tv BBC Business Live BBC News May 22, 2018 8:30am-9:01am BST
this is business live from bbc news with vishala sri—pathma and sally bundock. full stream ahead — google‘s youtube enters the music streaming market hoping to tune into a multi—billion dollar industry. live from london, that's our top story on tuesday 22nd may but steaming is a crowded space — so can google compete with the likes of market leaders spotify and apple and get its users to pay? also in the programme — a baby stock boom? china considers scrapping birth limits next year sending shares in infant products soaring. will get the latest on the markets, the ftse 100 in positive territory the ftse100 in positive territory today after hitting a record high
yesterday. and we'll be getting the inside track on turning tragedy into triumph — how two brothers lost their parents in the 2004 tsunami but channelled their experience into a sucessful ethical business. and keeping up with the obamas! netflix signs a production deal with michelle and barack but should the firm be a platform for politics? is that their intention? let us know, just use #bbcbizlive. hello and welcome to business live. welcome to the programme. we're going to be talking music streaming this morning. google is revamping its youtube music service in a bid to take on the likes of spotify and apple — its latest attempt to get fans to listen to music. now, youtube is known for its videos, from diy or learning the latest make up trends. but did you know it's actually
the world's most—used website to listen to music legally. in 2017 the international federation of the phonographic industry estimated that around 1.3 billion people used the site for music. so, can youtube get its huge user base to pay? right now, youtube doesn't is free — it's estimated 85% of users go right now, youtube doesn't and is free — it's estimated 85% of users go there to listen to music without paying a thing. and the company is missing out on revenues from music streaming. goldman sachs estimate sales could reach $28 billion by 2030. now, youtube has a lot of catching up to do. spotify revealed earlier this month that they had 75 million paid subscribers. while apple music recently announced it had over a0 million signed up. sally has more on this story. idea and the cameras are on the right people now. apologies, we have
robots are not behaving themselves in the we will see what happens next. with me is richard kramer, founder and senior analyst at arete research. good to see you. those are some statistics that give us a sense of youtube‘s pre—eminence. what do you make of the latest move? youtube's pre—eminence. what do you make of the latest move? the first thing to understand is the market value subscription service than it does the volatile advertising business so that is obviously attractive for google to secure a base of subscription revenues. the other thing is that all of these companies, google, spotify, amazon, facebook, apple, they are competing for time spent and music is a great way to capture time spent and also important for demographic information on users. so from that point of view you can understand the direction of travel. but many are asking the question, will people pay youtube to watch their favourite music songs, choices etc? and if they want to do that, is that an
issue for youtube? is that one of the reasons why they are going for this move? it is not an issue for youtubein this move? it is not an issue for youtube in that the core of the youtube in that the core of the youtube business right now is advertising based and in a way google might not want too many people to subscribe to youtube because it would undermine that very powerful advertising platform they have there. also when you think about it from the way the music industry is so concentrated with three majors controlling 80—90% of the music and the news this morning that sony is going to buy out the rest of emi, you realise that music industry wants many different venues for people to listen to their music as possible so there will be some people who will pay google for subscriptions to youtube and other youtube content, but the majority, i suspect, will still take an advertising —based service for free. something else you mentioned in our conversation earlier which was very interesting as well, was this concern in the markets about google's margins being squeezed. what is your take on that because i thought it was an interesting
perspective on in what is going on with google in terms of the share price and the regulator view of google. there was a prominent us news programme at the weekend all about google and whether or not you need to rewrite the rules of anti—trust away from consumer harm and to content with the fact that it is effectively a natural monopoly in search and other areas of the internet and the narrative google wa nt to internet and the narrative google want to put out is they are in a very competitive market, their margins are under pressure, and by investing in a service like youtube music which is almost certainly going to lose money in the first few yea rs going to lose money in the first few years because they have to pay upfront for the music before they get the volume of subscribers, this will put pressure on their margins and prove what a competitive market they are in. the narrative google might want to give to the markets is that, our margins are under pressure so we that, our margins are under pressure so we should not be regulated, look at all the competition we have. amazon and advertising on facebook, apple and spotify and so forth.
interesting, thank you for your perspective, richard. much more on that story on our website in analysis so take a look if it's of interest to you. fascinating stuff. let's take a look at some of the other stories making the news. sony says it has agreed to buy a controlling stake in emi music publishing for $2.3 billion as it looks to boost its music portfolio. the deal would mean sony would indirectly own about 90% of the firm and its some two million songs by artists from queen and carole king to alicia keys and pharrell williams. facebook founder mark zuckerberg will appear, via live—streaming, before the european parliament to answer questions relating to the data protection scandal involving the british firm cambridge analytica. it follows his testimony before us congress over the leaking of users' personal data. adobe — the maker of the popular photoshop and illustrator creative software — is buying e—commerce services provider magento commerce for $1.68 billion. its biggest deal in nearly a decade for adobe.
the firm says the move will bolster its cloud business, which provides services including advertising and marketing. chinese stocks linked to baby products have surged on reports that the country is considering ending the limit on the amount of children a family can have. currently families are limited to two children, however china's government is concerned about the country's ageing population. let's speak to robin brant who is in shanghai. good to see you. they say buy on the rumours and sell on the news so buy on the rumours and sell on the news so what's going on? bloomberg is reporting this country's state council, the cabinet, politicians at the top, have decided to go further than ending the one child policy which ended two years ago, after four decades of restricting people's ability to have any children beyond
just the one in the urban parts of this country and now they are looking to end all restrictions on the amount of children that families can have here. that would be the end ofa can have here. that would be the end of a hugely controversial policy. this is still a country where state authorities force women to have abortions, regulate the amount of children, babies, that people can have. in the reporting today companies connected to the manufacturing of baby powder, toys, incubators used in hospitals both here and injapan, saw their shares rise in what was a rather tepid day on the exchange is here in shanghai. it isa on the exchange is here in shanghai. it is a rumour at this stage and it has not been confirmed. there has been talk for the past year that they would be a further liberalisation of the restrictions on the amount of children that families can have here. this looks to ta ke families can have here. this looks to take step further. one unrelated bit of breaking news, in the last ten or 15 bloomberg again also
reporting an iota of good news for president trump in the us china trade talks, china will reduce the import tariff charges on passenger cars, something that ford, gm and mercedes get slapped with, coming down from 25% down to according to bloomberg. something president xi jinping talked about himself during a speech several weeks ago and something that donald trump has long campaigned for and has made the pa rolo of campaigned for and has made the parolo of the us 2.5%, china 25%, looks like china will reduce it somewhat —— made the parolo. thank you for that update, robin, in asia. on the markets in europe and asia, in the us are closed from positive territory yesterday, the nikkei in negative and the hang seng up slightly at 0.6%. in europe the ftse 100 ended yesterday on record levels, the backs and the cac a0 in negative territory is, the footsie
boosted yesterday that arises in the dollar. we saw many ftse100 companies, big ones, boosted by that increase in the dollar hosting their bottom line. that's what we saw, record highs yesterday. and kim gittleson has the details about what's ahead on wall street today. on tuesday investors will be closely eyeing the earnings report of toll brothers, a luxury home builder, for signs about the health of the us housing market. now, most analysts are expecting the company to report a rise in second—quarter revenue, it's been helped of course by a booming us economy. the concern here is about the future. mortgage rates are rising here in the united states because the us federal reserve has continued to increase its target federal funds rate. and last week data was released that showed housing starts declined sharply in april here in the united states. so investors will be wondering if these two factors have any drag on toll brothers' earnings, and, if they do what, that says about the overall us
housing market. that is part of our team in new york. joining us is sonja laud, head of equities at fidelity international. welcome to business live, nice to see you. what's going on in the markets, kim talking about stuff in the united states. what is your take? we have lots happening, the ftse100 is breaking new records, the price of oil is edging higher, italy, what are you watching? to start with its easy to get lost in all those headlines because it seems there is so much going on, and yet looking at the underlying market developments and they are still very mediocre so you could be forgiven for assuming that a lot more had happened already. i think it's important to understand what the fundamentals are telling us. ever since we entered 2018 we have been discussing the idea of whether growth has peaked and that to me is the important factor to watch because that will determine the cycle. and on top of that we have
all the other headlines, we have politics, trade wars and the oil price and the dollar which determined the short—term movements in markets. it is interesting you say that at the beginning of the year you were thinking and my disgust that growth has peaked, in davos everybody said we are in the sweet spot and it will be a fantastic year —— and it was being discussed. that's important because that will determine where the journey goes from here because if it's only noise we worried about you could easily assume, ok, we can go back to the good old days that was 2017 and early 2018. if we assume we are entering the last part of the cycle, that's very important to assess what your investments should look like. we have talked much about mergers and acquisitions this year which has boosted the ftse 250 which is unique because the ftse100 has hit record highs but so did the ftse 250. another sign of late cycle because we know it is only when companies face their organic growth potential kind of coming down and
decelerating, that is when they look for the opportunity to boost their growth with acquisitions, artificial and on top of. thank you, sonja laud will return. we have netflix to discuss with her as well as other stories, plenty to get our teeth into later. still to come — turning tragedy into triumph — we're speaking to the brothers and businessmen who lost their parents in the 200a tsunami, but turned their experience into a successful and ethical business. you're with business live from bbc news. let's talk about some of the other results we have had today. halfords has reported a 5% fall in underlying pre—tax profits to £71.6 million in its full—year results. the company which specialises in cycling and car equipment, said the results were in line with expectations but market conditions remained challenging. joining us now is david madden from cmc markets. david, the ceo of halfords said it
was actually because of lack of rising prices in its industry. is that correct? that is a factor all right. it would suggest that the momentum is kind of running out of the cycling market, a lot have got on the bandwagon of cycling to work schemes and that kind of appears to be coming to an end, much like how the smartphone sector is very much saturated and companies are relying more on services and on upgrades rather than acquiring new bicycles, in this case. halford did state that retail sales in relation to customer service grew at a double—digit rate and they will continue to focus on that, which suggests it is about preserving the existing client base rather than trying to expand it. the broader picture, the halfords share price has done pretty well rising over 10% in the last six months or
so. over 10% in the last six months or so. it has but it is down 996 today u nfortu nately. so. it has but it is down 996 today unfortunately. keeping in mind the stock hit a 17 month high yesterday, so stock hit a 17 month high yesterday, so there were high expectations for this. bearing in mind the company still has a solid cash flow position, cash flow is up nearly 1000% on the year and the final dividend has increased by 3% so it would seem to me there was a bit of profit—taking today given that the numbers and the outlook wasn't as rosy as the market expected. to what extent, david, is halford is challenged by the online presence of other companies, in the same way that we are seeing clothing retailers having a really tough time on the high street? how is a company like halford is faring? halford ‘s reported an 11% increase in online sales, they are getting involved in e—commerce along with other retailers. but i suspect an industry like the motor parts and
bicycles will be a bit more high street focused than, say, food shopping or even some sort of clothes shopping. they are making inroads into online sales but i suspect you will probably see them a bit longer on the high street than, say, clothing retailers. david madden from cmc markets, thank you so madden from cmc markets, thank you so much. he was talking about halfords. when it comes to bikes, i wa nt to halfords. when it comes to bikes, i want to go in the shop and... have a field, yes. i don't trust buying online. when it comes, the seat might be too high. poor weather weighs in on topps tiles, it says its pre—tax profits have tumbled by over 3a% in the months to the end of march. blaming market conditions. they also said poor weather, one of the reasons why retailers suffer. you're watching business live.
our top story... full stream ahead — google's youtube enters the music streaming market hoping to tune into a multi—billion dollar industry. and now let's get the inside track on a company with a powerful backstory. brothers rob and paul forkan had an unconventional childhood, exploring the world and volunteering with their family. they were in sri lanka when the tsunami hit in 200a. rob and paul survived but tragically they lost their parents. eight years later, inspired by their experiences, the pair went into business. the company, gandys, designs and sells travel clothing, including flip—flops. today there are three gandys stores in london with the business employing a2 people. it has a projected turnover of $2.15 million this year. and of the profits, 10% will go into their charity orphans for orphans. rob, one of the brothers, joins us
in the studio. you have some of your fli p—flo ps in the studio. you have some of your flip—flops to show us. get them out, well we are chatting. it was sunny today coming in, i could wear them and not worry! tell us, when did you start this company? when you were both in sri la nka company? when you were both in sri lanka you were 11 and 13? we were 11 and 13 when we left to go travelling, we spent about four yea rs travelling, we spent about four years volunteering around india. then we went across to sri lanka, that was when we were caught up in the tsunami, by that point it had been about four years, so we were 17 and 13, ala younger brother and sister were 11 and eight. there was for others in sri lanka caught up in this toon army and had to get home. —— there was four of us. this toon army and had to get home. -- there was four of us. so i presume you started the business a
bit later? just a little bit. we spent a few years rebuilding our lives, both when travelling, both got out and started working, then we said what can we do in terms of something which would continue to allow us to travel and let us do something that would build something on the values that our parents taught us, that is when we came up with the idea for gandys about six yea rs with the idea for gandys about six years ago and got started with the idea of building a children's home in memory of them. how much of the profit goes to the homes? 1096. we also have a foundation on the side, we have done things like our book and lots of fundraising and corporates and universities who as us corporates and universities who as us to share our story and talk about the journey we have been on and help go into the foundation, 100% of that money goes to the projects we are doing. on the business side, thinking about flip—flops, it is a big industry.
how do you compete with the likes of havaianas? it is hard, when we started we were taking pictures on our iphone in the bath to get a white backdrop to put it on a website, this whole world of e—commerce and some of these huge websites seem quite daunting. but we got on with it. from day one we have a lwa ys got on with it. from day one we have always tried to include everyone in the journey and built a community, thatis the journey and built a community, that is one of the reasons we have opened the stores, we get people coming from all over the place that have read our book, love the story of the brands and want to engage. that is what we are trying to do, we see it as notjust selling clothes, so to speak, for others it is building a community of people with a passion for travel and like to give back. have you turned it into a business that you and your brother and those involved in can live off, as it work? is it
profitable? i think we still have a long way to go in terms of building any brand. lots of our guys, we look at people like jack wills all super dry andi at people like jack wills all super dry and i had to remind the guys that it dry and i had to remind the guys thatitis dry and i had to remind the guys that it is good that we are looking at brands like that at by kind of level. lots of people are saying are you the next jack wills all superdry somebody like that? we get a lot about. but those guys started before we are born. i am like, guys, they are 20 years ahead of us, give us a chance we keep doing what we're doing, if we keep working on good customer experience and coming up with good products, it will build but you can't rush it. the retail sector, some gloomy news, does that put you off? what do you does that put you off? what do you do in terms of plans, do you want to expand beyond flip—flops? we did that about a year and a half ago, we expanded into clothing and
backpacks and even jumpers and things. being in the uk, overthe winter the bestselling products were jumpers and jackets. to go from a flip—flop brand to having that as our bestselling products over the christmas period etc did really well. but they were very different to anyone else, i was a handmade in the himalayas, it was notjust in jumpers made anywhere, they had a story and a purpose. —— ours were handmade in the himalayas. that is what makes is different to a general retail store. your story add your brother's story is very inspirational. tell us about meeting prince harry, the groom. the man of the moment. we went to buckingham palace and war are flip—flops. the moment. we went to buckingham palace and war are flip-flops. were you allowed in? yes, we were worried that we would not be but somehow we got in prince william jokes, are we there to use the swimming pool? we joked to prince harry that we thought it was a barbecue. there is
a funny picture of him pointing at our flip—flops, a funny picture of him pointing at ourflip—flops, going what a funny picture of him pointing at our flip—flops, going what the heck are you two doing here?! he was in a suit and are you two doing here?! he was in a suitandi are you two doing here?! he was in a suit and i think he was more frustrated that he was in a suit.“ you had went to the wedding, would you had went to the wedding, would you have worn your flip—flops? you had went to the wedding, would you have worn your flip-flops? we would have, we put something on social media but hopefully prince harry would be wearing the fli p—flo ps harry would be wearing the flip—flops down the aisle.|j harry would be wearing the flip-flops down the aisle. i bet he wears them on the beach. thank you, rob, good to meet you. this is how to stay in touch with us. stay up to date with all the day's business news as it happens, on the bbc‘s business live page. there's insight and analysis from our team of editors right around the globe. and we want to hear from you, too. get involved on the bbc‘s business live web page at bbc.com/business. on twitter we're @bbcbusiness. and you can find us on facebook at bbc money. business live, on tv and online. what you need to know, when you need to know. many of you have been in touch about
netflix and obama haas. sonja laud is back, tell others about your thoughts of netflix doing a deal with michelle and barack obama, yea rs of with michelle and barack obama, years of programming? it creates more headlines, we do not know what will be produced. it is clear it would always create a divergence in opinion, he was not universally liked as a president so when he joins a major production company it is clear that it may create some headlines, but it creates a headline for netflix, we will see what they will produce. rumours of moderating some debates and all sorts. you would expect that. but a programme such you would expect that. but a programme such as you would expect that. but a programme such as keeping up with the obamas?! another person said i would rather have politicians become television stars than the other way around, to be frank. who are you
referring to?! i couldn't possibly think. adam says as the current president is a reality tv star, i do not see this issue in going another way. another person says it will take a lot of credibility from the obamas. you are from germany, sonja laud, we could not imagine angela merkel doing a deal with the german broadcaster? we should give them the benefit of the doubt, if you read michelle and barack obama's comments, it is sharing the interesting experiences they had with great people around the world, maybe we should give them the benefit of the doubt. thank you so much for being on business live, sonja. that is it from us for today. we will see you again tomorrow. hello. for many, a dry and sunny
start to the day. we have a bit more cloud. and, northern ireland. it should be drier than yesterday. for most of us, the risk of some showers developing across southern parts, similarto developing across southern parts, similar to yesterday. from the satellite imagery you can see a pheromone to cloud toward scotland through northern and western parts of the uk, that is associated with this weather system —— you can see a fairamount of this weather system —— you can see a fair amount of cloud. unlike yesterday, where it was bringing rain, today it is weakening and will give us a fair amount of cloud for scotla nd give us a fair amount of cloud for scotland and northern ireland. and around the north—east of england, some coastal mist and fog moving way in. for southern england, the risk of one or two heavy sharp showers with the dust storms in the far south, many parts of england and wales having sunshine. the clouds
and northern ireland are much of scotland, staying rather misty and murky. a warmer day then yesterday in the north—west of scotland, only eight celsius year, about 12 today. juliet in the north—east of scotland, one of the northern ireland, for england and wales, temperatures getting into the low 20s. this evening and overnight, more coastal cloud and mist and fog moving further inland. it will come quite a long way westward overnight. those are your temperatures into wednesday morning. during wednesday, high pressure is still firmly in charge of the weather. when you have this big area of high pressure we are looking at another dry and subtle day with more sunshine. it will be quite a slow start to the central and eastern areas, quite a bit of cloud and mr younis. burning back towards the coast and staying quite misty and murky around the north sea coasts, elsewhere the heat will start to build for the day and it should be warmer for many of us,
but around the north—eastern areas, the green areas, still a bit chilly, temperatures into the low to mid teens. elsewhere, temperatures up to around 18 to 23 or 2a. on thursday, starting of dry and bright and keeping sunshine across northern parts, in southern areas it is heavy and potentially thundery, drier by friday and you will notice the temperatures for are up into the high teens to the low 20s. goodbye. hello, it's tuesday, it's 9am, i'm chloe tilley, welcome to the programme. pop star ariana grande has said her thoughts remain with all those affected by the manchester arena bombing one year on from the atrocity. 22 people were killed and hundreds injured when a bomb was detonated at the end of one of her concerts. we'll be talking to people who were there. it still just seems a bit like a movie, to be honest. haven't really processed it all yet. i did have to take a year out of my uni studies, just to deal with everything.