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Archive Monthly Archives: August 2017

Twitter still can’t focus and it’s falling behind

A monitor displays Twitter Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Jan. 23, 2017.
Image: michael nagle/bloomberg via getty images

Twitter is losing.

They’re losing executives, money, advertisers, investor confidence, and respect from developers and creators. But someone still believes its best days ahead.

“The whole world is watching Twitter. While we may not be currently meeting everyones growth expectations, there is one thing that continues to grow and outpace our peers: Twitters influence and impact,” CEO Jack Dorsey said Thursday on a call with analysts following another brutal quarterly earnings report.

Dorsey might be Twitter’s last True Believer.

Being influential is great, but you know what’s really cool? Being profitable. And now that Twitter effectively serves as the center of the political universe thanks to President Donald Trump, one might expect the company was well on its way to figuring out how to turn a profit.

Turns out, they’re not even close.

Image: twitter inc.

Twitter’s in more trouble than it’s ever been in before, and confidence in Dorseyseen by some as the one man who could turn things aroundlooks to be at an all-time low. Earlier Thursday, former Microsoft CEO and major Twitter shareholder Steve Ballmer, in conversation withCNBC, called on Dorsey to “focus.”

If 2016 was a rebuilding year for Dorsey, well, ‘looks like he’s got another one in store.

“Everyone wants us to win,” Twitter Chief Marketing Officer Leslie Berland said last month. Yet, winning (read: making money, thereby staying afloat) relies on a company’s growth and trust in its ability to grow furtherneither of which is happening.

Dorsey said they want to reach profitability this year, but expectations are rarely met by Twitter.

A year ago, Dorsey said he had five priorities for Twitter: refine the product; live video; safety; developers; and creators. They’ve done a lot with the product, according to Dorsey, but they’re nowhere near done.

Same goes for safety. Live video’s doing alright, but when it comes to money and influence, Facebook and television still keep future success at bay.

Meanwhile, Dorsey dropped developers and creators, for the most part, bringing down morale and confidence. He said creators would be a priority, but Vine, a massive destination for content creators, got axed. He apologized to developers onstage in 2015 and promised to rebuild trust, but instead, cancelled the annual conference and sold off their core resource (Fabric), offering little fanfare and excitement for future growth.

“Thats really worrying at not only this point in Twitters history but this point in Dorseys second stint at the company. Hes been there for well over a year now, and yet hes still setting in place completely new strategies,” Jan Dawson, chief analyst at Jackdaw Research, wrote in an email.

After a full-year spent focused on the product (with harassment updates, news alerts and live video deals), it seems to be nowhere near done. Why are my mentions always full of Trump supporters and sexism? How come I get alerted about entertainment, not about politics? Why is there still no single destination for live video? And why can’t I personalize what tweets I see during a live video?

Harassment is still (and has been for the last year) the company’s number one priority. And while that’s nowhere near fixed, the executive team spent Thursday pitching a revamp of its advertising, with few details. And even that has been talked about for years, with little to no success.

“Twitter … can’t figure out how to unstick itself.”

“Theyve been working on the ad products for two years now but are still saying much the same thing about where those are and what needs to change,” Dawson said. “Its just hard to avoid the sense that Twitter is stuck in several important ways, and cant figure out how to unstick itself.”

Twitter made $717 million over the last three months. While that may sound impressive to the average Twitter user, it’s chump change for the tech industry. Facebook made $8.8 billion over the same period. Looking at it on a per-user basis for all of 2016, Facebook brought in $14.83 per user while Twitter had $7.93 per user.

Twitter isn’t losing more users than it’s gaining, unlike it did a year ago. But it’s clearly losing advertisers and ad dollars, the two things it needs if it ever hopes to become profitable.

“We are now seeing massive shifts off Twitter,” said Nick Cicero, CEO of Delmondo, a creative studio and video analytics software that works with major brands on ad campaigns, “in terms of money for resources to make content on Twitter and to spend money distributing content on Twitter.”

That’s not breaking news, but it’s the thread that continues to be the most alarming. Twitter is influential, sure, but what’s stunning is its ability to keep losing more money in light of that influence.

If Twitter’s main goal is to make money, it’s an uphill battle to fight the so-called digital ad duopoly between Google and Facebook. Meanwhile, Snapchat, soon to go public, is also stealing away dollars.

Advertisers we spoke with also said they want better creative products from Twitternot surprising, pretty basic, and clearly not available.

While Twitter’s Moments, the curated-feed of tweets and videos, was quantified as one of Dorsey’s big undertakings, absent was a good plan for making money such as the full-screen video ads now popular in Facebook, Instagram and Snapchat.

A billboard advertisement for Twitter displays the faces of President Barack Obama and his wife, Michelle Obama, on a wall December 12, 2016 in a subway station in New York City.

Image: Robert Nickelsberg/Getty Images

“Look at Instagram’s beautiful image ads in the feed versus Twitter’s much less exciting promoted tweets,” said Ari Paparo, ad tech veteran and CEO of Beeswax. Add “big, beautiful image ads in the feed, Snap-like ads in ‘explore’ or ‘moments’ that are short, vertical, and cannot be skipped.”

While Google may not offer the most beautiful ads, it has user targeting going for them. Twitter’s about real-time and breaking newsso says Dorsey and his CFO/COO Anthony Notoyet advertisers still can’t so easily hand over dollars with that in mind. And other companies are sleeping giants for those same dollars that Twitter’s been after.

As Dorsey said Thursday, “The whole world is watching,” and competing and not just Donald Trump’s attention.

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4 Methods for Turning Blog Readers Into Paying Customers – Business 2 Community (blog)


Business 2 Community (blog)

4 Methods for Turning Blog Readers Into Paying Customers
Business 2 Community (blog)
It's true that there is money in blogging. However, most people assume the only way bloggers make money is through ads or sponsorship. That's one way of doing it (and a lucrative one at that), but you can also turn blog readers into paying customers.

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What does Cooper Rush's performance mean for Kellen Moore? – Blogging The Boys (blog)


Blogging The Boys (blog)

What does Cooper Rush's performance mean for Kellen Moore?
Blogging The Boys (blog)
There are only so many roster spots to go around on a National Football League team. Final cut downs are always a series of compromises. Teams juggle the final few slots around looking for the best possible combination. Going long at one position means …

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Buyer spends more than €600,000 at Nazi memorabilia auction

Man tells reporter at controversial sale in Germany that he came from Argentina and bought the relics for a museum

A buyer who said he came from Argentina has spent more than 600,000 (465,000) on Nazi memorabilia, including one of Adolf Hitlers jackets, at a controversial auction in Germany, according to reports.

The mystery buyer spent 275,000 (210,000) on the jacket and 3,000 (2,320) on a set of Hermann Grings silk underwear in his purchases of more than 50 items, reported German newspaper Bild.

Using the number 888, the man reportedly dominated the auction in Munich, outbidding others on most items. Bild sent an undercover reporter to the event, which was formally closed to the press after a public outcry.

The number evokes the neo-Nazi code 88, which stands for the banned greeting Heil Hitler.

Last week, the Central Council of Jews in Germany appealed to the auction house, Hermann Historica, to cancel the event, saying it was scandalous and disgusting to make money from Nazi relics.

Bild reported that the auction room was filled with young couples, elderly men, and muscular guys with shaved heads and tribal tattoos.

The top bidder also bought the brass container that held the hydrogen cyanide that Gring, chief of the air force and founder of the Gestapo secret police, used to kill himself hours before his scheduled execution in 1946 in Nuremberg.

When the Bild reporter asked the top bidder who he was, the man reportedly replied in Spanish-accented English that he came from Argentina and had bought the items for a museum, but declined to give his name.

The items, sold in the auction titled Hitler and the Nazi grandees a look into the abyss of evil, were formerly owned by late US army medic John K Lattimer, who was general medical officer during the Nuremberg trials.

German law prohibits the open display and distribution of Nazi objects, slogans and symbols, but not their purchase or ownership, for example by researchers and collectors.

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Twitch expands game sales to more streamers

In March, video game streaming site Twitch introduced a new way for its streamers to make money: by selling games directly to their fans. Initially, however, that feature was only available to Twitchs Partners that is, the sites top-tier streamers with large audiences. Today, Twitch is adding game sales to its newly launched Twitch Affiliate program, as well.

The affiliate program was introduced last month as a means of giving streamers who werent large enough to gain Partner status a way to make money from their efforts. At launch, Twitch Affiliates could generate revenue through Twitchs virtual tipping option, Cheering with Bits. But the company promised that more tools would become available to Affiliates in time.

Selling video games to fans will essentially work the same for Twitch Affiliates as it does for Twitch Partners. The idea is that streamers can showcase the titles theyre playing, giving fans the opportunity to purchase the games in question right from the site. That turns streamers into a crowdsourced advertising team of sorts for game publishers, while shifting Amazon-owned Twitch into more of an online retailer and game distributor, as well.

Affiliates, like Partners, will display the titles and other in-game content for sale, on their Channel pages on the site. Theyll also earn 5 percent on game purchases. (Another 70 percent goes to game publishers, and Twitch keeps the rest.)

Games are also available from the games detail page at any time. The games are downloaded via Twitchs desktop app.

At launch, Twitch was offering around 50 titles available for sale from game publishers large and small.

This included titles like Ubisofts For Honor and Tom Clancys Ghost Recon: Wildlands; Telltale Games The Walking Dead and Minecraft: Story Mode; Hi-Rez Studios SMITE and Paladins; Paradox Interactives Tyranny; Trion Worlds Atlas Reactor; Double Fine Productions Broken Age and Psychonauts; Campo Santos Firewatch; Jackbox Games Jackbox Party Pack 3; and Digital Extremes Warframe, and others.

Today, Twitch tells us it has nearly doubled its lineup to include close to a hundred titles. Some of the newer additions include a Twitch exclusive Warframe Prominence bundle and Bob Ross skins for SMITE.

The company is also kicking off the expansion of game sales by giving out double the Twitch Crates for the week ahead. Crates are an incentive Twitch uses to encourage game sales on its site, by offering other content along with the game itself, like its emotes, chat badges, and Bits.

Twitch declined to say how popular game sales have been on its site since their debut, given how early the company is into this new area of its business.

The move into game sales gives streamers another way to make money something thats needed to grow a strong creator community. However, the changes could also have an impact on the type of content featured on Twitch subtly shifting streamers to favor those games from publishers working with Twitch over the ones they would have otherwise chosen.

Twitch Affiliates will be a much larger group than Partners, which greatly expands Twitchs ability to sell games. While there are only17,000 Partners out of a total of 2.2 million unique streamers per month, Twitch invited tens of thousands of non-Partnered channels to its Affiliate program.

Twitch Affiliates will have the ability to sell games on the site, starting today.

Below is Twitchs original announcement about game sales:

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Meet the Ad Companies Ditching Breitbart and Fake News

At the end of 2016, the anger trade is a good business to be in. Audiences are reading and sharing fake “news” that stirs partisan ire while hardline outlets like Breitbart can count the president-elect as a fan. Advertising dollars are following those eyeballs, and thanks to the automated nature of online ads, the cash can flow into these sites often without the knowledge of companies doing the actual advertising. As a result, brands run the risk of appearing to endorse political stances or rhetoric that potential customers may find objectionable. Now some are starting to worry.

A growing number of brands, from Kelloggs to Allstate to Warby Parker, have pulled their ads from Breitbart. Meanwhile, at least one brand, Fiat Chrysler, said it adds fake news websites one by one to a blacklist it maintains. Others are scrambling to rejigger their ad policies to account for such fraudulent sites. But the influence of those individual brands may pale next to the power of a handful of companies whose names you probably havent heard: the ad tech companies that funnel ads to those sites in the first place.

These are the companies that run the digital marketplaces where advertisers bid for ad space on sites. They also provide the tech tools advertisers use for ad placement. Last month, one of the biggest, AppNexus, said it would block Breitbart News from using its ad-serving tools because the site had violated its hate speech policy. One week later, two more ad-tech companies, TubeMogul and RocketFuel, followed AppNexus lead.

Breitbarts editor-in-chief calls these decisions an attempt at censorship. But whats really at stake isnt a sites right to say whatever it wants to sayits whether a site can make money saying it. Fake news creators and hardline sites can’t get by if advertisers won’t sponsor their sitesa hard fact of the online publishing business that could make a few obscure tech companies the unlikely arbiters of the future of public discourse.

Sleeping Giants

Last month, a week and a day after the election, the anonymous activists behind Sleeping Giants posted their first tweet: @sofi Are you aware that you’re advertising on Breitbart, the alt-right’s biggest champion, today? Are you supporting them publicly?

The tweet was directed at San Francisco-based Social Finance (SoFi for short), an online personal finance company that helps offers student loan refinancing, personal loans, and mortgages. The company didnt respond publicly. But Sleeping Giants added SoFi to the list of brands it says its confirmed have blocked their ads from appearing on Breitbart. The list currently runs more than300 companies deep. The longer that list gets, the more incentive ad tech companies have to proactively seek to keep their clients ads off sites that might expose them to controversy.

But how is it that advertisers often dont know how or where their ads end up online in the first place? In more traditional advertising, brands designate where their ads will appear in print or on television, and they do so well in advance. But online advertising increasingly involves third-party networks and agencies that place ads across the web based on digital auctions that often happen in near real-timea matter of 100 or 200 milliseconds as a visitor arrives on a site.

The tech behind these auctions relies heavily on targeting and personalization based on what people have searched for and clicked on while surfing the web. If you searched for, say, a pair of boots in the last hour, a brand touting a new line of boots might be served up to you, no matter which website you end up on. Automated buys really chase the audience, not necessarily the context, says John Montgomery, executive vice president for brand safety at powerhouse media buyer GroupM. In other words, those boots might chase you to places on the web the makers of those boots dont want to be seen as supporting.

Yes, marketers can work out a media plan that places ads directly on websites, pre-approving domains as they goa so-called whitelisted environment. But the practice is increasingly falling out of fashion. Josh Zeitz, vice president of communications at AppNexus, says automated media buys have clear advantages. If youre doing just a handful of campaigns and buying against 50 sites, you dont know whether youre reaching the users youre trying to getthey may well be using other apps and other sites, Zeitz says. Automated buying, on the other hand, lets you follow users based on what you know about them, rather than relying on the sites you hope theyll visit.

But Zeitz says ad-tech companies have another big responsibility: brand safety.

You have to be able to count on your ad tech partners to maintain some kind of marketplace quality, Zeitz says. Because if its completely unregulated, your clients ads could show up anywhere. Today, certain standards are well established. Most ad tech companies have policies and filters that block ads from being served against piracy, pornography, and graphic violence. But highly charged political sites and fake news are brand new territory for these companies.

Free Speech Vs. Hate Speech

Most ad tech companies punt on the issue of serving ads on Breitbart specifically. They say the decision lies with their clients: advertisers and marketers. GroupM doesnt see itself as a censor, says Montgomery. But what we do is invite our clients to advise us at any time if there are any media properties that the company wishes to avoid, for instance on the grounds of perceived political extremism. Google holds the same view; the search giant still currently serves ads on Breitbart, asserting that the site does not violate its own hate speech policy.

‘The attacks on us are politically motivated, and theyre specifically because weve been effective.’Alexander Marlow, Breitbart Editor-in-Chief

RocketFuel, meanwhile, put Breitbart on its blacklist in November, meaning its clients have to actively opt in to serving ads on the site. But the companys CEO says the decision hinged on creating a more efficient market by trying to anticipate where its clients likely didnt want to see their adsnot on judging Breitbart itself. Efficient markets require trust and transparency between suppliers and buyers, CEO Randy Wootton says. Thats how commerce happens.

Breitbart editor-in-chief Alexander Marlow calls boycotts of his site by advertisers and ad tech companies absolutely an attempt at censoring Breitbart News.

The attacks on us are politically motivated, and theyre specifically because weve been effective, Marlow said in an interview. Weve changed the news narrative time and time again, and weve changed a lot of hearts and minds in the process. Marlow denied that the boycott had any impact on the websites bottom line, and he said Breitbart has no intention of changing its editorial direction in response to the increasing number of companies blacklisting the site. We have tens of thousands of advertisers. We are a loyal community of 45 million readers a montha very powerful consumer group, Marlow said.

Where to draw the line between free speech and hate speech depends on who you ask. Google defines hate speech as content that incites hatred or promotes violence against individuals or groups based on race or ethnic origin, religion, disability, gender, age, veteran status, or gender identity. Other companies have adopted a similar definition. But how different companies apply those standards varies. Google says it found Breitbart did not violate its standards. AppNexus, meanwhile, says it decided to ban Breitbart after an outcry from employees. There was human judgment involved, says Zeitz. There are plenty of people at AppNexus who voted for Donald Trump, and probably plenty of people who read Breitbart. But thats not why we had to remove it from the marketplace. We determined that it violated hate speech.

Ad Tech Answers

Of course, plenty of companies just dont care whether their ads appear on a site like Breitbart. Direct sales ads, for examplethose junky buy now! ads that clutter fake news sitesare only about making that sale, not burnishing a brand. But for those that do, new tools are starting to become available, created by ad-tech companies themselves.

For instance, Integral Ad Science, an ad verification company, approaches the problem as a numbers game. It uses tech to comb through individual pages across the web, then rates them from zero to 1000, depending on how risky its algorithms determine putting an ad up against that content might be. DoubleVerify, meanwhile, has created a new category for its clients called Inflammatory News and Politics, which includes Breitbart as well as other hardcore conservative and liberal sites such as Rawstory.com, IfYouOnlyNews.com, and NewsBusters.org.

A new offering from the company also scans for fake news sites as they come online so advertisers and marketplaces can avoid them. The hallmarks for fake news sites are distinct, DoubleVerify CEO Wayne Gattinella says: no documentation behind stories or cross-indexing of stories; vague, generic bylines; no daily updates; and internal links that go to blank pages. Google still largely relies on a human operation to assess which sites should be considered deliverers of fake news, but its also started on an automated effort that can scale. For now, some have criticized Google for spotty enforcement. But the company said it was important to move slowly on the effort to make sure its new policy would be executed correctly.

Because the realm of fake news and inflammatory political sites is still such new territory for advertisers, best practices have yet to become standardized. Brands can choose to serve ads on these sites, then reverse-engineer a public explanation for their actions. Ad tech companies can excuse themselves from pulling ads immediately because it takes time to enforce a policy, and it takes time to scale the tech. And they wouldnt be patently wrong. But that also means, for now, these sites are raking in the ad dollars and spreading disinformation.

In the end, its up to consumers to apply pressure before the next #pizzagate escalates. Dont like that brands are advertising on a certain site? Let them know. And if software companies really believe tech holds the solutions to tech-generated problems, tell them to prove it. When I think of companies the size of Google, Facebook, and others like them, they certainly have the resources to build whatever technology they make a priority, Gattinella says. Ad tech companies themselves might not be as big, but they could still plausibly do the same. Certainly their clients would value such an effort. It all depends on whether brandsand the public they hope to courtmake it clear that no number of clicks is worth the damage to democracy.

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Cowboys vs. Raiders: Five questions and answers about the upcoming game – Blogging The Boys (blog)


Blogging The Boys (blog)

Cowboys vs. Raiders: Five questions and answers about the upcoming game
Blogging The Boys (blog)
Blogging The Boys: How have the issues around the move affected the franchise, if at all? How has it affected the fans? … The Raiders and the NFL have chased the money with absolutely no regard for the fans now three times in a year (Rams, Chargers

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Five bold predictions for the Cowboys and Raiders preseason dress rehearsal – Blogging The Boys (blog)


Blogging The Boys (blog)

Five bold predictions for the Cowboys and Raiders preseason dress rehearsal
Blogging The Boys (blog)
The Dallas Cowboys and Oakland Raiders are getting set to play a football game today. This is as true today as it will be on December 17th, but unlike that future Sunday today isn't a game that matters. Of course, it matters in the sense that it's a
What the Raiders can expect from the Cowboys in their preseason week 3 match-upSilver and Black Pride

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New global rules on firms’ tax disclosure urged by economists – BBC News

Media captionTax havens “just need to end” says letter signatory Professor Jeffrey Sachs

New global rules forcing companies to report taxable activities country-by-country publicly have been called for by a group of 300 prominent economists.

In a letter to world leaders, the group urges the UK to “take a lead” in the push for more tax transparency.

Poor countries are the biggest losers from tax havens, they claim.

The letter’s signatories, co-ordinated by charity Oxfam, include best-selling author Thomas Piketty and 2015 Nobel Prize economics winner Angus Deaton.

The letter comes ahead of the UK government’s anti-corruption summit on Thursday, which politicians from 40 countries as well as World Bank and IMF representatives are expected to attend.

The economists – who include almost 50 professors from British universities – argue the UK’s position as summit host as well as its sovereignty over what it says is a third of the world’s tax havens makes it “uniquely placed” to take the lead.

Image copyright Thinkstock
Image caption The economists want public country-by-country reporting on taxable activities

‘No useful purpose’

“We need new global agreements on issues such as public country-by-country reporting, including for tax havens,” the economists write in the letter.

“Governments must also put their own houses in order by ensuring that all the territories for which they are responsible make publicly available information about the real ‘beneficial’ owners of company and trusts,” they add.

The letter comes in the aftermath of the Panama Papers leak, which revealed how some rich people hide assets, sparking widespread condemnation that the authorities had failed to act.

One of the signatories, the economist Dr Ha-Joon Chang of the University of Cambridge, told the BBC that he signed the letter because he shared “the view that tax havens serve no useful purpose”.

Dr Chang said: “These tax havens basically allow companies and certain individuals to free-ride on the rest of humanity.

“These companies and people make money in one country by using workers educated with public money, using roads, ports and other infrastructure paid for by the taxpayers of that country and moving the money to another country in a shell company which doesn’t really do any business there.”

Loopholes

Another high-profile signatory, Professor Jeffrey Sachs of Columbia University, also told the BBC that tax havens showed “how the rich and the powerful really control the levers of finance”.

He said: “Even with the secrecy, we’re in a more transparent world so I think our governments are being pushed harder and harder to crack down on these abuses.”

Media captionOffshore finance centres are “more transparent than UK” says tax lawyer James Quarmby

However, James Quarmby, a tax lawyer at the international law firm Stephenson Harwood, argued that offshore financial centres play an important role in international finance and trade.

“The Panama papers had a number of people who used that jurisdiction for criminal purposes,” he said. “But you can’t just argue for shutting down of finance centres because some criminals use them.”

Mr Quarmby added: “There’s more money laundering going on in New York, Frankfurt and London than any of the finance centres and I don’t hear Mr Sachs arguing for those jurisdictions to be shut down.”

Image copyright Reuters
Image caption The leak of 11.5 million documents from Panamanian law firm Mossack Fonseca has re-focused attention on tax havens

‘Deeply damaging’

Oxfam said that more than half of the companies set up by Mossack Fonseca, the law firm in the Panama Papers leak, were incorporated in British Overseas Territories such as the British Virgin Islands.

“As long as British-linked tax havens continue to help the rich and powerful get away with dodging tax it will remain deeply damaging to the UK’s credibility as a leader in the fight against corruption and global poverty,” said Oxfam chief executive Mark Goldring.

Last month, tax and law enforcement agencies in the UK, Germany, France, Italy and Spain agreed to share data in a new crackdown on international tax dodging.

Under the deal, the five nations will exchange information regarding beneficial ownership registers, which show who really owns assets.

However, only the UK has so far committed to making this information public.

Offshore funds

Registers or “similarly effective systems” will be introduced in UK overseas territories, but are expected to be open to enforcement agencies, not to the public.

Separately, it has emerged that there has been an increase in the amount of money flowing offshore from developing countries, in particular Russia and China.

Research carried out by Columbia University professor James S Henry for the Tax Justice Network found $12.1tn (8tn) had been shifted out of emerging economies.

Offshore accounts belonging to Russian citizens totalled $1.3tn, while Chinese citizens, including those in Hong Kong and Macau, had $1.2tn sitting offshore.

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Why North Korea will benefit from Seoul’s great leap backwards

South Korea is playing into Kim Jong-uns hands by closing the Kaesong complex

Its barely February but already 2016 is yielding a grim winter harvest of new dates that will go into future Korean history books, to be remembered and regretted.

So far it has been the North, predictably, that has made most of the running. On 6 January Pyongyang got the new year off to a bang with its fourth nuclear test, supposedly an H-bomb. A month later on 7 February the regime made it a double with a satellite launch that functions as a partial test of an inter-continental ballistic missile.

High stakes

But now South Korea has got in on the act, adding 10 February to the list of ominous dates. After several days of rumours, Unification minister Hong Yong-pyo confirmed that the South was closing the Kaesong industrial complex, the last remaining inter-Korean joint venture completely and indefinitely. Heres what he said:

Despite our efforts to support the Kaesong complex, the factory zone is seen as being used for North Koreas development of nuclear weapons and long-range missiles Weve decided to halt the operation of the Kaesong complex to prevent South Korean money from being funnelled into the Norths nuke and missile developments and to protect our companies.

South Koreas anger and frustration are understandable. Authorities watch and seethe as Kim Jong-un, like his father before him, tests nukes and missiles in defiance of UN resolutions and with seeming impunity.

But will closing Kaesong help? On the contrary, I fear it may backfire and harm the South.

First, will this hurt the North? That question has two components, economic and political. The Ministry of Unification said this:

Until now, about 616 billion Korean won [about $516m] has flowed into North Korea via the Kaesong industrial complex, with 132 billion won alone last year. It is crucial for South Korea to actively get involved while the international community discusses tougher sanctions [on North Korea] for violating UN resolutions and pushing forward with a nuclear test and missile launch.

That sounds a lot of money, especially for an economy as small and short of hard currency as the DPRK. But Yonhap, South Koreas semi-official news agency, puts it in perspective by citing unnamed industry watchers who suggest Kaesong earnings comprise just one percent of North Korean trade.

The DPRK government keeps 30% of what the South pays towards Kaesong, the other 70% presumably goes to the 55,000 workers as wages. Compared to the $2.48bn Pyongyang earned from exports to China last year, Kaesongs $111m (gross) or just $33m net is small potatoes.

But politics is key, on both sides of the DMZ. Seouls Unification ministry says the South has been forced press ahead with sanctions, but whats the rush? It could as well wait till the UN security council drafts a new sanctions resolution which is surely closer as the rocket launch concentrates minds. By acting unilaterally now, Seoul is making a conscious choice.

North

North Korean workers assemble jackets at a factory in the jointly-run Kaesong industrial complex. Photograph: Kim Hong-Ji/AP

About turn

Is it the right choice? One thing is for sure, it is a complete U-turn by South Koreas president, Park Geun-hye. Just three years ago, new in office, Kim tested her by fomenting a crisis in March and April. Remember all that rhetoric, extreme even by North Korean standards? Or the Chaplinesque staged photos of Kim and his generals, poring over maps of missile flight paths targeting the US including Austin, Texas?

Mostly this was mere talk, but the North also pulled its 55,000 workers out of Kaesong for no discernible reason. Park handled this challenge brilliantly. She kept her head, and patiently negotiated the reopening. By September it was up and running again.

Wisely too, Seoul insisted on new management rules to prevent any such unilateral sabotage from recurring. In August 2013 North and South signed a five-point agreement on what they called the constructive normalisation of the complex. This bears reading in full.

The two Koreas will not make Kaesong suffer again from the stoppage of the complex They will guarantee the normal operation of the complex [which is] not to be affected by inter-Korean situations under any circumstances.

Not under any circumstances. The words are unambiguous, as is their implication now. What South Korea has decided to do is to break a promise, tear up the deal and go back on its word.

So what has changed? The latest nuclear and missile tests cannot logically be seen as a deal-breaker. Park negotiated Kaesongs reopening in 2013 in the shadow of North Koreas third nuclear test that February, preceded by a satellite launch in December 2012. If that wasnt a sticking point then, why now?

Parks slogan used to be Trustpolitik. That means working with North Korea as it is, while seeking to change it over time. Like Ostpolitik in Germany, which paid off in the end, this cannot be done overnight.

For sure, South Korea is more sinned against than sinning. One expects nothing better from North Korea, but the South should steer a steadier course. Park has barely two more years left in office. Did she lose patience or lose her temper or change her mind?

At this rate Park will leave North-South relations in a worse state even than when she found them. Her hard-line predecessor Lee Myung-bak kept Kaesong open, despite two more immediately deadly provocations in 2010: the sinking of the Cheonan, and shelling of Yeonpyeong island.

For the past decade, the Kaesong zone has turned a bit of the worlds most heavily armed frontier, impassable for half a century, from a front line into a front door. That in itself was revolutionary, as was Seouls intention. A few small and medium enterprises would make money but the main objective was to demonstrate the benefits of cooperation to Pyongyang.

Trojan horse

The tragedy is that this was working. An article by regional expert Christopher Green claims that Kim Jong-ils last instructions to his son included one to move decisively to close [Kaesong] as soon as you see a chance.

Kim senior apparently feared the zone was a Trojan horse, daily exposing 55,000 of his subjects to the palpable superiority of the enemys system. Exactly. So why is the South shutting it down?

Will this be the end of hopes that the two Koreas might manage the pragmatic cooperation which has transformed ties between China and Taiwan? With no Kaesong, South and North Koreans will no longer be in contact anywhere on a regular everyday basis. That is a great leap backwards.

A version of this article first appeared on NK News North Korea news

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