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December 16 2010


Jonathan Stray: In 2011, news orgs will finally start to move past the borders of their own content

Editor’s Note: We’re wrapping up 2010 by asking some of the smartest people in journalism what the new year will bring.

Today, our predictor is Jonathan Stray, interactive technology editor for the Associated Press and a familiar byline here at the Lab. His subject: the building of new multi-source information products, and whether it’ll be news organizations that do the building.

2011 will be the year that news organizations finally start talking about integrated products designed to serve the complete information needs of consumers, but it won’t be the year that they ship them.

News used to be more or less whatever news organizations published and broadcast. With so many other ways to find out about the world, this is no longer the case. Professional journalism has sometimes displayed an antagonistic streak towards blogs, Wikipedia, and social media of all types, but it’s no longer possible to deny that non-journalism sources of news are exciting and useful to people.

Unencumbered by such tribalism — and lacking content creation behemoths of their own — the information technology industry has long understood the value of curating multiple sources, including traditional news content. Google web search was the first truly widespread digital public information system. RSS allowed readers to assemble their own news feeds. Mid-decade, Wikipedia exploded into the one of the top ten sites on the web, used as much for news as for reference. The business practices of news aggregators angered publishers, but there’s no getting around the fact that they are tremendously useful tools. The most recent change in information distribution is social. Twitter has become an entirely new form of news network, while Facebook wants media organizations to use their social infrastructure to reach users.

But as of yet, there are few integrated products. Flipboard comes closest with its slick integration of socially filtered news, and now they’ve announced collaborations with several news organizations for seamless delivery of professional content — the user no longer has to open a link in the browser to read an article from, say, The Washington Post. Flipboard aims to be the starting point for my exploration of the news, whereas a news product that refuses to provide me with high-quality filtering and curation of the rest of the world’s information will only ever be an endpoint, a place I might arrive rather than the place I start from.

In 2011, news organizations will finally start to realize that they need to be in the business of serving the consumer’s information needs, not just producing content, and any tool that allows them to serve those needs is fair game. There’s no getting around the fact that integrated products are beloved by users; this is part of the appeal of Google’s and Apple’s offerings. And being loved by users is essential, regardless of whether your revenue strategy is advertising, subscriptions, or philanthropy.

This is also about being multi-platform. One of the great things about Facebook is that I can access it fluidly on any device; Facebook isn’t a website, it’s a product. So far, no news organization really offers a seamless experience across platforms. Several are aiming for it, CNN is pretty good at it, and the Huffington Post and The New York Times are not far behind. But I suspect that the industry will slowly discover that multi-platform will not be enough to compete with multi-platform and multi-source. I expect to eventually to see much more incorporation of search and social content, and many more syndication deals.

This is a discussion that I expect will enter into the mainstream of the journalism business by the year’s end. But I don’t think the news industry will release any truly competitive integrated products in 2011. Flipboard and other startups will pick up most of that slack, and it will be a few more years before most news organizations complete the organizational and philosophical changes they need to compete successfully.

August 03 2010


11 Connects Outdoor Report – Spruce Mountain Guide Service

11 Connects Outdoor Reporter Joe Byrd travels to the northwoods of Maine in search of a black bear
Video Rating: 0 / 5

Slideshow featuring the pictures of the book “Recreational kayaking for women” by Anna Levesque / www.watergirlsatplay.com Pictures by Paul Villecourt / www.villecourt.com Music by Alice Di Micele / www.alicedimicele.com Song : “Made out of water” from the album “By Ebb & By flow” available on iTunes Music Store.
Video Rating: 5 / 5

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March 15 2010


No such thing as free money to save the local press

As I was leafing through the Guardian on Saturday morning I came across an article with the rather alarming headline

Google news tax could boost local papers, report says

Google and other websites that carry news they do not produce should be taxed and the money generated used to prop up local newspapers, says a report which warns control of the media is concentrated in too few hands.

I tweeted it and got a number of interesting replies:

The report comes from the Carnegie trust UK’s commission on Making Good Society. It does indeed set out a suggestion for Industry levies citing Institute for Public Policy Research research that a 1% levy on pay TV providers of 1% “bring in around £70m a year”

A similar fee imposed on the country’s five mobile operators could generate £208m a year. Making Google meet its full tax liability in Britain would boost the pot by a further £100m.‘ The same IPPR report argues that ‘such sums could save many local newspapers and web sites from closing down, could stop the destruction of local and regional news on ITV and could help new media start-ups to plug these gaping holes in public service provision – all without the taxpayer having to stump up any more cash and without having to raid the licence fee.’

But the report also makes it clear that the money would come with something of price

Levies on the use of aggregated material have the potential to generate significant revenue to support the production of new public service and local content, involving civil society associations. If this form of funding were to be explored, changes in regulation would be needed to ensure that revenues go to original news producers and not just to those who present and disseminate material. Original news reporting needs to be supported so that it is financially viable; this could require charging those who are not authorised to use and distribute this material.

Not quite free money from a google tax.

The whole report makes for an interesting read (I mean genuinely interesting not that other academic definition of interesting)

It’s pretty wide ranging but it singles out “democratising media ownership and content as one of it’s four main areas where “a stronger civil society could make the most difference”

A whole chapter (chapter 3) is devoted to trying to understand the pressures and drives on news production and the impact that has. They are clear that technology plays a key part citing radical cultural shifts associated with pervasive technology and the rise of ‘digital natives;’ as an uncertain driver of change. But the discussion is a bit more broad ranging:

…[D]espite the proliferation of online platforms, more of the news we receive is recycled ‘churnalism’ and aggregated content. Trends of concentration in media ownership and increased pressure of time and resources have narrowed the sources from which original news derives. Moreover, the centralisation of news production and neglect of local issues has particular repercussions for access to information across the UK and Ireland, especially in the devolved nations.

And it’s clear where the problem is:

…the central issue affecting traditional news providers is not the decline of audiences or interest in news, but the collapse of the existing business model jeopardising the democratic role of journalism. According to the National Union of Journalists: ‘The media industry is essentially profitable but the business model is killing quality journalism.’

Media concentration.
When I first read the Guardian article I bristled at the idea of a google tax of newspapers. Why? Because we would essentially be propping up commercial organsiations who still work at a profit. It would be akin to a bail out. So I found myself drawn to the areas of ownership and centralization in particular. The report is pretty robust here.

The challenge of creating original content and the diminishing number of newspapers is further compounded by the concentration of media ownership in relatively few hands…..with four dominant publishers controlling 70% of the market share across the UK

That concentration of ownership and the influence it exerts is cited as a “key obstacle to transparent policy-making which incorporates a sustainable role for civil society associations” Which comes from the ‘continuing and intimate relationship between key corporate interests and policy-makers; a relationship whose bonds are rarely exposed to the public’

Their suggestion seems to be that the Scott Trust/Guardian model is more likely to serve the development of a pluralist media landscape than a purely commercial one. But it sounds a note of caution

While independent funds directly supporting journalism can come with strings attached and endowments are not immune from economic pressures, philanthropic funding can help preserve journalistic independence and secure guarantees on public service content.

General suggestions.
The big ticket suggestions like tax breaks and levies are balanced by some more specific suggestions that form the main discussion of the chapter.

  • Growing local and community news media.
  • Protecting the free, open and democratic nature of the internet.
  • Strengthening the transparency and accountability of news content production.
  • Enhancing the governance of the media.
  • Protecting the BBC.
  • Redirecting revenue flows to promote diversity and integrity.

Their ideas for strengthening transparency include the suggestion of a Kite mark that shows no dis or mis-information. Good luck with that one.

But back to funding, the last three points are interesting in themselves.

When they talk about enhancing the governance of the media they say that”

“All news organisations in receipt of public funding should actively engage with the public and with civil society associations, through their governing bodies as well as through their daily practice.”

Which could only really mean the BBC right? But in developing the suggestion of redirecting the revenue flow they:

…want to see new funding models explored: for example, tax concessions, industry levies or the direction of proportions of advertising spend into news content creation by civil society associations, or into local multimedia websites.

The price of public money.
My reading of the report was that nothing comes for free. In an earlier chapter the financial sector comes in for a real battering. But though the media orgs are more delicately handled the implicit message is still the same. All the money that could come from tax breaks, funding and other sources comes at a cost. That cost is de-centralisation, openness, stronger regulation and in transparency (a phrase that seems to disappear mid report to be replaced by integrity)

Would be nice but I can’t see it happening.

The full report is available here.

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February 25 2010


Not interest in hyperlocal that scales

I’m not interested in “hyperlocal” journalism that scales.  These start-up, disruptive sites have their best chance at success if they are locally run and locally owned.

Catching up with feeds, as you do, I finally got chance to read Brian Cubbison’s Q & A with Howard Owens about his award winning online news service The Batavian.

Howard is a US newspaper exec and long time advocate of the web, journalism and their combined disruptive power; I have an image of Howard in a t-shirt with the slogan ‘I’m disruptive’ on it.

Obviously the quote I picked chimed with me and my thoughts about hyperlocal only having to be ‘big enough’. But the whole  interview makes for interesting reading and offers some useful insight in to his approach.

Go and have a look.

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February 19 2010


Hard Nut To Crack -Service Tax Refund Claim

Hard nut to crack -Service tax refund claim

Prepared By:
CA Pradeep Jain
Anjali Bihani

Visit us www.capradeepjain.com


The recent circular no. 120/01/2010-ST dated January 19, 2010 has been issued by the Board for claiming the refund of unutilized Cenvat credit under Rule 5 of Cenvat credit Rules by the service exporters. The above circular has tried to address all the problems faced by the service tax exporters in claiming such exemption. They have tried to give clarification on all the issues. But the famous Hindi proverb “lohe ke chane chabana” (Hard nut to crack) is apt for refund claim for the exporters under Notification 41/2007 or refund under Rule 5. This is also applicable even after this circular. Even we have written a Series of articles on such refund scheme titled as “Johnny and Service Tax refund” for the refund of service tax under notification 41/2007. This can be viewed from our website www.capradeepjain.com. We are discussing the aforesaid circular in this article in length.
Rule 5 of Cenvat Credit Rules, 2004 provides that accumulated credit of inputs and input services which are used for providing output services or output goods, can be refunded to the exporter subject to stipulated conditions. Notification No. 5/2006-CE (NT) dated 14.03.2006 provides the conditions, safeguards and limitations for obtaining refund of such credit. The Rule 5 of CENVAT Credit Rules, 2004 is produced as under for your ready reference:
? Rule 5: Refund of CENVAT credit
“Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or
used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,
i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or
ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:
Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.
Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilized for payment of service tax on any output service.
Explanation: For the purposes of this rule, the words ‘output service which is exported’ means the output service exported in accordance with the Export of Services Rules, 2005.”
Notification No. 5/2006 is produced as under for your ready reference:
? Notification No. 5/2006-CE (NT)
G.S.R. (E) In exercise of the powers conferred by rule 5 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the „said rules?), and in supercession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.11/2002 – Central Excise (NT), dated 1st March, 2002, published in the Gazette of India Extraordinary, vide number G.S.R. 150(E), dated 1st March, 2002, the Central Government hereby directs that refund of CENVAT credit shall be allowed in respect of :
(a) input or input service used in the manufacture of final product which is cleared for export under bond or letter of undertaking;
(b) input or input service used in providing output service which has been exported without payment of service tax, subject to safeguards, conditions and limitations, set out in the Appendix to this notification.
1. The final product or the output service is exported in accordance with the procedure laid down in the Central Excise Rules, 2002, or the Export of Services Rules, 2005, as the case may be.
2. The claims for such refund are submitted not more than once for any quarter in a calendar year
Provided that where,-
(a) the average export clearances of final products or the output services in value terms is fifty percent or more of the total clearances of final products or output services, as the case may be, in the preceding quarter; or
(b) the claim is filed by Export Oriented Unit, the claim for such refund may be submitted for each calendar month.
3. The manufacturer or provider of output service, as the case may be, submits an application in Form A annexed to this notification to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction,-
(a) the factory from which the final products are exported is situated, along with the Shipping Bill or Bill of Export, duly certified by the officer of customs to the effect that goods have in fact been exported; or
(b) the registered premises of the service provider from which output services are exported is situated, along with a copy of the invoice and a certificate from the bank certifying realization of export proceeds
4. The refund is allowed only in those circumstances where a manufacturer or provider of output service is not in a position to utilize the input credit or input service credit allowed under rule 3 of the said rules against goods exported during the quarter or month to which the claim relates (hereinafter referred to as „the given period?).
5. The refund of unutilized input service credit will be restricted to the extent of the ratio of export turnover to the total turnover for the given period to which the claim relates i.e.
Maximum refund = Total CENVAT taken on input services during the given period × export turnover ÷ Total turnover
If total credit taken on input services for a quarter = Rs. 100
Export turnover during the quarter = Rs 250
Total Turnover during the quarter = Rs 500
Refund of input service credit under Rule 5 of the CENVAT Credit Rule, during the quarter = 100*250/500 i.e. Rs 50
Explanation: For the purposes of condition no.5,-
1. “Export turnover” shall mean the sum total of the value of final products and output services exported during the given period in respect of which the exporter claims the facility of refund under this rule.
2. “Total turnover” means the sum total of the value of,-
(a) all output services and exempted services provided, including value of services exported;
(b) all excisable and non excisable goods cleared, including the value of goods exported;
(c) The value of bought out goods sold, during the given period.
6. The application in Form A, along with the prescribed enclosures and the relevant extracts of the records maintained under the Central Excise Rules, 2002, CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994,in original, are filed with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, before the expiry of the period specified in section
11B of the Central Excise Act, 1944(1 of 1944).
7. the refund of excise duty or service tax is allowed by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be.”

Difficulties pointed out in the circular: -
The service tax exporters are facing difficulties in getting refund from the department. Similar difficulties are also faced by the goods exporters are and many matters are pending in the tribunal.
The circular says that the call centers or the BPOs are sailing in the same boat. The main problems faced by service tax exporters and as clarified in this circular are summarized as under:-
a. Language of the notification vis-à-vis input service definition.
b. Nexus between input or input services and final services exported
c. Verification of the documents.
d. Refund of Cenvat credit accumulated during the quarter or earlier quarter.
e. Incomplete invoices.
Underneath we have discussed these problems and solutions offered by the circular in a detailed view as follows: -

1) Language of the notification:
The Board circular no. 120/01/2010 ST, Dt 19 January, 2010 says that the language of the notification 5/2006 provides that:-
“Refund is permitted of duties and taxes paid on inputs or input services USED in the manufacture of export goods or USED in providing the output services exported”.
However, “Input services” definition under Rule 2(l) of Cenvat credit Rules reads as follows:-
“(i) used by a provider of taxable service for providing an output service;or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, (This clause has been amended vide Notification 10/2008 C.E. (N.T.) – dated 01-03-2008) and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;”
The field formalities says that the CENVAT Credit Rules allowed the credit on input services used “whether directly or indirectly, in or in relation to the manufacture of final product or for providing the output service”. But the Rule 5 says that it should be directly used in the manufacture of export goods.
On the basis of wordings, departmental authorities are focusing on nexus theory. For refund, the inputs/ input services should be directly related to the goods / services exported. The department states that the goods or services covered under a particular invoice which are not able to establish a connection with a specific consignment of export goods or specific instance of export of service, are not eligible for refund.
The board has maintained that the Harmonious reading of both the rules should take place. The real intention of the rule is to provide the refund claim to exporters. Even if different words have been used in both the rules then also they should be read in Harmonious manner. It is very welcome step on the part of the Board. Thus, by reading these lines, one can say that refund of all Cenvat credit taken will be allowed to the exporters.
But the Board goes further and says that to prove the nexus it is to be seen that whether the quality and efficiency of services exported is increased. This was not there in Rules also but the Board has inserted the new provision and field formalities will use this weapon to say that the all input services credit taken by the exporters does not increase the efficiency and quality and as such refund is to be denied. Else the exporter has to prove that the quality and efficiency has increased. The circular has given examples also in respect of the call centres or the BPOs. The services which are directly correlate with the export of services are renting of premises, right to use software, rent a cab, maintenance & repair of equipment, telecommunication facilities, etc. are eligible for granting of refund.
The activities which are recreational in nature or used in beautification of premises are apparently not able to correlate with the export of services, hence not eligible for refund. The activities which are recreational in nature like event management, company-sponsored dinners/picnics/ tours, flower arrangements, mandap keepers, hydrant sprinkler systems, rest houses, etc. can establish nexus with the export of services indirectly. The call centres or BPO will get atleast get refund on such services. But the poor other service providers has to face the music from the department.
However, recreational activities also increase the efficiency of the employees. The expansion of office building etc. also increases the export of services. As such the refund should be allowed on such services also.
The nexus will be said to exist if it is essential for the quality and efficiency of provision of service exported. The departmental authorities considered that the recreational activities are not related to export of services or does not impact the efficiency, but they are meant for the improvement of efficiency only. The recreational activities provided to employees are to ensure that output service is provided efficiently.

2) Voluminous record to grant refund as well as one to one co-relation:
The board circular has mixed up both these problems and given solution in single para. The exporters has to submit many documents like input service invoices, export invoices, bank certificates etc, in order to get refund. This was also the situation for the goods exporters who have to get the refund under notification 41/2007. But afterwards self certification model was introduced in budget 2009 by notification 17/2009. A declaration certified by the CA was to be submitted to help in faster disposal of the refund claims. The circular says that the same procedure should be followed in such type of refunds.
A CA certificate should be provided along with the refund claim about the co-relation and nexus. But there is legal provision for the same under notification 17/2009 but no such legal backing for the same for the refund claim under Rule 5. The circular can prescribe the conditions which are not there in Rule and notification.
As a member of ICAI, we welcome these provisions but the language of circular says that after the certificate, it will be verified by the AC/DC. If this is situation, then why this circular is increasing the problems of the poor exporters who is already not getting the refund claim. One more step of certificate of CA is added. It has prescribed one more declaration along with the refund claim.

3) Quarterly filing of refund claims:
There was a dispute between the serviced tax exporter and the department that the service tax refund is to be granted for the quarter where the export has taken place. If the Cenvat is accumulated in the earlier quarter and there was no export but the export has taken place in next quarter then the refund will not be granted of cenvat credit accumulated for the earlier quarter.
This is a good clarification from the Board. The refund will be granted even for the earlier quarter also. But the notification does not suggest the same. It allows the refund on proportionate basis. If the real intention of the Board was to give the refund then they have to amend the notification. It is settled position that the board circular which are against the law are not binding on the departmental officers. As such they can
very well challenge the same. Hence, the overall position is not alerted and the exporter will not get relief on this count also.

4) Non compliance of Rule 4A
The department rejects refund claim because invoices submitted are not complete in all respects as per Rule 4A of Service tax Rules. In invoices, either description of the service or the classification is not mentioned. The exporters submits that refund should be allowed if it appears on invoice the nature of service received, tax paid, details required under Rule 4A, & the input service has link with the service/goods exported. The board has accepted this position and granted the refund claim even if there is minor variation. It has instructed the field formalities to take broader view based on judicial pronouncements.

A Quick Wrap before we wind up:-
We have seen that the board has tried to resolve the problems of the exporters but it has not finished yet. The rule should be amended in such a manner that it provides that complete unutilized credit lying with the exporter should be refunded irrespective of the nexus theory. Ultimately, the aim is to provide the refund of unutilized credit to the exporter. Till then it does not seem that the problems will be resolved for the exporters. And the most important thing is that a positive attitude is required for grass root level to says, it will be hard nut to crack.
Goods Exporter can also claim the rebate claim on finished goods under Rule 18 rather than to claim the refund of unutilized credit under Rule 5. This is very easy and total unutilized credit can be claimed as rebate. We have always suggested to exporters that they should claim the same. The refund of unutilized credit should be opted when no other option is available with the exporter, like in case, when the exporter is supplying goods to 100%EOU or else the 100% EOU is having unutilized Cenvat credit. In such cases rebate route is not available. We suggest that the same route is available for the service tax exporters. They can also pay the service tax on their output services under Rule 5 of Export of services rules and get the refund from the department. This is a simple solution. As per our opinion, the same should be preferred.

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