
http://www.dailymail.co.uk/
Media organisation's compete to get your attention. But at what cost?
Rupert Murdoch would not surely sue Google right? I think it would be a mistake to bite the hand that feeds you bread. His proposal to charge online customers for news and block Google from using headlines and paragraphs of news stories in search results is very interesting.
This week in a 35 minute interview with Sky News Australia (a third owned by Murdoch), Murdoch indicated that he would use legal means to prevent Google and other search engines from taking his newspaper material.
It is a very topical issue since many readers, including myself are used to online newspapers being free and searching for new stories. I think it would harm the ability of Google and News Corporation papers to generate advertising revenues. However, it would be more detrimental to News Corporation as I believe that people will easily shift their reading habits and view other free online sources. Google can generate money from other sources but News Corporation cannot. It’s a two way street.
But as quoted by Murdoch “What’s the point of having someone come occasionally who likes a headline they see on Google? We’d rather have fewer people coming to our web sites and paying”. Paying for news has been successful for the Wall Street Journal but I do not really expect people to pay to view The Sun. It is not worrying for Murdoch?
Google has been quoted in the Australian “its news listings service and web searches were a tremendous source of promotion” for news organizations, sending them about 100,000 clicks every minute”. I think Murdoch might be wrong.
This issue is not only blocking searches on Google search service but the fact that Murdoch believes search engines are breaching copyright law. This is where search engines are using the legal justification of ‘fair use’ for reproducing excerpts of news stories online.
I do not know much about copyright law but am beginning to get an understanding that the internet is a domain that has a cloudy area between breaching copyright law or not. There are so many different types of opinion on the issue. However, to avoid expensive legal action Google has the ability to remove content from Google News at a publishers’ request. It will save everyone a lot of time and money.
In the press this week the headlines for this story was dominated by the name ‘Murdoch’. His influence in the media is far-reaching. It is interesting that Sky News Australia granted the interview as I believe it could have been more impartial. However when I watched the interview I felt it was slightly subjective since I wonder what was the motives of the interview. Was it to scare Google or for self promotion.
The Australian reported a response from Google and the ability to take off stories from search results. It was very factual. I found that the language of the article was very colloquial since it contained a lot of quotes. I think that was a good way to produce the article considering The Australian is a News Corp paper.
The Financial Times was a short article however it focused more on Murdoch attacking the BBC. The content quoted the Sky News interview and was very UK centric. But I suppose that can be expected from a UK paper.
I also read an article from the BBC. The interesting thing about this article was that it failed to mention Murdoch’s criticism of the BBC and the way they handle taxpayer funds from TV licenses. It was very concise and direct. It failed to give any background information but I suspect the article was written with the intention for a response from the BBC in another article.
The Guardian I felt was the most opinionated. It uses words to describe Murdoch’s staff as ‘lieutenants’ and challenges Murdoch on the other ways to access the Wall Street Journal without a subscription. The article also chose quotes that made it seem Murdoch was an angry man. However, the Guardian was the only news source that embedded the Sky News interview into their article. It was a good form of reference to understand the context of the article.
In my opinion I think News Corporation should not remove its papers from search results since I enjoy browsing for different news. I also highly believe that it would be difficult for Murdoch to get subscribers to pay for tabloid papers such as the The Sun or The New York Post. It also seems there is going to be some difficulties in implementing the online pay model since it has already been delayed. The test will be the money. Who will get more advertising revenue, News Corp or Google?
Sources
Youtube
http://www.youtube.com/watch?v=M7GkJqRv3BI&feature=player_embedded
The Australian
http://www.theaustralian.com.au/news/world/news-corporation-stories-can-be-taken-off-google/story-fn3dxix6-1225796268717
Financial Times
http://www.ft.com/cms/s/0/ab874200-cd28-11de-a748-00144feabdc0.html
Guardian
http://www.guardian.co.uk/media/2009/nov/09/murdoch-google
BBC
http://news.bbc.co.uk/1/hi/business/8351331.stm
Sydney Morning Herald
http://news.smh.com.au/breaking-news-world/murdoch-stories-can-be-taken-off-google-20091110-i7nb.html
Daily Mail
http://www.dailymail.co.uk/news/worldnews/article-1226559/Rupert-Murdoch-threatens-sue-BBC-stories-stolen-newspapers.html#
CNBC
http://www.cnbc.com/id/33811171
Based on the M&S website two press releases were released. First, was the press release to ‘Sell Branded Grocery and Household Products’. Secondly, the press release for financial results.
But not unsurprising ‘Big Brands’ was the leading story in most press headlines and journalists pounced on the story. The financial data was a worked-into the story or later updated, and I believe saturated the financial news. As an investor I would like to know the financial data first but as a shopper this is great news.
However, the better-than-expected profit before tax of £298m did lead to analysts raising their full-year estimates and according to the Financial Times ‘shares in M&S rose 6.5 per cent in early trading’. Analysts were predicting profits of £285m. This highlights the importance of future earnings growth for a company and the reaction from the market. Analysts were right to believe that the stock was undervalued.
But the decision to offer selected branded goods was a good way to hide the fact that M&S will be facing intense competition from Waitrose, a threat to future earnings growth.
It is a pre-emptive strategy since figures show, stated from Times Online: ‘M&S is losing market share in food, falling from 3.7 per cent to 3.5 per cent in the quarter’. Since Waitrose plans to open up to 300 smaller stores it would be necessary for M&S to keep their customers in their stores instead of wandering off to their local Tesco for other products. However, it is a strategy that may harm a 125 year old brand.
M&S selling other brands in its stores could likely devalue the brand of M&S products since it puts M&S in the league of convenience stores such as Tesco. But M&S is smart by introducing products from brands they could not replicate or compete with, such as Marmite and Kit Kat. I think falling profitability and lower market share is more likely to devalue M&S to shareholders and opinion varies greatly.
News coverage for this story this week was very diverse with some papers offering a Retail Correspondent article and a Journalist article separating the content of the announcements.
The Financial Times (FT) offered both stories. The article by O’Doherty provided an objective and financially relevant story with quotes from Sir Stuart Rose, the Chief Executive and an analyst opinion from Oriel Securities. The article summarized the financial reports and gave details on the future strategies of M&S. As an investor I would be happy to read this article to help support my justification to invest in M&S.
The other FT article was written by the Retail Correspondent. It was very brief but concise story which highlighted the need for M&S to adopt brands to its product line. Felsted made reference to Waitrose which was good for the reader to understand the potential threats to M&S.
Bloomberg was different to the FT. They combined the story of profits and branded products. The article was more optimistic with headings like ‘Good Start’ and highlighted the 21 percent growth in profit from its overseas stores. The FT was more domestic. I like to know how overseas factors affect the UK operations.
Times Online was another news service which provided two articles. The Lindsay article did not contain as much financial data as the FT or Bloomberg articles. It was made up of quotes from Sir Stuart Rose and John Dixon, Executive Director of Food and made the article seem more colloquial.
The other Times article by Lenoux was subjective as it described the impending ‘war’ with Waitrose. I liked how the journalist mentions how the M&S boss down played the threat of Waitrose last month. Seemingly contradicting that view by implementing a new business strategy.
The Mail Online was the most subjective of them all. The journalist liked the idea of M&S selling the ‘big brands’ and the table in the article shifted attention to the ‘Big names they will stock’. I think this article is a good read for the average consumer as it gives them an idea what to expect in the stores. The article mentions very little financial data. But I suppose readership of the Mail are not likely to invest in shares of M&S but instead help boost profits.
As a poor student I do not look for ‘premium’ M&S products preferring the convenience and lower price for well known branded products at Tesco or Sainsbury’s. It depends on your taste. The same applies on what types of information you seek from the media. Do you want financial data? Or do you want to know about what they are now putting the shops? I surely would not be reading the Mail for investment tips. Anyways, I do enjoy the ‘M&S 3 for £5’ dinner deals!
Sources
M&S Press releases
Branded Products
http://corporate.marksandspencer.com/page.aspx?pointerid=0a05aa5dd72143379c87f017699c0e39
Financial Results
http://corporate.marksandspencer.com/page.aspx?pointerid=c07f5ecb589140148d3bf76fbd85f0b0
Financial Times
http://www.ft.com/cms/s/0/96a146be-c8a6-11de-8f9d-00144feabdc0.html
http://www.ft.com/cms/s/0/a90f9d30-c911-11de-b551-00144feabdc0.html
Bloomberg
http://www.bloomberg.com/apps/news?pid=20601102&sid=agojR18RjINc#
Times Online
http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article6902369.ece
Reuters
http://uk.reuters.com/article/idUKTRE5A31JO20091104
Daily Mail
http://www.dailymail.co.uk/news/article-1225081/After-125-years-M-S-stores-start-selling-brands.html#
Guardian
http://www.guardian.co.uk/business/2009/nov/04/marks-and-spencer-profits-higher
In news this week the Financial Services Authority (FSA) announced planes to ban self-certification mortgages and mandatory affordability tests for all mortgages. It is a good sign that the UK financial regulator is doing something to manage risky credit in the mortgage market. But the question is: Is it the lender's responsibility or consumer responsibility? I think its a balance of both.
Key measures proposed by the FSA include:
The FSA should enforce the measures now instead of waiting. It would be in the best interests for banks to act responsibly and for borrowers to act rationally when it comes to affordability.
Statistics provided from the FSA, 45 percent of mortgages issued in 2007 made no checks on the applicants' income. It is very scary considering the amount of money that an applicant would be able to borrow (in some cases more than a 100 percent of the value of a home!) and overstate income. Can the consumer be blamed for overstating their income if it comes down to the home dream they want? There is nothing stopping them.
The Council of Mortgage Lenders (CML) says that mortgages will be more expensive and harder to obtain but the measures are likely to prevent the credit shortage we have now. There has to be a balance to allow credit to flow into the economy but at the same time prevent irresponsible lending practices that fuelled the credit crisis. It will also help to dampen rising housing prices and allow for first time buyers to enter the market.
Banks should be able to lend based on an individual's needs but in a way that they can expect the money to be eventually returned. This includes a reducing high-risk lending practices and tightening credit standards.
The four papers I read this week highlighted the differences in opinion on the responsibilities of consumers and lenders.
The Financial Times headline read “Mortgage borrowers face stricter tests”. The article was objective, factual and straight-forward to read. It reported opinions from the British Bankers Association (BBA), Building Societies Association (BSA) and the CML who would be directly affected by the changes. The BBA and the BSA supported the measures but with some caution and implied that they have acted in a similar manner already.
Bloomberg this week was a longer critical piece than the FT. It had additional quotes from the FSA CEO Hector Sants and mentioned the FSA plans for an extension of their powers. However, I thought that the Binham article was critical to the speed of the review since it was promised since March and the lack of momentum of mortgage approvals.
The Telegraph and The Daily Mail were very different stories but fun and easy to read. Once you read these articles you immediately know that the articles were written to support the home buyer. The Telegraph was more inclined to report the critics of the measures such as the CML and failed to report on the consumer's responsibilities in repaying their debts.
The Daily Mail was the most subjective of the articles which had a headline “Homebuyers forced to reveal how much they spend on alcohol in tough new mortgage tests”. This was an attention grabbing headline and surely got my attention! The Daily Mail wrote more about the affordability test. Not surprising, the Mail used different quotes from the BBA and BSA, focusing on the difficulty for would-be buyers.
As new measures are brought into the mortgage market it is important to consider the implications for lenders and borrowers. The articles I have read provide various opinions on the issue but are ultimately a good way to promote and encourage awareness for banks and consumers. To some extent there must be regulations in place to prevent the consumer from overstating incomes. Consumers must think rationally and know their 'true' limits on repaying loans. But to also be protected from overzealous banks who are willing to lend at a level that would be unaffordable. Banks must also act in a responsible and reasonable manner. Do their due diligence and maybe have some pessimism when it comes to loans being repaid.
Was the rate rise too pre-emptive for Australia? I think not. A world economic recovery? Highly unlikely. An increase in the target cash rate to 3.25 per cent signifies that the Australian economy is weathering the economic recovery better than other G20 nations and is 'close to trend'. My prediction, rates could hit 4 percent by early 2010.
The rate rise was based on the following factors:
And to a lesser extent consumer and business confidence.
The direction of the indicators are the opposite from other developed nations such as the US, Japan and Britain. The indicators give some justification for the Reserve Bank of Australia (RBA) to raise interest rates to prevent the 'economy from expanding too quickly'.
Media organisations this week reported the news with very similar headlines with constant reference to the Reserve Bank Governor, Glenn Stevens. There is very little information that can be distorted by the news however an analysts' opinion may sway influence for a reader.
Two short articles, from Wearden in the Guardian and Burgess in the Times reported on Britain's upcoming decision to set monetary policy. The articles were written with a UK-centric voice with a neutral stance to a change in interest rates.
Wearden interviewed Howard Archer from IHS Global Insight and suggested that interest rates would remain unchanged. While Burgess at the Times also reported that rates would remain unchanged to 'avoid damaging rebounding consumer confidence'.
The Bank of England's decision is based on the lack of consumer confidence, lack of growth and liquidity in the British economy. I think it would be wise to hold back any rate rises until there was better signs of recovery in the British economy.
In Reuters they reported the rate rise as a 'first among equals' and it is highly unlikely that the 'US, EU zone, Britain, Canada and Japan' are to tighten their monetary stance. However, Australia's economy is now more-than-ever reliant on selling commodities to Asian-Pacific economies. Looking to Australia may not be a good indicator of a world recovery in technology-based developed nations in the EU.
Analysts interviewed by Reuters had an optimistic view on the Australian economy and predicted that there will be cash rate increases in the next few months to a high of 4 to 4.25 before stabilising. This is consistent with my prediction of a cash rate of 4 percent by March 2010, based on favourable unemployment data and low inflationary pressures.
The Bloomberg article reported the shock of the interest rate increase. 'Only one of 20 economists surveyed by Bloomberg News forecast today's move'. This highlights the pessimism that is prevalent in the world economy and the pre-emptive nature of the RBA.
The Bloomberg article was the most extensive with background information, interviews with major Australia banks and senior economists. The article also mentioned government measures that stimulated growth in the Australian economy and driving up asset prices. I believe it is in the best interest for the government to also think about unwinding some of the stimulus measures which are likely to overheat the economy.
A prediction of a 4 per cent cash rate for Australia by March 2010 is looking more likely on the cards. GDP growth and the potential of a 'housing bubble' are strong influences. Correct me if I am wrong. But Australia's economy is based on trade with China so as long as the Dragon blows fire the Kangaroo is likely to also hop along!
The Australian
http://www.theaustralian.news.
SMH
http://www.smh.com.au/
FT
http://www.ft.com/cms/s/0/