0:03

Good morning from the Financial Times. Today

0:05

is Thursday, July 4th, and this

0:07

is your FT News Briefing. SoftBank

0:11

is ditching share buybacks for

0:13

now, and Shell pulls the

0:16

plug on one of its largest clean

0:18

energy projects. Plus YouTube

0:20

wants to cash in on music

0:22

created by Artificial Intelligence. We're

0:25

not sure if record companies are going to allow it though.

0:28

I'm Mark Filipino and here's the news you need to start

0:31

your day. SoftBank

0:47

is shaking off pressure from activist

0:49

investor, Elliott Management. Elliott

0:51

has a position in SoftBank worth

0:53

more than $2 billion, and is

0:55

pushing SoftBank to greenlight a share

0:57

buyback. Elliott thinks that it

0:59

would shrink the gap between the value of

1:02

SoftBank's portfolio and its market value. But

1:05

SoftBank's chief financial officer basically told

1:07

the FT, nah, we're going

1:10

to invest in artificial intelligence instead. The

1:12

tech group's balance sheet has improved recently, and

1:14

Yoshimitsu Goto said hunting for AI deals

1:16

was a better use of it. Goto

1:19

did not rule out buybacks down the line

1:21

though. Shell

1:29

said this week it's pausing work

1:31

on a huge biofuels plant in

1:33

the Netherlands indefinitely. It was

1:36

supposed to be one of the biggest energy

1:38

transition projects in the world. And

1:40

so the stalled project is a setback for

1:42

the biofuels market. Malcolm

1:44

Morris, the FT's energy editor, and he joins me

1:47

now. Hi Malcolm. Hi there. All

1:49

right, Malcolm. So just tell me a little bit more about this

1:51

project. What was it supposed to be? Okay,

1:54

so the project was unveiled in 2021.

1:58

And back then, Shell... said

2:00

that this was going to be a key part

2:02

of its plans to reduce the

2:04

carbon intensity of its production. And

2:08

essentially what they were going to do is they were going to take

2:10

used cooking oil and

2:12

other animal waste and they were going

2:15

to transform all of that into sustainable

2:18

aviation fuel and also

2:21

biodiesel. And then earlier

2:23

this year they said, oh, actually the plant's

2:26

not going to be operational until the

2:28

latter part of this decade. And

2:31

then this week they said, actually, we need

2:33

to rethink the whole thing. And

2:35

they didn't give a timeframe for when it would be

2:37

operational. Why are

2:39

they putting this project on hold? Shell

2:42

said that they needed to look at it again in terms

2:45

of making sure they got the project

2:47

delivery right, which I'm taking as a

2:49

euphemism for they need to fix the

2:51

engineering. But also the market

2:53

isn't great for biofuels at the moment. And

2:56

I think that Shell's got a new

2:58

CEO. He's focusing more on delivering value

3:00

for shareholders. And he's

3:02

asked everybody to really look at the economics

3:04

of these things and ask themselves if they

3:07

work. Do me a favor.

3:09

Can you explain why biofuels are

3:12

under so much pressure at the moment? Yeah,

3:14

absolutely. So biofuels have been around for a

3:16

long time. And in fact,

3:19

here in the UK, when we fill up

3:21

our cars with diesel or petrol, gasoline, a

3:24

certain proportion of that is already biofuels.

3:26

It's blended into the fuel. So

3:28

oil companies and refineries really like

3:30

biofuels because essentially you don't really

3:32

need to modify your equipment that

3:34

much to produce them. They're

3:37

more sustainable. And you don't

3:39

need to change the engine of the car or anything else. So

3:41

in terms of meeting climate

3:43

targets, everybody has for a long

3:45

time now thought that biofuels are a good idea. The

3:48

issue is that there are lots of people

3:50

who are building capacity to make this stuff.

3:53

There's a lot of biofuels being imported into

3:55

Europe from China. That's really

3:57

depressed the price of biodiesel. And

4:00

that's basically meant that a lot of these plants

4:03

are not making enough money out of it. Seems

4:05

like Shell might not be the only one second

4:07

guessing their biofuels projects right now. So

4:09

all of the big oil companies have

4:11

got climate targets and over the last

4:13

few years, we've seen all of them

4:16

announce big things around biofuels, but

4:18

now we're reaching the stage where actually

4:20

you're seeing people start to pull back

4:22

a little bit. So just before Shell

4:24

made this announcement, BP said that they

4:26

were gonna scale back and maybe pause

4:29

some projects at their existing facilities. It's

4:31

probably the conversation in a lot of places. So

4:34

it sounds like it's a little bit of an

4:36

uphill battle to get the biofuels market back to

4:38

a point where it would have a significant impact

4:41

on the energy transition. What

4:44

would it take to get that done? Yeah,

4:47

so all of this stuff depends on

4:49

countries telling companies that they have to

4:51

produce this stuff because it's more expensive

4:54

than conventional fuel. And

4:56

at the moment, there are those regulations

4:58

in place, but people are a

5:00

little bit skeptical that the regulations are going

5:03

to survive. If there's a public outcry over

5:05

the cost of doing all of this, then

5:07

maybe the politicians will roll back a bit.

5:09

So we're in that phase where

5:11

people are thinking twice about their

5:13

investments because they're not 100% confident

5:16

that the regulations are gonna continue to exist in

5:18

their current form. Malcolm

5:20

Moore is the FT's energy editor. Thanks,

5:23

Malcolm. Thanks, Mark. The

5:32

artificial intelligence boom is putting the music

5:34

industry in a tight spot, and

5:36

YouTube is trying to take advantage of it. It's

5:39

created an AI generator that takes

5:42

actual music, you know, the kind

5:44

made by humans, to help the programs

5:46

learn. The company is

5:48

testing it out on a short-form video

5:51

platform called YouTube Shorts, but the jury

5:53

is still out on how the music

5:55

industry feels about it. I'm

5:57

joined now by the FT's Anna Nicole Aube. She covers

5:59

U.S. media. for the FT. Hi, Anna. Hi,

6:02

Mark. How are you? I'm doing

6:04

well. Thanks for joining us. So

6:06

can you explain to me how YouTube's

6:08

AI song generator works? Yeah,

6:10

so I guess firstly, to be clear, the song generator,

6:12

as it stands right now, is still in kind of a

6:14

test phase. It was only

6:16

kind of a handful of musicians that signed

6:19

up for

6:21

the initial test program. So

6:23

on YouTube Shorts, right now if

6:25

you go on the platform, you can see that some creators

6:27

do have access to this AI song generator

6:29

and have been kind of playing around with it. And

6:31

I mean, the way it works is pretty

6:33

simple. It's, you

6:36

know, you have a prompt, which is the same

6:39

as kind of in chat GPT, where you enter

6:41

text, might say like, give

6:43

me a song that sounds like Drake,

6:45

but singing Dolly Parton, but with lyrics

6:47

that sound like Johnny Cash or something,

6:50

whatever it might be. And then it plays

6:52

back a clip for you. So,

6:54

Anna, is YouTube trying to expand this beyond

6:57

just a test program? So

7:00

YouTube is trying to make it bigger and make

7:02

it a proper product. It's about kind of enticing

7:04

people to Shorts and making them want to stay

7:06

there and watch videos there

7:08

and make videos for Shorts. They've

7:10

recently kind of come to these big music companies

7:13

and said, what if we just pay you, you

7:15

know, a lump sum of money in exchange

7:17

for bringing more of your artists into this

7:20

and allowing more of their music to be

7:22

used to train our AI. And

7:25

that is, it's quite different from

7:28

on Spotify or Apple Music or these

7:30

more established streaming services. They

7:32

have a fairly sophisticated payment structure

7:35

based on streams. This

7:37

would be more of kind of an ad hoc solution.

7:40

So that's kind of the model they're

7:42

looking at right now. And as

7:44

far as I know, talks are happening live.

7:48

How is this different from, I mean, I'm

7:50

old enough to remember like the wild west

7:53

of the music era of the internet with like

7:55

Napster. The Lime Wire

7:57

days? Exactly, exactly.

8:01

Yeah, I mean, there's very clear parallels

8:03

here, right? It's copyright infringement. It's

8:06

this kind of robots versus

8:08

humanity. I think there's definitely

8:10

a sense, and I hear this a lot

8:12

in talking to people in the music industry,

8:14

is that they don't want to do what

8:16

they did that time around. There's this view

8:18

that that time around, they really got caught

8:20

flat-footed and they were kind

8:23

of slow to adapt and,

8:25

you know, they were suing teenagers

8:27

in, like, Kentucky. So I think

8:30

they genuinely are trying to find

8:32

ways to kind of go

8:34

with the wave rather than just pushing

8:36

against it. They're very, very interested in

8:38

not getting themselves into that situation again.

8:42

So we've been talking a lot about

8:44

stuff that had big impacts

8:46

on the music industry. These

8:48

free download sites like LimeWire,

8:50

streaming services, and now artificial

8:52

intelligence. To what

8:54

degree does AI have the potential to

8:57

transform the music industry? Yeah,

8:59

I think it's interesting because

9:01

even with this experiment with YouTube,

9:04

it's not clear to me that everyone is

9:07

going to want to be spending their time

9:09

making AI songs. Like,

9:12

it kind of feels gimmicky in a

9:14

sense. It'll be different from

9:16

Spotify and the, quote, professional catalog, and

9:18

it'll be more of a social media

9:21

thing. The other side of it, further,

9:23

I guess the more extreme view is

9:25

that AI will, in a lot

9:27

of ways, take the place of generic

9:30

music. That could pretty easily

9:32

be replaced, you would think. Like

9:35

elevator music or food music? Yeah, all kinds of things

9:37

like that. Even like they call it, like, music for hire. I

9:40

probably lean towards the other side of it more and

9:43

I don't see it really replacing real people.

9:46

I think there's, like, a very emotional connection

9:48

that people feel to, like, their favorite artists.

9:51

And I don't particularly see that being

9:54

just crushed away by this. But

9:56

yeah, maybe I'm overly unconcerned. I don't

9:59

know. Anna Nicolaou

10:01

is the FT's U.S. media correspondent. Thanks as

10:03

always, Anna. Thanks so much. Before

10:12

we go, I don't need to remind you

10:14

that a lot of our friends in the U.K. are heading

10:16

to the polls today. The country

10:18

is holding a general election, and

10:20

even before anyone had voted,

10:23

conservatives were already waving a

10:25

white flag. One

10:27

Tory minister said this could turn out

10:29

to be, quote, the largest labor landslide

10:31

majority that this country has ever seen.

10:34

We'll have more on the results tomorrow from

10:37

our U.K. colleagues. Stay tuned.

10:46

This has been your daily FT news briefing.

10:48

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10:50

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