A New Strain of the Coronavirus in the UK Overshadows US Stimulus News
New Variant of Virus Spreads 70% Faster
Stocks in the US and Europe fell yesterday as investors weighed concerns about a new, fast-spreading strain of the coronavirus which has been found in the UK. The British government reported that this variant of the virus seems to be spreading 70% more quickly than earlier strains, and is the reason for a spike in coronavirus cases in London.
In response to the news, over the weekend the UK government closed all nonessential retail businesses and rolled back plans for loosening restrictions on gatherings over the week of Christmas. Additionally, a number of countries in Europe and elsewhere suspended air travel from the UK to prevent the spread of the new strain. The US State Department currently recommends that Americans reconsider traveling to the UK, and the US Centers for Disease Control and Prevention recommends against visiting the country.
Oil Prices and the British Pound Fall
The new travel restrictions caused oil prices to fall sharply as investors worry that demand for oil will be weak heading into the new year. Yesterday the price of Brent crude oil, which is the international benchmark, tumbled 4.1% to $50.10 per barrel. This was the most significant one-day drop since October.
The British pound also tumbled yesterday because of concerns about the new strain of the coronavirus and because of difficulties surrounding a trade deal between the UK and the EU. In less than two weeks the UK will no longer be included in European Union trade agreements. Lawmakers are working on a free-trade deal which would make the transition more smooth, but an agreement has not yet been reached.
The Good News
Though consequences of the new strain of coronavirus had a significant impact on markets yesterday, some of the downturn was buffered by news that Republicans and Democrats finally came to an agreement about a $900 billion stimulus package on Sunday night. The bill includes direct payments to some Americans, support for small businesses, additional unemployment benefits, and other measures to help prop up the economy through what will likely be a difficult winter.
Additionally, rollout of the COVID-19 vaccines continues to progress. Matt Hancock, the UK health secretary said in a statement to Parliament it is “highly unlikely” that the new variant of the virus will not respond to the vaccine, providing some relief as the UK and the world work to keep people safe from the new strain.
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New Partnerships Form Between Tech Giants and Record Labels
After Years of Conflict, Opportunities for Collaboration Emerge
For years, record companies have criticized tech giants for using music to attract customers without compensating the owners of that music. But now, record labels are singing a different tune as they ink billions of dollars worth of deals with social media platforms.
In the early 2000s tech companies gave people ways to pirate music, which hurt CD sales and record companies’ balance sheets. Then streaming platforms like Pandora and Spotify (SPOT) cut into labels’ revenue. As companies like YouTube (GOOGL), Facebook (FB), and Snapchat (SNAP) grew, for some time these platforms displayed user created content featuring music without compensating record labels. Now social media and tech platforms are seeing the benefits of developing closer relationships with music companies.
Billion-Dollar Deals Between the Tech and Music Industries
Last year YouTube reported that it paid the music industry more than $3 billion. Three years ago Facebook entered an agreement to pay music companies over $600 million per year to allow people to use songs in their videos on the platform.
One of the most significant players in this new era of relationships between tech platforms and record labels is TikTok. The Chinese short video app with over 600 million users has made many songs go viral and generate revenue across other platforms. TikTok recently signed an agreement with Warner Music (WMG), which will raise the fees TikTok pays for song rights. The terms of the deal were not disclosed, but it marks a significant development in the relationship between the tech and music industries.
How the Pandemic Impacted Relations Between the Two Industries
Though tech companies and the music industry were beginning to form partnerships before the pandemic, unique circumstances this year have accelerated that trend. “It feels like we’ve seen years’ worth of change and evolution in the course of a handful of months,” explained Oana Ruxandra, Chief Digital Officer at Warner Music.
Many revenue streams for record companies have been hurt this year. Concerts have been canceled, radio listenership is down, stores and restaurants which pay to play music are closed. Meanwhile, people stuck at home are spending more time engaging with social media and other tech platforms. This has led to more collaboration between tech and music companies. In addition to partnering with social media platforms, record labels are entering deals with fitness platforms, video game makers, and other branches of the tech industry.
Ski Resorts Look Toward an Unconventional Season
After a Truncated Season, Skiing Returns
When the COVID-19 pandemic first hit, the ski industry lost an estimated $2 billion due to canceled spring break trips. Ski resorts say spring break is their second-most lucrative period. Winter vacation, typically the most profitable period for the ski industry, is fast approaching. As COVID-19 cases around the country surge, resorts are concerned that this winter could be even more detrimental than the spring was.
The 2019-20 season was on track to be the fourth best in the United States since the 1970s. The National Ski Areas Association estimates that over 51 million people went skiing and snowboarding in the US before March shutdowns. However, demand at many resorts has fallen because of economic downturn and concerns about COVID-19.
International Business Worries
The pandemic has had a different impact on various types of ski areas. Some small resorts that cater to people within driving distance have actually seen an increase in demand, as families look for ways to get out of the house at a time when many indoor activities are canceled. This has resulted in logistical challenges for these ski areas as they try to meet demand while also keeping people distanced and safe in public spaces. These types of resorts are asking people to stay outside while they can and to put on their gear while still at their cars.
For destination resorts that mostly cater to international travelers, the logistical challenges are different. Vaccine distribution is still far in the distance for most people, and many travelers are still wary of crowded airplanes. For Aspen Snowmass, the Colorado resort that hosts skiers from around the world on its 350 trails, this season will likely be less profitable than most. The resort expects it will lose as much as 80% of its international business this year.
Ski Resorts Could See Post-Pandemic Success
Analysts who have been watching ski stocks say they have performed surprisingly well this year even before coronavirus vaccine distribution began. Over the summer, more people started golfing as a hobby. The sport is perfect for the pandemic era because it is possible to stay distanced from other golfers on the green. The same could be true for skiing this winter. In the spring, COVID-19 was so new that resorts had not yet put systems in place to keep people safe, but now they are working on measures to make sure that consumers can enjoy the slopes without congregating in crowded areas.
Additionally, analysts expect that pent-up demand for skiing and other leisure activities could lead to a boom once more of the population is vaccinated against COVID-19. Many resorts are selling passes in advance now to set themselves up for future success even as they deal with challenges in the present moment.