Max Bowie: Data Romance Isn’t Dead; It’s Just in an Open Relationship

Traditionally, content partnerships went like this: data vendors and content producers entered into monogamous relationships—sometimes serial monogamy when one party walks out or goes bust. For example, Telerate made its name on exclusive access to treasury bond data, while Reuters was able to draw in clients with its exclusive access to bond trading platform Tradeweb’s fixed-income data. The vendor gets an in-demand dataset that it doesn’t already have, while the data source obtains much broader distribution over the vendor’s network to a client base that it would not have been able to achieve alone.

Waters stablemate Inside Market Data featured several examples of these content partnerships: low-cost terminal provider Money.Net adding content from MT Newswires to its workstation; sentiment analysis provider RavenPack integrating content from news and trade ideas provider Benzinga; and Wall Street Horizon capturing drug approval events dates from Informa subsidiary BioMedTracker.

Open Relationships 

Now, however, data sources and aggregators are saying “I do,” to a more open relationship style; one that invites—and positively encourages—liaisons with multiple partners. Take network provider Colt’s new plans to create an ecosystem of managed services, leveraging its technology infrastructure and connectivity to data sources around the world. They call it an “ecosystem” because the actions of one party can have knock-on benefits with another, and because the parties rely on one another for their success.

Adoption of this approach is being driven in part by the need to compete as the vendor marketplace has become more consolidated and concentrated, and in part by startups and the developers of niche services needing to be able to offer mainstream and commoditized datasets as part of their services, to present their data in a usable context.

The more clients you can provide access to, the more attractive a channel your platform becomes.

However, similar approaches are being used by larger vendors to enrich their broad services with valuable, niche content. In recent years, the biggest data vendors began offering “app store” models of add-on content and tools that might be too niche for a big vendor to develop, or which might simply take too long to develop in-house. In Colt’s case, the network provider’s plan is to create an ecosystem of managed services from third-party developers that leverage its infrastructure and data connectivity, giving Colt a suite of services that it can offer clients, without ever having to develop any of those services itself.

Industry observers often ask how any vendor can ever hope to compete against companies with the size and breadth of Thomson Reuters and especially Bloomberg, which grew almost entirely organically compared to the acquisition strategies pursued over the years by Thomson Reuters and others such as Interactive Data or Markit. But today, vendors don’t need to grow their own business to that size and scope: they merely need to find a raft of willing vendors that need a delivery platform with access to a client base. Smartphone providers don’t build many apps, yet anyone can access a plethora of content and capabilities from their Apple or Android devices because the phones are a direct channel to potential customers.

The more clients you can provide access to, the more attractive a channel your platform becomes, and more third-party vendors will be willing to make their content available via your platform. Take, for example, startup Symphony Communication Services, the messaging platform backed by a consortium of Wall Street firms led by Goldman Sachs. 

Symphony has already attracted Selerity, McGraw-Hill Financial and Dow Jones to its ecosystem of third-party content providers. For them, it’s the prospect of gaining direct access to potential paying customers at the firms backing Symphony, as well as its clients—which numbered 45,000 in November, according to CEO David Gurle, who said 40 percent of these are at buy-side firms.

And though originally hailed as a Bloomberg-killer, Gurle has always publicly stated that he has no plans to compete with Bloomberg. After all, why bother? Use ecosystem technology right, and in theory, you could be bigger than Bloomberg.