In a previous post I outlined the costs of recording an independent EP, and hinted that with Fuzu’s second EP we were trying to significantly reduce our costs.

Some friends who read the post found it useful, and I’ve also participated in some further discussions on a related post over at new music strategies.

As we’ve just completed mixing and mastering (i.e. we’re close to finished the project) I thought it might be worthwhile looking at the costs so far…

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I spotted these just before Christmas, but didn’t get around to blogging them:

Millionaires factory keeps smiling minus the bonuses.

A $1 BILLION cut in the bonus pool split by Macquarie Group’s 13,800 staff, including the controversial multimillion-dollar rewards received by its senior executives, helped the investment bank deliver a better-than-expected half-year profit, it emerged yesterday.

The cut still allowed for $1.3 billion to be distributed as bonuses – an average of $94,000 per employee. Of course this would be split more unevenly in practice. Before the cuts, the average would have been$173,000 per employee. Hardly “minus the bonuses” as the headline suggests…

But then comes the news:

Macquarie Bank sacks 100 investment bankers.

MACQUARIE Group has sacked almost 100 investment bankers and advisers in a savage day of job cutting across the diversified bank.

…There were suggestions yesterday that Macquarie could end up cutting up to 1000 of its 13,000 employees around the world.

$1.3 billion in bonuses (which of course must be much smaller than the company’s profits) followed by 100 sackings. Seems the “greed is good” mentality is still alive and well.

The cash bonus mechanism rewards short-term thinking with sometimes obscene amounts of cash. Seems to me if the bonus schemes were more long-term focused (e.g. share options and other mechanisms), rewarding employees based on the long-term profitability and viability of the business, perhaps the rush to sub-prime investments would have been tempered with more cautious risk analysis.

Given how quiet I’ve been around these parts of late, I thought I might post a quick “what’s been happening” post.

• Fuzu have finished recording and mixing our second EP – tentatively titled “The Point”. We’ll be mastering later this month, and hopefully completing the artwork shortly after. I’ll hopefully have a follow-up to my budget post soon reflecting the actual budget.
• I’ve been working solidly on two big projects (one for Inspire Foundation, another for UNSW. This has taken up a big chunk of my time (as one might expect) – but I hope to be a little less frantic come February.
• Thanks mostly to Timo Rissanen, further work has been done on refining the pattern’s for Arketype’s first range, which will be launched for Winter 2010 now, instead of Summer 09/10 (I’ve been a bit too busy with the ‘day job’ and have missed some deadlines). We Buy Your Kids are working on the graphic designs for the range – I’m looking forward to seeing what they come up with given the logo treatment Sonny and Biddy, the duo behind WBYK, came up with (more on that front soon).
• Holidays – I’ve taken 3 weeks off work to visit family in Queensland – which was a wonderful break (that’s not quite over yet…).

Recent reading

I’ve also been doing a lot of reading of more “popular science” accounts of network theory, prompted in part by an ABC doco on the topic, and also economics and the history of money. This was in part prompted when a friend of mine sent me this video on money.

After reading Peter Bernstein’s A Primer on Money, Banking, and Gold it seems that many of the claims in the video are reasonably accurate.

I also recently finished Clay Shirky’s Here Comes Everybody which looks at some of the societal changes being spurred on by networks. Especially interesting to me is the notion of “reduced transaction cost” for organising collective action.

George Soros’ The New Paradigm for Financial Markets was also an interesting read, albeit a bit repetitive. What’s most interesting is that an über-capitalist such as Soros would have such disdain for the models and assumptions underpinning the industry that he profited so well from.

Critical Mass by Philip Ball is a great overview of what he describes as an emerging “physics of society”. The book covers network and game theory, and emphasises the extent to which power laws and “phase transitions” apply to social phenomena. It also weaves into its narrative the ideas of many economic and social thinkers in history – which was fascinating to me as someone who’s not overly familiar with many of their contributions (at least not directly/explicitly).

Continuing the theme I’m currently reading Duncan Watts’ Six Degrees: The Science of a Connected Age. It delves much deeper into “small world” networks (popularised by the “Kevin Bacon” game) which are covered more lightly in Critical Mass.

It seems every year, in the lead-up to Christmas, we hear about how “retailers are doing it tough” and that the Christmas period is crucial for retailers, so we, as consumers, had better “spend, spend, spend”.

This year was no different, except the “global financial crisis” had “hit retailers hard” and that, more than ever, we needed to spend, spend, spend. Never mind the fact that families might need the Rudd government’s handout for bills and savings – it was our duty to spend to save the economy.

Before the Christmas rush I commented to Ang (though I wish I had have blogged the prediction here) that by the time Christmas was over we’d hear that spending was up this year, if not to record levels. Why? Because I’ve noticed that this happens every year.

Last year it was the weight of growing interest rates denting consumers’ spending. This year, the economic crisis. I forget what it was the year before that.

I did entertain the thought that the financial “crisis” might, in fact, have an impact this year – but I posited that we’d still see a surge in spending all the same.

Well… the scare tactics appear to have worked.

According to the salesman at The Good Guys near my Mum’s home, large LCD TVs have been “walking out the door” (hardly an objective measure I know). And Gerry Harvey is surprised that sales had increased 8.7% over the same period last year.

Mr Rudd must be very pleased that his bonus is being spent so wisely…

Now, I am aware that retailers have experienced a significant decrease in spending over the past few months and that some, especially I suspect smaller operators, will actually be “doing it tough”.

I don’t know about you, but I just find the whole “it’s your duty to spend” line a little sickening and that the justifications for why we should are wearing a little thin when retailers continue to report record profits even after claiming that they’re “doing it tough”.

I’d like to see journalists, when reporting such statements, take a look at the profit figures across the previous year and put it all in a bit of perspective: “Despite the fact that David Jones posted a record profit last year, the best in it’s history, the retailer says its preparing for ‘tough times’.” (tough times = “net profit after tax … in line with previous guidance of five to 10% growth” – emphasis mine.)

I think it’s all very much a sign of our myopic focus on growth at all costs (hilariously captured by this YouTube video) as though the environment is just a never-ending source of resources and that permanent, endless growth is possible.

It’s quite simply not possible – the environment has limits that are already stretched by our current consumption habits. Sooner rather than later we’re going to have to face that fact.

Perhaps we should be looking for alternative models and starting to look at the economy from a different perspective? Models and perspectives that don’t rely on infinite, unsustainable growth fueled by private, debt-enabled spending – which, after all, got us into this mess in the first place.

Originally posted on the Green Loves Gold blog.

When I was thinking about starting a sustainable business one of the things I looked into fairly early on was certification standards. In the clothing business there are a growing number of standards and certification programmes that need to be considered.

Standards in the textile industry

In the industry that I’m entering with Arketype, there are a number of potentially applicable standards – to name just a few:

• Fairtrade Cotton – Fairtrade certification for the raw fibre and textiles production
• Certified organic cotton schemes, such as USDA National Organic Program or EU 834/2007 (which takes effect in Jan 2009) – covering raw fibre production using methods that are much less impacting on the environment
• Oeko-Tex – testing and certification to limit use of certain chemicals
• Homeworkers Code of Practice – an Australian programme that accredits garment manufacturing as “No Sweatshop” (which is part of the Fairtrade cotton standard for garments manufactured in Australia)
• NoC0₂ – programme for auditing, reducing and offsetting carbon emissions

Of course there are many standards and logos which can be quite overwhelming for business owners and customers alike. The good folks at Eco-Textile News have produced an excellent guide for the TCF industry that outlines the major standards for that industry.

Even so, businesses can’t carry out all of these certifications, especially so during the start-up phase where capital (and time) are often limited. So the challenge is to be discerning about which programs we engage in.

Of course, we can also incorporate the principles of the various other programs into our practice, even if we’re not in a position to carry out certification against those standards.

Certification counter-acts the tyrrany of distance

I attended a talk recently by a member of a local food co-op and talk turned to “certified organic” produce. Many of the local growers are using organic methods, but not all are seeking certification.

In discussing this, the member explained that one of the aims of the co-op was to connect local growers with their customers directly. In breaking down this distance – creating a direct, personal connection – he argued that the need for certification is greatly reduced as a relationship is built up and trust develops.

If customers can talk directly to the farmer about their methods, perhaps even visit the farm etc., the farmer is less likely to break that trust as their customers are people they know.

In other words, it’s when distance is introduced – when the supply chain gets between the customer and the producer – that certification becomes increasingly important. The longer the supply chain, the more important certification becomes. I find it a thought-provoking alternative “approach” to achieve the same goal as certification.

For example, at a recent event held by my primary supplier, Rise Up Productions, the makers of our products were there at the event, and were introduced to us. Bronwyn Darlington, Rise Up’s founder, often visits the manufacturers and suppliers of our textiles in India – she has a personal connection to the producers – radically reducing the distance between producer and customer.

This builds confidence in me (the customer) that Rise Up are doing the right thing.

Why should we certify?

Interestingly, though, Rise Up are provide certified organic and Fairtrade cotton products, and are accredited under the Homeworkers Code of Practice. So why, given her close connection to producers, is Rise Up going through the certification process?

I can’t speak for Bronwyn and her team, but for me, certification is still important even under this circumstance for one reason: customer confidence.

Thanks to the effects of greenwashing – essentially an abuse of trust by companies who do more talking than walking – certification is essential to build confidence that what we’re doing is not just a marketing pitch and that our claims have been verified by an independent third party.

Without it, we risk being tainted with the same brush as other companies that aren’t as committed to social and environmental outcomes, but are trying to jump on the bandwagon of growing consumer interest in sustainability.

I have often seen a lot of debate about the merits of downloading music for promotion of a band and how downloads are changing the music landscape.

Generally I agree that the opportunities for bands are much greater in this day an age than they were previously. In fact, our first EP is released under a Creative Commons license because of this belief – anyone can share our music with their friends, remix it (as our friend Karoshi just has – can’t wait to share that with you!), and the like.

What I haven’t seen is a lot of discussion of how much it actually costs to record and produce music of a standard suitable for “releasing” (radio play etc.). I get a sense that there’s a bit of a misconception that, with the advent of cheaper computers and audio recording hardware and software, that artists are able to produce their music really cheaply, which isn’t actually the case.

The other suggestion I see a lot is that bands can release music for free and make money through other means (performance fees etc.). This I think is in some way related to the first misconception, but also is problematic in its own way.

What I want to do in this post is share my experience of producing music with my band, Fuzu, and having a look at what it costs to release an independent EP.

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This is a random little rant – feel free to pass it over if that’s not your thing..

I am one of those weirdos that takes his own mug to the coffee shop, to avoid the wastage of a paper cup.

A life-cycle analysis of a paper cup vs. a porcelain mug shows that, if the mug is used enough times, the carbon footprint is lower – so I use it as often as I can. I probably have used my mug for hundreds of coffees – and I intend to keep using it to maximise the use of the resources involved.

I’m consistently dumbfounded, though, when I turn up to a cafe with my trusty mug and one (or both) of two things happens:

• The barista takes a paper cup to put the espresso in, rather than a re-usable container. I’m bringing my mug to reduce wastage (why else would I do it?), then you go and waste the cup anyway.
• They then only half-fill the mug, or fill it and complain that it’s bigger than a normal cup. I’m saving you the $0.02 of the paper cup, you can afford to give me that $0.02 back with an extra 25-50ml of milk.

If either of these two things happen, I usually don’t go back. Even if the coffee’s good. It’s a basic attention to detail/service thing. Yes – I’m sure that I’m being picky, and probably unreasonable (there are, of course, bigger things in the world to get upset about).

But I’m sure there are lots of people like me that notice these things, and many cafes that are losing custom because of them. And many cafes get it – my favourite one charges less because I bring my own mug.

Which is a long way of saying that I won’t be returning to either of the cafes I went to today…

</rant>

Strangely enough I’ve been thinking about my financial situation given the apparent impending collapse of the global economic system… (Or has it already collapsed? I can’t quite work that bit out.)

Although the tanking Aussie dollar is a little bit of a concern, I have a suspicion it’s going to bounce back a bit in the coming months. (Besides, if it wasn’t for the recent buoyancy of the dollar we probably wouldn’t be too concerned – it’s not like the first time the dollar has been hovering around $0.70).

And despite all the ups and downs of the interest rates, I’ve only actually seen one small increase in my mortgage in the past 12 months, so there’s not much to concern myself with there either.

Most of my “net worth”, though, is in my superannuation – so I’ve been thinking about that a bit.

I recently shifted my super across to a more aggressive fund option that includes international shares. This has increased my exposure to the current volatility – though I’m not panicking and “locking in” my losses by changing strategy just yet. Allow me to explain why…

For a number of years my super has been invested with Australian Ethical Superannuation. This means that my money is invested in businesses geared towards a sustainable future.

As far as I can tell the fund has been a strong performer for some time – and one of the nice things is when there’s a downturn the fund typically doesn’t see as great a loss as the general market (unless tech stocks are particularly affected – there’s a slight bias towards bio- and medical-tech in the fund).

Additionally, I truly believe that sustainable businesses are the way of the future and that as the market recovers the sustainable stocks will recover well, especially as people reconsider their investment options and perhaps put some thought into sustainable strategies, rather than the “growth at all costs” approach that started this whole mess. (Call me naive – but that’s how I view things.)

So while I’m expecting to be a bit shocked at the level to which my super goes backwards in my next statement, I’m confident that over time the value will be restored and I’ll be better off in the long run. And I’m really glad I made the choice all those years ago to invest in a strong SRI fund…

A few months back I picked up a stand for my laptop. I decided to shell out for a Griffin Elevator. I’m quite sensitive to neck strain, so having a stand for my laptop is important, and I’d used the Elevator at Digital Eskimo, liked the look of it, so went with that.

When I picked up the Elevator from the store I was disappointed to find that the packaging was predominantly vacuum molded plastic. Not only that, but there were no indications/markings on it indicating recyclability (the little recycle symbol with a number on it).

Having visited a recycling depot (yes, I’m truly an enviro-geek!) I knew that I couldn’t put this in the recycling as they are hand sorted and would end up in landfill anyways – so I was left with no option to but to throw it into general waste.

Annoyed by this I wrote to Griffin suggesting that, in this day and age, it wasn’t good enough to be putting out packaging that was unrecyclable – let alone something that wasn’t recycled to begin with. The response? We’ve looked into it but it’s too expensive.

Now, call me naive – but for a product that retails at around AUD$80 for what amounts to being two formed strips of aluminium and a piece of plastic, I’m sure that Griffin could afford the extra few cents (even a dollar or two) per unit to clean up their packaging. Perhaps by exploring other materials, like molded cardboard, they could possibly even reduce their costs (I’m not sure – but creative thinking might uncover cost savings is my point).

Ever since I read Cradle to Cradle I’ve been quite averse to plastic – especially for so-called “single-use consumables” – plastic water bottles etc. (For example, the Elevator uses plastic in its construction – but it has a long expected life usage. That’s not to say that it, too, shouldn’t be recyclable – which it isn’t – but it offends me far less.)

Sometime whilst reading that book it really struck home how insane our use of plastic is. Here’s a material that has a life expectancy of hundreds, if not thousands of years (depending on the plastic) – and we use it for “single use” products?! As the book says – isn’t it odd that we use a container that outlives its contents by thousands of years? Why not use materials that degrade within years, or months, instead?

It’s not just Griffin, of course. The use of plastic in product packaging is deeply embedded. What bothers me most is that this is the “cheaper” option – the incentive is there to use the most damaging option. That, to me, is broken.

In my view it’s a systemic failure – a market failure. Since I’ve been thinking about it I’ve been wondering what sort of “market mechanisms” might be employed to correct this failure. I’d be really interested to know what David thinks, because so far I’m at a loss.

The thing is, solutions are coming – but as we saw with the recent ruckus by retailers about phasing out plastic bags, we seem unwilling to change our damaging ways. This is a legacy that will last for generations – one of those clear cases where we’re borrowing against our childrens’ future – it’s disappointing (to say the least) that we’re not being more pro-active in embracing and developing solutions.

In my new business I am resigned to the fact that plastic is going to make up part of what we do. I know that Rise Up has found alternatives to plastic coat hangers already – but it seems everything from the buttons (usually plastic) to packing cases to the threads (polyester) seem to be unbiodegradable plastic.

I had the pleasure of meeting a materials scientist at the RMIT textiles workshop I attended earlier in the week and I would dearly love to continue the conversation with him, to continue to explore options. Hopefully we’ll find some alternatives that can help be part of the solution.

And while I don’t have the capital or scale to effect a lot of change – I will be doing all I can to find alternatives…

In response to my last post, Damian points out via Twitter that, despite all my whining, I still want one (that’s my words, not his).

My response initially was: “yes, but I want to not want one. I really would like to boycott the damn thing in disgust, but noone can match the integration. I have a love/hate relationship with Apple. I’ll be cheering on any credible competitor that can challenge their arrogance.”

This is the thing – Apple’s balls-up makes me feel the fool for wanting their product. I stopped wanting to feel the fool some time ago, and will jump to a credible competitor as soon as one appears.

(I think that’s a testament to Apple’s brand – that I would take such a thing personally. But I digress…

I don’t purchase music from iTunes as there is a credible alternative without the lock-in – they’re called CDs. And I recently switched to use my Sony Ericcson W880i instead of my iPod, only to switch back due to the lack of integration. I want to avoid using the App Store as well due to the lock-in there – I simply don’t want to support it.

The thing is, this isn’t the first time I’ve felt this way – I’ve mentioned my gripes more than a few times on this blog. But every time it happens, I want more and more for a competitor to step up and provide me with a decent alternative. I know I’m not alone.

And that’s something Apple’s current market success with the iPod and iPhone currently masks, and thus Apple’s arrogance continues unabated. This hubris (among other things) is what led them to become a minority player early in the PC industry (a position they’ve yet to escape in the personal computer market). I dearly hope they get slapped upside the head sometime soon by a competitor so they pull their head in and start serving their customers. Not that I’m holding my breath…

Update: Hugh posted the following cartoon on a slightly different front, but appropriate all the same: