Is it time the government subsidised the High Street? - The Share Centre Blog

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Michael Baxter

Is it time the government subsidised the High Street?

Written by: Michael Baxter on January 24th 2013

Category: Thought for the day

That great economist of the 1970s and 1980s Freddie Mercury described what is happening on the High Street right pretty well. He said: “And another one down, and another one down, and another one bites the dust.” Well HMV may not have completely bitten the dust, because efforts to save it are afoot, but many retailers – including HMV – are most certainly “hanging on the edge of their seat.” So does the High Street have a future, or – thanks to new government regulation – is it set to become an extension of the UK’s housing estates?

Although I have often used this column to rave about the commercial opportunities that are set to open up thanks to the Internet, I am not without qualms. If the online world does not at least occasionally drive you potty, then you are unusual. And whether it is banks, Internet service providers, or online book stores, I hate how impersonal things have become.

You may recall that back in the 1980s Ridley Scott directed an advertisement for Barclays featuring ‘Blade Runner’ type graphics, the theme of which was: “I just want to talk to someone.” Back then the ad confused me because I was not aware that it was so difficult to talk to people in the mid-1980s. But if that same ad could be updated, then I think it would be totally relevant to the modern world.

Barclays once ran another ad featuring Robbie Coltrane, in which he looked at the camera and said: “We are all bank managers now.” I guess in a way that is right. Bank managers of the past were limited in the decisions they could make by directives from head office, and the funds they had available. Now we can borrow as much as we like, subject to our requirements being supported by our credit rating. You could say that the Internet has cut out the middle man, who in this case was the bank manager. I don’t like it, but I get the point.

But there is a set of beliefs that permeates those who so energetically promote the latest online service which I think are based on a false premise.

Essentially, advocates of all things online say the Internet is the ultimate form of democracy. Amazon tells us what other people are buying – including those who have bought the same books we have bought in the past – therefore it is easy for us to know what book to read next. You Tube tells us what videos are the most popular, and since it is assumed that if they are popular they must be good, more people then view the video making it more popular still. Even the site, along with just about every other blog, shows the most popular articles, and as a result more people click on them and they become more popular than ever.

The set of beliefs that permeates advocates of all things Internet is that the crowd is always right, and what most people want must be best.

But I think this assumption is wrong.

Let me illustrate why with a brief sojourn into network theory. I am going to call an individual unit that forms part of any network a node. Network theory has found that in any network, be it the neurons that make up a brain, ants in an ants’ nest, the web sites on the world wide web, friends on Facebook, or even connectivity to Kevin Bacon, some nodes become  hubs. And the existence of these hubs follows a power rule. Let me explain. Take the world wide web: each domain name is a node. Some of these nodes are more connected than others. Some, such as Google, are incredibly well connected. Studies show that the vast majority of nodes have modest connectivity, say ten other web sites linked to them. Then a small number of nodes are hubs, which may have around a thousand web sites connecting to them. And then a very small number are hubs with several million web sites connecting. And if you were to plot the connectivity of these nodes along a graph, you won’t see a smooth curve with, say, 10 per cent having no connection, another ten per cent with 20 per cent connection and so on. No, it won’t be like that. Rather the curve will get rapidly steeper. But, and this is my key point, studies show that networks follow this power rule, even when each node is pretty much identical. Hubs don’t occur because some nodes are better; they appear because that is the way in which networks work.

Think of it in these terms: a book or record tends to either dive or do well – there is very little in-between.

What the Internet does is exaggerate this trend. The inevitable result is that purchases will become more and more determined by what others are doing, and that means we will all tend to buy the same books, the same records, and maybe even the same clothes.

To an extent this happens already – that is what we call fashion. But I am saying that the Internet will have the precise opposite effect of what people assume. It is assumed it will create more variety, I think it will do the opposite.

That is why the death of the High Street or even the partial death – which is what I think we are seeing at the moment – is a tragedy. It is tragic not just because of the jobs that are lost, but because it will ultimately lead to a more uniform world.

The music industry does not want HMV to disappear, and it is doing its best to help. I would say that determination to save HMV illustrates my argument. Alas, I doubt that they will be successful. The sameness that the Internet created may be negative in the long-term, but for company balance sheets it is short-term positive, and the short term always wins.

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Tags: future of high street, hubs follows a power rule, I just want to talk to someone, Internet is the ultimate form of democracy, network theory, nodes become hubs, Ridley Scott ads, We are all bank managers now, will the internet lead to a more uniform world

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