), Ecuador (share of population in poverty: 52%) and Bolivia (share of population in poverty: 64%) have all taken steps to nationalize oil and other resource industries. (Bolivia has even pledged to seize agricultural estates.) Apparently, the leaders of these states have decided to stake their countries' economic future on continuing strong oil and commodity prices, rather than on liberal policies that could attract foreign capital and might actually help lift their people out of poverty over the long term.

Oh, well. For the rest of the world, the return of nationalization in Latin America might be a good leading indicator. After all, if these guys are getting into resources in such a big way, maybe it's high time for smart investors to get out.

Joe Chidley, Editor

FEEDBACK letters@canadianbusiness.com