How technology is opening up a new paradigm of Policy challenges?

Nowadays one can enjoy music to their liking without going through the hassle of buying cassettes or Compact Disks (CD), a concept almost alien to today’s new age population, and play one’s favorites or top songs, suggested using Artificial Intelligence, or preferences. The existing state of affairs in the music industry started to take shape post the introduction of Napster, which came into existence in 1999, and was developed purely as a peer-to-peer (P2P) file sharing network. The said application was not only easy to use but also provided the services for free, which in turn led to its exponential growth and popularity among the music lovers.

The popularity of the platform at a point skyrocketed to a level which led to legal investigations into the modus operandi of Napster, which led to a conclusion that people used the application to download MP3’s they had not paid for leading to a violation of United States copyright laws. At the end, Napster saw itself being sued by labels as well as artists, including Metallica, Dr. Dre, etc. In the extremity of the outrage, president of Reprise Records, Mr. Howie Klein, was found to be saying “The people who are on the board of directors and in the upper-level management of Napster all belong in prison”. On the contrary, certain artists, such as Limp Bizkit, Offspring, etc. were found to be supporting the platform as long as the platform was acting as a bridge to offer their music to their fans, regardless of the legal or economic considerations being involved in the said case.

At last, Napster had brought in a disruption in the music industry, which was not anticipated by the players already existing in the music industry ecosystem, and was an early sign in the shift of consumer behavior as far as consumption of music was concerned. Something similar can be noted with the onset of Adani fiasco, whereby anyone and everyone, even if remotely connected to the equity markets, has witnessed surreal pain of losses whether directly due to their investments in the Adani Group or due to rapid falls in the prices of stocks post publication of the Heisenberg research. 

On the one hand, people and government have been critical to the fact the delinquencies, if any, are limited to a particular company only and is not a market phenomenon; on the other hand investors have now started to contemplate the market failures associated with the Adani group, especially on account of behemoth investments of Life Insurance Corporation (LIC) of India and State Bank of India (SBI). Furthermore, due to the ongoing panic in the market, which in the recent few trading days has led to astronomical decline in the value of Adani group companies, has forced Adani group to retreat the INR 20,000 Crore FPO from the market. As a result, the Indian market watchdog, Securities and Exchange Board of India (SEBI), has also opened up on the fiasco and vowed to address and act upon any information coming into its notice. 

One of the crucial facts oblivious to the plain sight remains to be investor’s inability to transcend beyond the bare minimum information being provided by the news outlets and companies. The said case should be taken up as an eye opener, especially with the mushrooming of tech enabled investment platforms which have disrupted the investment eco-system by flooding money from new age investors, with no or limited access to the financial information and / or inputs to invest, into the markets across financial instruments, ranging from Equity to Debt instruments to traditional investment channels like Fixed Deposits or curated portfolios.

In one such instance, one of the companies offering such services was slapped heavily by the market watchdog for offering curated portfolios to its investors. However, any such news continues to remain unheard off by these new age investors actively being targeted by these platforms, which is an integral part of the overall play. With all the turmoil at its play in the market, the crucial question which now looms large upon the Policy makers at this moment is to recognize and understand the Napster moment for Indian financial markets, whereby the investors no longer shows the patience to absorb the information and risks involved with investing in financial markets and agreeing to terms & conditions is just a click away.

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