Bank bonuses and the Barclays myth

We, the taxpayers, saved Barclays too!

From the BBC:

Banking giant Barclays has seen its full-year profits increase by 92 per cent to £11.6bn ($18.2bn) in 2009.

The news story goes on to add:

The bank, which did not take any direct state help during the financial crisis, said its total bonus payouts for staff had been reined in to £2.7bn.

First, the fact that multibillion-pound bonuses in the midst of a recession are described as having been "reined in" says all you need to know about the excess and greed that has blighted the banking sector in recent years.

Second, notice the key disclaimer slipped in, early on:

The bank, which did not take any direct state help during the financial crisis . . .

I've heard a version of this line again and again, in the context of Barclays, ever since the government's bailout of the banks in late 2008. Last night on LBC, for example, the business reporter went out of her way to remind listeners that Barclays hadn't taken any government money -- in other words, it is less culpable for the crash and less accountable to the public for what it does with its profits now.

What a load of rubbish.

Barclays, as the Beeb's business editor Robert Peston points out later on, in the same story, benefited indirectly:

. . . from a windfall generated by the emergency rescue of the global economy undertaken by governments and central banks, an emergency rescue that was needed in large part because of the havoc wreaked by the excessive risk-taking of banks.

The banking sector, which Barclays is part of, would not exist today were it not for the billions stumped up by British taxpayers in the form of bailout money, short-term loans, loan guarantees and quantitative easing. Even the Barclays boss, John Varley, has acknowledged the crucial role played by the government in rescuing the City as a whole:

There are two ways I would say the system as a whole benefited generically.

One was in the injection of liquidity undertaken by the Bank of England and a new structure put in place in March 2008.

And the other was the making available of guarantees from government for funding undertaken by banks.

It is important to recognise that in each case the banks were encouraged to use these new structures that were put in place and we did.

It is also important to recognise that we were required and we did pay a price for these things but I'm not trivialising the importance of the intervention. It was important.

So Barclays has to behave responsibly. Massive bonuses are unjustified, irresponsible, offensive and dangerous.

Let's not forget either that Barclays only avoided crashing like Royal Bank of Scotland through good fortune: had the former succeeded in buying the debt-ridden ABN Amro in 2007, instead of the latter, Varley might be as reviled and ridiculed today as Fred "the Shred" Goodwin. What a lucky man . . .

 

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

Photo: Will Ireland
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Rock solid-arity: how fans and bands helped save Team Rock's music magazines

“It was purely helping out friends in a time of need.”

A little over 25 years ago, a journalist friend let me in on the secret of publishing success. He cut his teeth in the Sixties as an editor in the Yippie underground press, wrote for Rolling Stone, Associated Press and the Chicago Sun-Times, then went on to teach at one of America’s most prestigious journalism schools.

The big secret, he had concluded, was community. No more, no less. Get to know your community and serve it well.

A quarter of a century on, it’s sometimes hard to remember what community looks like in newspapers and magazines. Carefully crafted pages have been obscured by a haze of clickbait, engineered to sucker everyone and anyone into donating a drive-by page view for ads. Community has given way to commodity.

But occasionally, there are glimpses of hope. Six months ago, TeamRock.com, built around a group of specialist music magazines including Classic Rock, Metal Hammer and Prog, went into administration.

The Christmas closure came brutally quickly. The Scottish Sun reported that stunned staff in the company’s Lanarkshire headquarters were told they had been made redundant “as a joiner changed the locks on their offices”. In total, 73 staff were laid off; nearly 30 in Scotland and more than 40 in London.

At the close of 2016, the future for the Team Rock brand and its stable of magazine titles was bleaker than a Black Sabbath album. But last month, in an extraordinary reversal of fortunes, TeamRock.com was named the most influential rock music website in the world.

Bargain-basement buy back

Just a fortnight after its shock closure, the brand was bought by former owners Future Plc. In a no-brainer deal, the Bath-based publisher re-acquired the three magazines it had sold to Team Rock’s founders in 2013. It bought back assets sold for £10m at the knockdown price of £800,000 with the bonus of TeamRock.com and Team Rock Radio. The deal rescued large parts of the Team Rock operation – but its soul was saved by the rock and metal community.

Oblivious to any discussions going on to rescue the magazines, readers, music fans and bands came together in a stunning display of loyalty. Hearing that Team Rock staff wouldn’t be getting paid their Christmas wage they took to social media to pledge their support and raised almost £90,000 for redundant staff.

Ben Ward, the organiser of the crowdfunding campaign and frontman for heavy metal band Orange Goblin said he started the appeal with no thought for the business. “It was purely helping out friends in a time of need,” he explained.

He had read all three Team Rock magazines for years, socialised with their staff and promoted his own and other bands in their pages. “To think of a world without any of those magazines – it was devastating,” he said.

The response to the campaign brought him some cheer, with members of bands such as Queen, Rush and Avenged Sevenfold all posting about it on their social media pages. He added: “The whole Christmas period, my phone just wouldn't stop beeping with notifications for another donation.”

Show of solidarity

Though the fundraiser blew up all Ward's expectations, beating his initial target by more than 400 per cent, he didn't seem completely surprised by the scale of the response.

“Heavy metal and hard rock, people that are into that sort of music, we've always been sort of looked down upon. We know it's not commercially the done thing, we know it's not the norm to walk around with long hair and tattoos and dirty leather jackets. But when you see a fellow metal head in the supermarket, you always give them an approving nod. There's a kind of solidarity.”

While favourable capitalist arithmetic has kept the presses rolling – and the online servers going – for Team Rock, it was the music community – empowered by social media – who delivered the real resurrection. With a combined Facebook following of more than 3.5million and a total social media audience of almost five million, it was no surprise TeamRock.com was soon number one in its field.

“What's brilliant about this is that it's based on what music fans share with each other,” explains editor-in-chief Scott Rowley.

TeamRock.com became the most influential rock site based on social media sharing, and came fifth in the top 100 sites across all music genres. The site above it is a hip-hop title, again featured for the strength of its community, according to Rowley. “Those people really know what they're talking about, they want very specific content, and they're not getting served it elsewhere,” he said. “When they get it, they love it and they share it and talk about it and that's their world.”

Responsiblity

Following the outpouring of support for the rock magazines, Rowley now feels a heightened sense of responsibility to do “the right thing” and steer clear of cynical decisions to get clicks or put certain bands on the cover just to sell copies. He believes future success will come down to trust. “Sometimes that feels precarious, but equally I think we're in good hands,” he explains. “We're a business, we've got to make money, but we know what smells fake and where the limits are.”

Zillah Byng-Thorne, CEO of owner Future, recognises the need to balance the realities of running a listed company with the authenticity needed to maintain trust. “What Future is interested in is the passion that underpins specialist media,” she says. “I don't really mind what your passion is, what's important is that it's a passion.”

“No one is sitting around thinking, 'I wonder what bands sound like Thin Lizzy?',” says Rowley. “We're much more a part of their lifestyle, interrupting their day to tell them someone’s just released an album or announced a tour.”

“But it doesn't have to always be about fishing for clicks,” he adds. “I remember [Classic Rock online editor] Fraser Lewry saying, 'Sometimes on social we should just be being social'.”

Being social. Listening. Contributing to the conversation. Sharing the passion. That old-fashioned notion of serving the community. It seems Ward would agree, as he offers the new owners of the magazines he helped to save some advice: “Don't make the same mistakes, investing in things that weren't really necessary from the magazine’s point of view. I'm in no position to tell anyone how to run their business, but on behalf of the rock and metal community…keep it interesting, keep it relevant.”