For years we have been hearing about disintermediation. Banks were disintermediated in the 1970s by brokers, brokers were disintermediated by online brokers, active funds by passive funds, passive funds by ETFs, and on and on. The banking, brokerage and wealth management worlds have been going through some stage of eating one another's lunch since time began. This is about as shocking as the sun rising in the east.
But while disintermediation has always been a mainstay of the finance business, we are now seeing traditional media crumpling under the weight of the ubiquitous Internet. For example, the Chicago Tribune, The Philadelphia Inquirer/Daily News and the San Francisco Chronicle all either are in or close to bankruptcy.
And it is not only the newspapers -- it's all advertising-driven content. As the economy sours and advertisers are bruised, magazines and broadcast television are also threatened as cable splinters viewership, content is increasingly downloadable, interactive games siphon teens, and technology makes it easier for folks both to work longer and to be more distracted.
So what does the destruction of professional media mean for an industry focused on high-speed, accurate and intelligent information? Do we really only need three newspapers, two market data companies and two broadcast financial news organizations? Is a new media needed as the business model devolves and the content fragments?
The Value of Content
While our industry certainly understands the value of content, we, too, are bombarded by messages, as everyone today can be a publisher. Distribution tools make it easy to get your message to the market, as e-mail, instant messaging, GPS, blogs, YouTube, Facebook and now Twitter can track your every move, thought and burp.
How will this evolution change what you read? How will it change how content is aggregated and delivered, if you will pay for it, and how it is protected? And perhaps most important, how will it change whom you can trust? All of these questions need to be answered before a new business model can be developed.
Certainly content drives media. But how it is monetized drives the quality, its producers and its distributors.
For music and books, we have seen form drive adoption. The iPod and the Kindle are changing the face of music and publishing. Music is downloadable by the drink, and books no longer need to be printed. Gone are records, CDs and tapes that clutter the house, and while books continue to do well, think of students carrying a 10-ounce Kindle instead of a 50-pound backpack -- the impact is sure to be significant.
But what does it all mean to financial markets and the developers of financial content?
The Value of Brand
While content is king, brand is increasingly critical. More and more the consistency, clarity, value, support and brand behind content will dictate what firms buy. As content originates from anywhere and everywhere, we need to know whom to trust and how it is biased.
Delivery and integration will also be key. Our media products say "Bloomberg" and "Thomson Reuters," not "iPod" or "Kindle." But is there a market for a new device, a new distribution channel or a new way to integrate content into our daily workflow -- be it a data feed, an algorithmically digestible news product, a better news browser, or a better way to aggregate and search for content in the deep Web?
While I wish I knew which products will win and who will survive, the answers to these questions are increasingly difficult to discern and surely in flux. Just as the iPod disintermediated the major record labels and the Kindle looks to change publishing, the models for advertising-driven content (i.e., newspapers, magazines and broadcast television) are changing, and the person who can answer "What's next?" will have the keys to launch a very interesting, innovative and rewarding business -- a business with many zeros as part of its bottom line.
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