After a couple of years of speculation that the general public are on the brink of replacing journalists either through blogging or citizen reporting, the news today (FT) is that Thomson Financial has developed a programme that simply has a computer write the news, cutting journalists out the equation in an entirely new fashion.
The service is (currently) limited to breaking news of company results for traders in the financial markets, and sends out stories that automatically draw a comparison between the results announced and previous data. Now, from my years selling data systems to brokers I have some appreciation of how important speed of information is to those guys - fortunes are won and lost on the issue of "latency" and anything that lets traders get the jump on their competitors, effectively anticipating how the market will move and pre-empting the wave, is extremely valuable.
Yet it raises two issues. First, if Thomson can disintermediate the expensive journalists by having computers write the news, banks can clearly disintermediate the expensive traders by having computers interpret it. Reacting to news that is "written" in 0.3 of a second is just held up by having a human in the loop at the bank's end to execute the order. Secondly, an automatic news generator is unlikely to pick up the nuances of e.g. pro forma reporting. A company might show a disastrous quarter-on-quarter performance on a GAAP basis, but if it is genuinely exceptional it could be ultimately meaningless. Traders executing automatically on the basis of nuanceless computer-generated news are going to get themselves into all sorts of problems when a closer examination of the data reveals that the formulaic constraints of regulated reporting simply don't often reflect the meaning of the news.