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The Free Content movement continues

Jun 2008/in /by

I was struck by the juxtaposition of two articles in the last 24 hours
- Thomson Reuters plan to take share from Bloomberg and
- NYSE releasing real time quotes to the public.

Seemingly unrelated right?

Underlying both is a theme of how the ongoing trend to free content is shaping their competitive strategies and responses.

Thomson Reuters believes it can use price to take Bloomberg market share – Bloomberg being notorious for having fixed pricing and not discounting – and being expensive as a result. And the impact of free web content impacts how users view the terminals:

Neither company has sorted out a strategy for competing with online services. Michael F. Holland, the chairman of Holland & Company and the former chief executive of First Boston’s asset management division, said he can no longer justify a Bloomberg terminal for his current role and often turns to the Web for data. He first used a terminal in the 1980s and remains a fan: “There really is nothing else that’s quite like the Bloomberg,” he said. “From the beginning, it has provided incredible information. But at a very high price.”

And when asked what Google Finance and Yahoo Finance might mean for Bloomberg’s future over time, Mr. Grauer paused. “I don’t know how to answer that,” he said. “I really don’t know how to answer that.”

And John Blossom’s comment in his summary of NYSE’s move is right on:

It is, unfortunately, a familiar refrain in the content industry: major institution covets proprietary content revenues, squeezes them out for as long as possible while the markets move to find both acceptable substitutes and better ways of doing business. Publishing is in essence a very conservative business, so it’s not surprising that NYSE would try to keep this formula going for so long. But in an era when the buyers of securities have and demand information at least as good as most selling institutions failing to serve the buy side in financial markets effectively is to ignore the fundamental shift in the content industry that empowers people with independent access to content from around the world. Your content may seem safe as a proprietary asset, but if it’s not driving your clients’ profits in its most valuable user-defined contexts it is far from a safe bet in today’s content markets.

Lehman Blogs and Closing Price C

Lehman blog volumes before and as the price declines

Jun 2008/in /by

As you can see from our Blog Impact report announcement earlier this week, we’ve been watching blog frequency trends for our clients. I asked my team to do a review of Lehman’s blog stats vs. price and this is what we found. I’m no analyst so I won’t draw a direct correlation – but it is interesting to see the increase in volume of chatter before the price starts to decline and the commonality in the shape of the curves.

spikes

Detecting blog spikes and market moves

Jun 2008/in /by

We announced some important new capabilities to our service today: FirstRain Blog Impact Reports and Capital Market Reports. The key breakthrough is that we can now detect spikes in blogs – which are based on normalized trends over time so you can see when there is truly a change in posting volume – and so quickly see what the blog chatter is that may be impacting the market.

This is an enormous time savings for our users. No more need to set up thousands of RSS readers and troll through them. No more wondering if you are missing rare posts on quiet companies. We’ve determined the most influential blogs at the time, based on our MarketScore algorithms which consider prominence, authority and reach to figure out which blogs to include in your report – and then they are tightly presented as lists linked to the original posts and the FirstRain system.

It’s the first time there is an automated way to systematically include blogs into the investment research process!

The second set of reports are about the capital markets themselves and their interaction with the web. We correlate web results with hedge fund trends, market movers and the short interest – presenting web results directly tied to one of these effects – and in an automated, thorough but prioritized way so our users don’t have to look anywhere else and can quickly see what’s being reported on the web related to the trend.

From our press release:

“… today announced the release of two new qualitative analytics packages-FirstRain Blog Monitor and FirstRain Capital Markets Monitor-that report on the interaction between web results and the market to enable better decisions. These products build on FirstRain’s cutting-edge qualitative analytics technology which distills unstructured data from across the vast web into concise data points and trends that matter to professionals.

“The investing and management communities have largely been without a comprehensive strategy when it comes to understanding and exploiting rich information from the web, particularly the impact that blogs have on the markets,” said Sean O’Dowd, capital markets senior analyst at IDC Financial Insights. “FirstRain’s reports are an important step to bridging this gap in the research process, allowing the analysis of qualitative data on the web beyond just tactical means of tracking names at the peak of market focus.”"

We’re headed to SIFMA in New York this week and very excited to show this new way of using the web as a research database to our users and prospects.

Missing Piece Pattern

How much information is missing?

Jun 2008/in /by

We’ve been doing studies of the volume of unique information on blogs and some interesting facts are coming out. With the exception of prominant tech blogs like TechCrunch, there’s a general lack of understanding/belief in the investment community about whether blogs matter or not so we’ve set out to quantify how often original and meaningful information is published on a blog first.

The challenge with blogs is that while they are exploding in volume, they are often junky and duplicative. And sometimes they are outright copies, called Splogs, designed solely to generate advertising revenue.

It takes technology, like ours, to make sense of the blog world and to identify both the quality of the source and the frequency of original posts so we can quickly identify when a unique (original) piece of information appears on a blog first (and earliest). We not only identify uniqueness, we normalize it to typical volumes by company so we can identify when a change in volume is occurring and so alert our user that there is a change in blog volume, from quality blogs, about his/her company.

When we do exhaustive analysis of blog content vs. news content, across all news sources we process (many, many thousands and far broader than retail aggregators like Google News), we see typically one new, material post per month for 80% of the large cap companies. So, if you are managing a portfolio of 100 equities, we are talking about 80 unique, meaningful pieces of information per month that you will miss – completely unacceptable for the institutional investor. And using RSS readers won’t cut it because of the level of junk and duplication – you’ll miss the one in a thousand that was different and original.

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