In the new world data economy, if you snooze you lose
It’s amazing, given the scale of the competition, that a relatively small firm like Netflix has managed to achieve almost world domination in the entertainment provision business. When comparing Netflix to the leading media giants it just goes to show that size doesn’t matter anymore. Apparently, they employ around 50,000 people worldwide and boast a global subscriber list of some 140 million viewers. Amazon has circa 500,000 employees, although not all of them will be focussed on the content side of the business, with Apple hovering around the 135,000 mark.
However, all three companies share common traits; ongoing and significant investment in the latest technologies and a goal of creating high quality, unique content which can be delivered directly to the consumer on their device of choice at a compelling price point. By challenging the cosy monopoly once enjoyed by the established media brands, the likes of Netflix, Amazon and Apple have become a complete pain in the backside. The old-world media tycoons were caught ‘sleeping on the job’ and are now watching lucrative market share being ferociously gobbled up by these disruptive upstarts. The saying, ‘if you snooze you lose’ couldn’t be more pertinent.
The same is true within financial services. The old adage that no one ever got fired for buying IBM or Reuters has an increasingly hollow ring as the kudos surrounding the bigger brands becomes less relevant, particularly in the data driven economy. Just like within the entertainment business, agility, flexibility and a commercial model that can be tailored to suit the requirements of both the content creators and consumers is the only way forward. With virtually every other industry in the world tearing up the rule book by embracing new technologies and reinventing the way they operate; one has to ask why aren’t we seeing the same transformation intensity across the financial firms? Is it fear of change, lack of funding, the challenge of unravelling complex commercial models or just plain inertia?
However, it does appear that consumer style behaviour is starting to permeate it’s way through the financial services industry, driving change at a pace not seen for quite some time. And it’s about time too. Within the market and alternative data arena, the millennium workforce probably wouldn’t even recognise the names of the established data providers in this space, let alone understand the outdated approach to proprietary terminal delivered data. Whether one is a Netflix, Amazon or Apple subscriber, most people won’t know or care where the content comes from, be it a David or Goliath brand, to them it’s irrelevant. Yes, they will question price and the licensing model for the underlying content, but perhaps this is because market data sources are somewhat different from music and film. Film and music content has an immutable quality to it, preserved and bound by its origins and the creator, whereas market data on the other hand has a metamorphic quality to it and can often be enriched with the addition of other ingredients. However, the creative quality of this data has a dark side to it in that it can be changed from source so as to mask its origins, bypassing IP and losing its providence.
These days financial data is far more valuable than oil and is driving the global economy. You have to be in it to win it and mining for this invaluable commodity should be seamless and not cost a fortune to acquire. As competition hots up and new players emerge, on-demand access and smarter use of modern technologies will be the major differentiators. Whilst technology is undoubtedly a liberating force for change and brings with it many benefits, it’s not always completely straightforward. Within the entertainment business, per user access with individual accounts and unique IDs is an ideal scenario for the retail model but one has to question if this approach can be adapted to suit the needs of a corporate entity who might want to subscribe to content and then be able to share it with hundreds of users. This needs to be addressed but one thing is for sure once the content owners and content consumers start to force an issue, solutions are generally found.
It will be fascinating to see how the established data providers respond to this changing landscape. Will they adapt in order to survive and prosper? Or, just like the old-world media tycoons, will they also be left watching from the sidelines as their once highly lucrative market share is decimated by a new breed of smaller, agile firms who are more in tune with the needs of the modern user? Only time will tell.