LinkedIn Goes Social

LinkedIn has just added various collaborative, work-oriented applications to its platform. But I'm struggling to get beyond it as a fairly static place to hold your CV and network in a fairly basic, formal sense. I do receive requests for my services via LinkedIn, and it's useful for making introductions and learning a bit about someone you're scheduled to meet or call – the whole reason they published their profile. I guess people might use it as a “work” platform, add their blogs stc and yet retain the air of formality. But not all of that seems compatible. We'll see.

In the meantime, Facebook still seems more engaging and better aligned with the blurred social, business and academic blogosphere - it's the equivalent of meeting with the founders of a start-up in Starbucks, or with colleagues in a bar to talk shop and whatever else is going on. So that's where I prefer to share my blog, for example.

It will be interesting to see whether, and if so, how Facebook reaches out to the business community as LinkedIn evolves to be more engaging.

Travels in the Blogosphere

Phew! What a journey, and what a pleasure to have so much great stuff to consider and comment on over the past week, including:

• the iPod of financial services on Guillaume's blog;
  

• the European Commission's e-money plans on panGloss;
  

• the EC's consumer protection plans on Digital Law;
  

• discovering that European Commissioner Meglena Kuneva has launched her own blog;
  

• the future of cash at Digital Money Forum; and
  

• the impact of prescriptive regulation on financial services innovation at The Bankwatch.

Thanks, folks, please keep it coming!

In the meantime, I reckon I'll need another week off...

Be Careful Saving With Your Mortgage Lender

You'll be aware of recent concerns about how much of your deposits are covered by the UK's Financial Services Compensation Scheme.

Their general guidance on the subject is here, but there was a twist announced indirectly at a recent conference - hat tip to the Fool Blog:

• if you have an offset mortgage - where the bank agrees to credit your savings against your mortgage balance and only charge interest on the difference (if any) - then if the bank goes under, your savings will simply be deducted from the mortgage balance, even if those savings exceed £50,000. So you won't actually have access to the money anymore (unless, perhaps, the mortgage is taken over by another bank on the same terms and you can draw down again, or you remortgage, which will cost you interest).
  

• if you're an ordinary saver who just happens to have deposits with the same bank who has your mortgage, indications are that the FSCS will treat you the same as if you had an offset mortgage, although only £50,000 of your savings may be protected. Again, you could merely be treated as owing the bank less, and not actually get your savings paid back to you.

It does seem fair that the FSCS is able to offset deposits against mortgages or other loans in the event of bank insolvency, regardless of whether or not you agreed an offset mortgage. The higher deduction for offset mortgagors is also fair. Otherwise, people who've saved more than £50,000 and who were therefore able to take on a bigger mortgage than their income might have supported, could find themselves penalised. That would be inconsistent with the principles of recent mortgage regulation.

But this could be a disaster for anyone who's tried to set aside 3 to 6 months' net salary as "rainy day" money - as a buffer against unemployment, lengthy illness etc.

So, you should consider making sure that your rainy day money is not deposited with your mortgage lender. Worth checking with the FSCS before making the decision. Here are their contact details.

Consumers Paying For Services That Are Free

In these troubled times, we as individuals must take economics into our own hands - cut costs, repair balance sheets. And so on.

One needless expense is the purchase of complaints handling services from private suppliers when the alternative is free of charge.

Not only does that cost you money, but it also means your complaint may not be visible to the authorities. So there won't be as much pressure on the product provider to cure the problem you're complaining about.

Topical examples include:

• financial services claims management companies - why pay these guys, when the Financial Ombudsman Service (FOS) is free to consumers? The regulated product providers must pay FOS's fee for handling the dispute. That's an added incentive to resolve your complaint more quickly, and to avoid causing problems in the first place. But, as I've pointed out before, some claims management companies and law firms continue to promote services where the consumer bears the expense. There is even speculation within the industry that some product providers who've mis-sold financial services in the past are either starting up claims management companies or selling lists of affected consumers to them in order to profit from curing the problem they helped create. Your first complaint should be the product provider. But, if you aren't satisfied, then FOS is your best bet. Going to the media might sound attractive, but you shouldn't have to bear your soul in public to get a private financial matter resolved.
  

• call blocking services - sure, cold calls are annoying - especially those from an automated calling system that fails to connect anyone when we pick up the phone (known in the industry as "silent calls"). But rather than pay for a blocking service, the best solution is to help ensure the people using these systems get named, shamed and fined. That way, it's the perpetrators who will demand - and pay for - the improvements in technology that stops this happening, not you. So, before you pay for one of these blocking services, complain to Ofcom or the Information Commissioner. The Ofcom policy on the subject is here. You'll be comforted to hear that Ofcom fined Barclaycard the maximum fine of £50,000 for breaching the rules on silent and abandoned calls last month. It may not sound like much, but it will end up saving you money on a blocking service.
  

We all whinge when the Government doesn't act. But we only have ourselves to blame if they do act and we don't take advantage - and end up paying for it.

War on File-Sharers Spells D-o-o-m for Net Neutrality

The UK government is planning to promote "attractively packaged content" on the internet, bowing to pressure from copyright owners to prevent online piracy.

Only figures for the music industry are cited in the consultation paper, yet various regulatory and co-regulatory solutions are proposed that will affect all copyright content online.

The paper claims that about 6.5m people in the UK (25% of UK internet users), engaged in illicit P2P file sharing in 2007. This is estimated to "cost" the "music industry" £1bn over the next 5 years, against revenues of about £1bn per annum.

So, where's the problem? The "music industry's" digital music sales increased by 28% in 2007. Sure, declining CD sales resulted in a loss, but that's like saying Ford made a loss because no one wants to by the Model T anymore. It is also conceded that the decline in CD sales wasn't due to piracy alone - supermarket discounting and the shift to digital purchases were chiefly responsible. In other words, the "music industry's" woes are born of consumer dissatisfaction.

Consumers are used to getting content for free online, knowing that providers are making money out of advertising. So it's no surprise that 91% of survey respondents file-share because the content is free. More telling is that 42% say it's because they could find everything they were looking for. In other words, constraining supply by "attractively packaging content" doesn't work, and the music industry needs to get with the programme.

Of course, file sharing isn't actually not free. File-sharers spend time and pay for wireless technology, proxy servers, encryption and communications to download the material. No figures are given for how much revenue this generates, but at 6.5m UK consumers, it seems to be a sizeable market. I wonder who's making money out of that?

The chief cause of music industry misery actually seems to be the cost of enforcing copyright via the clunky legal system. They say it can cost £10,000 for each court order to obtain the IP address for each file sharer. I'm prepared to believe that, and I'm all for reducing the cost of enforcement. But that problem shouldn't need a "memorandum of understanding" among the rights owners' associations, network service providers and goverment, paragraph 3 of which says this:

"Many legal online content services already exist as an alternative to unlawful copying and sharing but signatories agree on the importance of competing to make available to consumers commercially available and attractively packaged content in a wide range of user-friendly formats as an alternative to unlawful file-sharing, for example subscription, on demand, or sharing services."

One shudders to think what is meant by "attractively packaged content". But it's implicit that any such packaging will be done by, and must suit, the few industry players who signed the MOU.

And that implies we'll be forced to pay for premium content bundled with rubbish, like "albums" on CDs. A sort of packaged internet, chosen for us by cosy institutions.

The neutral, open internet appears to be doomed.

PS: The Society for Computers and Law response to the consultation can be viewed here, and the SCL's response to proposals to increase the penalties for criminal infringement of intellectual property rights can be viewed here.