It’s common for vendors to partner on content, say to obtain a dataset they don’t have in return for giving their partner broader distribution over their platform. But in recent years, as the vendor marketplace has become more consolidated and concentrated, the need to compete is forcing some players to consider a different kind of content-sharing model: the ecosystem, or app store approach.
This issue features several content partnerships, from low-cost terminal provider Money.Net adding content from MT Newswires to its workstation, and sentiment analysis provider RavenPack integrating content from news and trade ideas provider Benzinga, to Wall Street Horizon capturing drug approval events dates from Informa subsidiary BioMedTracker.
But two stories that caught my eye were the details of Deutsche Borse’s new reporting hub, which will offer a suite of in house-developed data and reporting services to support compliance with MiFID 2, and network provider Colt’s plan to create an ecosystem of managed services, leveraging third-party developers to provide hosted applications 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.
When analyzing the gap between Bloomberg and Thomson Reuters and the rest of the market, industry observers often ask, how can any vendor ever hope to replicate the size and scope of those giants—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 in today’s market, you don’t need to grow your own business to that size and scope: You merely need to find a raft of vendors that perform each function that you need, and find a way to provide access to them. 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 dominant smartphones are a direct channel to potential customers.
And it’s those potential customers—and your ability to provide access to them—that makes third-party vendors willing to make their content available via your platform. The more clients you can provide access to, the more attractive a channel you become. Take Symphony Communication Services, the startup messaging platform backed by a consortium of Wall Street firms led by Goldman Sachs, which 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 access to potential paying customers at Symphony’s backers and clients—which numbered 45,000 in November, according to chief executive David Gurle, who said 40 percent of these are at buy-side firms.
If you could put your products in front of that many potential clients so easily, wouldn’t you? And if you had that many clients and wanted to protect that base by making your platform more “sticky” by adding access to content and tools that you can’t or won’t build yourself, wouldn’t you also do that?
For now, the app store or ecosystem model seems the way to go if you want to have the capabilities of a major vendor without the cost and time required to assemble them yourself. However, with so few barriers to entry, how do you differentiate yourself from everyone else offering access to the same third parties on their own app store? That’s where your USP comes in. Is your proprietary content or service enough of a draw that people can’t afford to leave your application, and need to consume other content through it, rather than exiting it to access that content via other vendors? Let’s not forget that Bloomberg and Markit both started out serving niche markets but proved so invaluable that they were able to grow or buy their way into the mainstream while others found themselves mired in less attractive niches or forever battling on price with full-service vendors.
Anthony and James take a look at the interdealer broker space and quickly hit on whether or not bitcoin ETFs are to come in the near future.Subscribe to Weekly Wrap emails