RADAR
Net closing in Big Brother could soon become a reality. The UK government says that it may impose sanctions on Internet Service Providers (ISPs) that fail to stop illegal downloads of films and music and force them to squeal on customers spreading pirated material. This posturing has already set off alarms bells in Europe, with industry analysts and legal experts warning that the proposals could hurt legal downloads of content while raising privacy and free-speech issues. Currently, communication companies are not legally responsible for the content of the traffic they carry over their wires and wavelengths. Indeed, common carrier provisions now protect them unless they are actively participating in illegal operations. If that protection were removed, ISPs could be forced to supervise their own customers to avoid prosecution or lawsuits by music and film companies. At the same time, they could be exposed to suits from customers fighting to protect their privacy. Market researcher JupiterResearch says 457 million Europeans used the web last year, up from 369 million in 2004, and, of those, about 20% say that they regularly use file-sharing sites to download content. Some ISPs publicly acknowledge the need to fight back against illegal downloading but are in favour of a voluntary scheme run in conjunction with content providers.
DRAWING BOARD
CITIES SLICKER?
In a policy paper from Brussels-based think tank Bruegel, economists Thomas Philippon and Nicolas Véron claim that new companies in Europe – particularly those involved in design and R&D – desperately need simpler regulations and more innovative financing to accelerate growth. In the FT Global 500, they huff, only three European companies were founded after 1975, compared with 26 in the US, and 21 in emerging markets. “Europe suffers from extraordinary corporate rigidity. Not only is there the power of trade unions, but business, labour and political elites protect each other. We stifle innovation. That is why Europe has failed to produce a Bill Gates.” Bruegel says the EU needs to tweak competition laws, allowing private equity to compete for business, while simplifying and harmonising insolvency legislation and cross-border tax rules. But while many people have long urged Europe to modernise, some commentators warn that this is probably not the best time to argue for US-style risk-taking entrepreneurship and greater financial innovation. Indeed, the FT points out: “The name of [Société Générale’s] Jérôme Kerviel will be forever associated with the explosive dangers of risk” and “securitisation, as practised in US subprime mortgage markets, has become a radioactive word.”
COOL BRITANNIA 2.0
The UK government has unveiled an “action plan” backed with €90m in funding for the creative industries. The measures sketched out in a report entitled New Talents for the New Economy include a plan to develop 5,000 apprenticeships by 2013, “media centres” in cultural venues nationwide, proposals for a World Creative Business Conference and, er, a finishing school in animation education in partnership with Aardman Animations, the outfit behind Wallace & Gromit (pictured above).
The UK’s new culture secretary, Andy Burnham, points out that the report represents a move to take the creative industries from the margins of economic and policy thinking to the mainstream. “Now is the time to recognise the growing success story that is Britain’s creative economy and build on it,” he says. “Our vision is of a Britain in 10 years’ time where the local economies in our biggest cities are driven by creativity. We need a clear action plan to keep our competitive advantage. We want to take raw talent, nurture it, and give people the best possible chance of building a successful business.”
Not really… Indian
Sharkah Chakra might sound vaguely mystic, or at least Indian, but in fact it is a London-based denim label, which founder Sara Simmonds calls the “ultimate green jeans”. Meaning ‘hand make life’ in Hindi, Sharkah Chakra is the first company to earn an official Fairtrade mark for the entire manufacturing process as well as the finished product. The denim is made from organic cotton farmed in Mali, West Africa, which is then taken to Tamil Nadu, southern India to be hand-woven and dyed using natural indigo, then sun-dried. The jeans will be rolled out slowly in upmarket stores, such as Fred Segal in Los Angeles and London’s Harvey Nichols – for whom Simmonds was formerly a denim buyer. They will cost around €255, which probably makes them too expensive for most Europeans, let alone the hipsters of Mali or Tamil Nadu. Yet Simmonds believes the same production standards that make her jeans ethically sound make them much more luxurious than regular denim. “[They’re] first and foremost about styling and fashionability, but it just happens to be ethical,” she gushes, adding – somewhat inevitably – “we want to grow the brand organically”.
BUZZING ABOUT… Puma’s top cat
The Olympic Games and Euro 2008 football championships promise a good summer for sportswear companies but a bigger competition is being played out in the fashion arena. Europe’s largest sporting goods manufacturer, Adidas has long worked with designer Yohji Yamamoto for its Y-3 fashion label and is also working with Diesel and Stella McCartney; however, number-two-company Puma – which was the first to use the word ‘fashion’ in its strategy, and has worked with designers Jil Sander and Neil Barrett – has now hired Hussein Chalayan as creative director.
Puma already collaborates with Italian motorcycle manufacturer Ducati Motor Holding on a shoe range, and has created accessories with Dutch designer Marcel Wanders. Last year, PPR, owner of Gucci, acquired a majority stake in Puma, as luxury outfits mulled over how to best capitalise on demand for fashionable sportswear. Puma’s fourth-quarter profits for 2007 rose 17% after new products fuelled sales growth, and the company’s 44-year-old CEO, Jochen Zeitz, is now being touted as the future head of PPR.
UPGRADE YOUR TRIP No country for old menus
Soon you may be able to enjoy meals across Europe without dealing with language barriers or grumpy waiters. Tel Aviv-based company Conceptic has developed the e-Menu, which involves a touch-screen on restaurant tables with which diners can order, complain and request the bill. The system relies on a wireless computer network that links each table’s screen to a central computer. Diners tap the touch-sensitive screen to order, and the system relays their requirements to the kitchen. Food and drinks are then delivered to tables by human waiting staff. Additionally, children can play games on the screen (presumably, a favourite one is: “let’s max-out daddy’s cards”) and diners can send instant messages to people on other tables. The menu has been installed in restaurants in France, Belgium and South Africa, and the company hopes to be in business in the UK within three months.
Mergers & acquisitions
PORSCHE POISED FOR TAKEOVER
Most people dream of buying a Porsche but for years Porsche has dreamt of buying Volkswagen, Europe’s largest car manufacturer. And now it is poised to take a majority stake in VW for around €10bn. The news emerged as Volkswagen, which already owns Audi, Skoda, Seat, Bentley, Bugatti and Lamborghini – and which has just announced record profits – has taken over Scania, the Swedish lorry firm. “Our aim is to create one of the strongest and most innovative automobile alliances in the world, able to measure up to the increased international competition,” said Wendelin Wiedeking, Porsche’s chief executive after his supervisory board approved a plan to boost Porsche’s 30.9% stake in VW by a further 20%. Regulatory approval is likely to be a formality. Cynics suggest the move may have been delayed to allow for the end of the VW corruption trial, during which its former CEO denied knowledge of sleaze and kickbacks. However, for the moment, staff at Porsche’s headquarters at Stuttgart and VW staff at Wolfsburg near Hamburg, are doing the other thing Germans do so well – celebrating.
Growing gains
Boom time
One pocket of Europe continues to pour scorn on a digital future. Exports of Swiss watches grew 16.2% to CHF15.96bn (€10.1bn) in 2007 and analysts at Zurich’s Bank Vontobel forecast sales to grow 10% in 2008, despite the global economic downturn. This confidence is partly down to the Olympic Games in Beijing, of which Omega is an official sponsor. Bank Vontobel says strong demand in Asia and the Middle East should offset economic gloom in the US and Europe. This optimism is echoed by Nick Hayek, chairman of Swatch, the biggest Swiss watch company, who told Finanz und Wirtschaft that he expects his company’s sales to grow to CHF10bn (€6.32bn) over this year. Swatch, which owns Omega, posted sales of CHF5.9bn (€3.73bn) in 2007. The company’s Breguet, Tourbillon, Blancpain brands plus Swatch and Omega notched up higher sales in the first half of January than for the whole of the January 2007. Hayek says: “China, Russia, the Middle East and eventually India” will fuel future growth. Meanwhile Swatch’s competitor Richemont also reported rising sales; up 14% to €1.7bn in the third quarter of 2007. Of course, the other people anticipating a windfall from summer’s Olympics are the vendors flogging fake Rolexes and Omegas to tourists in Beijing.
UPGRADE YOUR TRIP
Diffusion lines
Designer mobile phones are not just in fashion – they are fashion. When Giorgio Armani launched a line of mobile phones at January’s Computer Electronics Show he was merely following in the footsteps of Dolce & Gabbana, which has tied up with Motorola to make a gold version of the RAZR V3i, and Prada, whose collaboration with LG has spawned accessories, including a Bluetooth headset featuring a Prada logo. But the competition to ‘dress’ designer mobiles is becoming as intense as the competition to design the actual phones. Swarovski Group raised some sort of bar with €1,500 headphones encrusted with amethyst crystals, but Louis Vuitton, which has already designed a leather case for the Bang & Olufsen and Samsung phone Serenata, is reporting booming sales on its four cases for the iPhone. The alligator skin one costs around €750 – twice the price of the iPhone.
Traffic report
Local heroes
Cinema attendance in the EU dipped 2.2% last year, with 910 million tickets sold, down from 931 million in 2006, according to the European Audiovisual Observatory. Countries with falling admissions included Germany (-8.2%), Spain (-7.7%) and France (-5.6%). Steep drops occured in some new EU states, such as Hungary (-13.8%) and Slovakia (-19.9%); however, in Italy, admissions grew 8.4%, and were up 3.7% in the UK admissions. Some new EU countries also saw rising attendance, most notably in Lithuania, where admissions skyrocketed 34% from 2.4 million to 3.2 million. Locally produced movies performed well in many markets, underpinning overall box office success, and fared particularly well in the UK, Italy, the Czech Republic and Poland, where market share for domestic product leapt 8%, 7.2%, 5.1% and 8.8%, respectively. All four territories saw overall admissions rise. Market share for local flicks dropped most steeply in Germany (-6.9%), Hungary (-5.8%) and France (-8.1%) – all overall admissions losers.
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