Launch of the Daily: the verdict

A round-up of media comment on the launch of Rupert Murdoch’s new iPad newspaper.

Yesterday saw the launch in New York of the Daily, a newspaper designed exclusively for the iPad and other tablet computers. Rupert Murdoch has made an initial investment of $30m (£18.5m) in the project, in what is billed as an attempt to revolutionise journalism. Below are highlights of press reaction.

Shane Richmond, in an article for the Telegraph writes:

The problem for publishers is that I can get the latest news by opening up the iPad's browser.
And this is a general publication, which means that, whoever you are, The Daily will offer something you don't care about. For me, it's the "gossip" section: I couldn't care less. Perhaps for you, it will be sport or arts.
In print, this is a problem that you are just stuck with; you get what you're given. On the iPad I can have my own magazine.

Alexandra Frean, writing for the Times (£), takes a different view:

The Daily's engineers and designers have used every possible digital trick to make the publication's pages come to life, including still and moving pictures, sound and animated graphics.
Certain features work fully only when the device is connected to a wi-fi signal, a disadvantage perhaps for commuters. Breaking news will be displayed on a ticker but it may take readers some time to learn how best to navigate their way around the publication's news, gossip, opinion, arts & life, apps & games and sports sections.

In a blog for the Guardian, Dan Sabbagh writes:

What is also unclear is how far the Daily will act as a "walled garden". Will it be easy to link to the external content referred to in the Daily's news items? And will it be possible to link into the Daily's content via an iPad? Significantly, no Daily content will be available on the open internet, thus greatly restricting the pool of potential consumers.

Stephen Foley in the Independent comments:

Even the fun stuff, such as a piece on a New York disco for dogs, barely stands out from the great amount of "fancy that" fare available to iPad owners for free at the click of a Safari web browser button.
Here's the problem. The Daily's premise is that newspapers' decline is a delivery problem, that people are out of the habit of nipping to the newsagent and unwilling to pay the built-in costs of trucking papers round the country, but will happily pay a few cents for something that pops up on their iPad.

For the Financial Times, the columnist John Gapper writes:

Who exactly is it aimed at? The publication is sending very mixed signals to readers and advertisers about its editorial intentions.
The Daily is a crossover, not only in looking like a cross between a magazine and a newspaper, but in its style of reporting. It seems closest to the New York Post, with headlines such as: "Obama's No. 1 Nerd Now Citi Slicker in NY" over a piece about Peter Orszag.
As it happens, I had a chance to ask Rupert Murdoch my question at the press conference, but did not get much joy. "That's your suggestion," he growled amiably as I posited that papers tended to be aimed at distinct upmarket or downmarket audiences.

On the Huffington Post, Larry Magid comments:

The cover story, "Falling Pharaoh," did a pretty good job of covering yesterday's news including the subhead "Obama pushes Mubarak to quit now as a million march in Egypt revolution." That was accompanied by some gorgeous photos from yesterday's demonstrations and some sidebars about activism in Syria and Jordan and a profile of Mubarak's sons. All of this was great but as I was reading it, TV and radio news and all of the web-based news services were telling today's news, about counter-protests in Tahrir Square and violent clashes between pro and anti-Mubarak demonstrators. I found none of this in The Daily nor did I see any reports about Egypt turning the internet back on, a subject that I and multiple other online journalists had already covered.

Rob Pegoraro, writes in the Washington Post:

Reading the Daily can involve a certain amount of sluggishness. The "carousel" interface that greets you when you launch it lags behind your gestures, and some turns of an onscreen page also leave you waiting for a moment. I also noticed one outright bug: With the Daily open, an iPad would not shut off its screen automatically, quickly draining its battery.

There's no reason to think that the Daily or its business model represents the last, best hope for journalism. But there are many reasons to think we'll see more attempts such as this.

Jeremy W Peters and Brian Stelter, for the New York Times, write:

As groundbreaking as The Daily is, it is also freighted with risks. Whether consumers will regularly pay for news content on their tablets is far from certain. Sales of iPad applications for magazines have been uneven, and many newspapers give their applications away free.
And as with many first-generation innovations – the Newton tablet from Apple, the internet service Prodigy and the EV1 electric car from General Motors – there is always the risk that The Daily is ahead of its time.

Joel Mathis, writing for the website Macworld:

As a piece of technology, then, The Daily is promising. As a journalistic endeavour, though, it's confusing. Who is the intended audience? News junkies? Unlikely. New Yorkers? There's a Big Apple feel to the content, but the coverage is everywhere and nowhere all at once. Commuters? Why would they shell out a dollar a week for this when they can pick up a similar product, for free, off the rack in a subway kiosk?

Daniel Lyons, author of Options: the Secret Life of Steve Jobs, in Newsweek:

In both the Murdoch and Denton approaches [CEO of Gawker Nick Denton is planning to launch a new advertising business concept], the vital thing is the content itself. Their strategies will work only if their sites deliver compelling, unique material, stuff you can't find anywhere else. That too is a bold idea, as up to now the goal has been to get content as cheaply as possible, either by persuading people to write articles for little or no pay or by aggregating stuff that's been published elsewhere. As a result, the news business has been engaged in a race to the bottom, churning out more and more garbage and then wondering why our industry is collapsing.

Ryan Tate, at Gawker.com:

Being walled off will hurt not only The Daily but its readers, too, who expect, as Rosenberg puts it, "news that you can respond to, link to, share with friends." As web inventor Tim Berners Lee recently wrote, "Walled gardens, no matter how pleasing, can never compete in diversity, richness and innovation with the mad, throbbing web market outside their gates."

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The need for responsible investment banking with a strong regional focus

Let’s begin by stating the problem: there’s a lack of long-term investment in the UK economy, both in infrastructure and in the capital needed to run productive businesses.  That counts double at a regional level across the country. This is an old song to be sure, but that doesn’t detract from its reality.  And with the main fallout from Brexit likely to be a decline in foreign direct investment, the investment gap is only going to get worse.

For example, the OECD think tank estimates an annual infrastructure investment of 3.5% of GDP is necessary in developed economies to maintain competitiveness, never mind boost it.  Currently, public sector infrastructure investment in the UK is forecast to reach to be 1.4% of GDP in 2020/21 – and that’s with the increase in capital spending offered in the Autumn Statement.

The curious thing, though, is that there is no actual shortage of capital.  In fact, in the City, there is probably the world’s biggest pot of footloose cash just looking for an investment opportunity. Which suggests that the failure to invest in UK Plc has more to do with the financial plumbing that anything else. Which brings us to investment banks and their role in the economy.

Today’s high street retail banks – the sort you keep your current account with – make their money from mortgage lending and hidden charges on overdraft facilities. The last thing they do is risk lending money to industry or for long-term infrastructure projects. That’s where dedicated investment banks come in.  Their job is to organise the financial plumbing that channels risk capital from its owner through to companies or infrastructure projects, using any means necessary: underwriting share issues, creating consortia to build windfarms, brokering mergers, managing funds, or selling advice.

To cut to the chase: the UK is suffering a blocked financial pipeline.  Our local investment banking system is in crisis.  Post the 2008 Credit Crunch, domestic banks in the UK – Barclays excepted - have been in wholesale flight from investment banking, which is perceived as having been the cause of their ruin. Certainly derivatives trading allied to insane levels of inter-bank lending formed the detonator of the 2008 implosion. And some institutions – notably HBOS – leveraged themselves to unsustainable levels in order to invest in the latter stages of a commercial property bubble whose eventual collapse was obvious to anyone but a banker. 

But the retreat from investment banking activities by UK firms brings problems. First it implies handing over the keys to investment banking and capital supply to Wall Street. Second, if Donald Trump launches his proffered $1trillion infrastructure investment plan for America, there will be a capital flight from the UK and Europe. All of which suggests that Britain needs to make its own arrangements for capital provision through a reformed and expanded domestic investment banking sector or see UK productivity continue to flat-line.

That’s not to say there aren’t questions still to be asked about the ethical behaviour of investment banks. The five biggest global investment banks operating in the UK regularly contrive to pay no corporation tax locally, despite making billions in profits.  Name and shame: I mean JP Morgan, Bank of America Merrill Lynch, Deutsche Bank AG, Nomura Holding and Morgan Stanley.  But without a domestic UK investment banking sector, we are still going to be ripped off.

There is even more of a problem in the regions and nations that make up Britain.  If anything, regional inequality in the UK has worsened since 2010, with London becoming more, not less economically dominant despite the financial crash. The most recent data show that London’s share of Gross Value Added (GVA) increased from 21.5% in 2010 to 22.6% in 2014, while GVA per head also grew quicker in London than elsewhere.  But regional stock exchanges have long since vanished meaning that what capital is available – for growing companies or local infrastructure needs – is stashed in London and won’t go north in a hurry.

There is no single solution to this set of problems so let’s experiment with trying to create various new bits of financial plumbing. First, accept we need an investment banking sector. Next, let’s create some domestic competition in the sector. RBS has spent too much time chasing its tail and downsizing. It’s time RBS recovered its mojo and went back into the investment banking business. Besides, that is probably the only way it is ever going to start generating real profits again.  All it takes is for UKFI, its public owner, to tell CEO Ross McEwan to change course.

We can also unlock domestic capital specifically for safe, long-term infrastructure projects. Here the problem is Solvency II, the new EU regulations governing the capital requirements for the insurance sector and the pension funds they manage. UK pension funds invest an estimated 1% of their total assets in infrastructure. But this is very low compared with funds in Australia and Canada, where 8-15% of assets are invested in infrastructure.  The problem, complain UK insurers, is that the Prudential Conduct Authority is over-interpreting Solvency II and treating the industry as if it were a dodgy bank.  If capital requirements imposed by the PRA on UK insurers were eased, there would be more capital to invest in local infrastructure.

One possible hard solution to the regional investment gap comes from the New Economics Foundation in conjunction with Common Weal, a pro-independence Scottish think tank.  They are pushing the SNP Government at Holyrood to create a Scottish National Investment Bank and have published a detailed blueprint as to how it could work. Using Scottish Government figures for job creation from capital investment, their joint report states that such an investment bank could directly support the creation of 50,000 jobs “within just a few years of being established”.

Investment banking has become a dirty word since 2008. It’s actually a necessary part of the financial furniture.  The trick is to make it work properly. And for that to happen, politicians and regulators have to be pro-active.

Barclays has commissioned a report ‘‘What have the Capital Markets ever done for us? And how could they do it better?’’ by New Financial with the hope to start a debate about the value of capital markets to the economy, especially in the UK. Many thanks go to those who joined us at our events with New Statesman so to examine the report’s findings in detail.

For the previous feature in the series, see Alison McGovern’s Why we must maintain the highest standards in banking in the new political landscape.

George Kerevan is the SNP Member of Parliament for East Lothian.