Following the July 30 announcement from the US Securities and Exchange Commission (SEC) about new guidance concerning Regulation FD, there has been plenty of online commentary and opinion on what people think it means for business, investors and communicators.
The regulator has yet to publish the full details of its guidance, so much of the commentary and opinion at the moment is just speculation. [Update Aug 4: the details have now been published: see note at end of this post.]
But I think one thing is clear – among the huge implications the SEC’s announcement has for financial communication as a whole, the press release and how news and information is traditionally distributed will be affected.
Tom Foremski’s speculative view is a good one:
[...] If a company’s web site is RSS enabled and it releases financial information and any other material information through that web site, that should satisfy FD requirements. This is because financial analysts and investors can opt-in and subscribe to that information through RSS news readers, or choose to have that information emailed as soon as it is published.
The bold emphasis is mine as that gets to the heart of the new self-distribution model that I believe will emerge with more organizations as a result of the SEC’s move, one that will change traditional press release distribution and could dramatically affect the newswire services’ business models.
This form of distribution is much broader than through a wire service such as BusinessWire or PRNewswire. Distribution through RSS and email takes advantage of the full breadth of the Internet and does not require an intermediary such as a wire service. Yahoo Finance and Google News would provide additional free distribution services in those cases where investors are not subscribed to a company’s financial information. Companies will be able to save considerable amounts of money in bypassing those wire services, where a single release can cost at least $1200 and often more.
Again, the bold is my emphasis.
It seems like a no-brainer, doesn’t it? If you could use a communication channel that not only is within the scope of any regulations you must adhere to but also saves you quite a bit of money, surely you would. Wouldn’t you?
Aside from the SEC guidance itself – and remember, we’ve still not seen the details of that – a primary thing to think about in what I’ll call the emerging self-distribution news model is whether or not it has the breadth and depth of reach to be an effective communication channel.
Not yet, in my view, not in the sense of it entirely replacing those traditional channels: the press release and the newswires. So any calls for dispensing with the press release are a bit premature.
What I think will happen is more social media newsrooms going up, perhaps along the lines of what GM Europe has done. Or Electrolux, IABC and Ford. Or perhaps like Cisco Systems or Hewlett-Packard who issued a press release in a social media format (HP’s via a wire service).
You’ll notice that none of these examples has anything to do with communicating financial news and information.
That will come from some organizations, perhaps even from some of these ones, as a result of the SEC announcement.
Notice, too, that all these examples of using a social media approach to press releases are in parallel with traditional press releases – no one has replaced any traditional communication channels.
That’s an important point – you can experiment with new ideas like the social media news release without making any changes to the established order of things – you simply add a complementary channel.
I was talking to Dennis Howlett a few days ago about the SEC news. Dennis has an interesting point of view (and one I hadn’t considered) broadly surrounding governance, risk and compliance which he wrote about in ZDNet, saying:
[...] there is a case where the notion of social media as a prime delivery tool takes on genuine value. If, as has been argued elsewhere, one of the Big Four collapses and this guidance is fleshed out to be meaningful, then the whole question of corporate public disclosure becomes a major talking point.
Imagine this: the entire value of traditional audit comes under question. What replaces it? A carefully orchestrated stream of transparent information that can be parsed through links. There will, in other words, be no place to hide. Corporations will be forced into acting in a very different manner to the command and control structures I see every day of the week.
My emphasis in bold. What the SEC is proposing has far-reaching implications for corporate and financial communication, of which this post’s focus on news distribution is purely one aspect.
As I said in my post on Thursday, I think this could be the tipping point for the social media news release where its value as an interactive communication channel becomes even more apparent.
I’m even more convinced of that. Note the word ‘could,’ though.
[Update August 4] The SEC has now published a 47-page document entitled “Commission Guidance on The Use of Company Websites” (PDF download) which explains the detail behind last week’s announcement.
I’ve glanced through it but clearly it requires careful reading and study before making any further commentary.
The SEC is asking for feedback on the content:
[...] We are soliciting comment on issues relating to company use of technology generally in providing information to investors.
Dominic Jones has some initial analysis of the report.