Jinfo: Business Information Trends: Locking Down and Opening Up Content

Business Information Trends: Locking Down and Opening Up Content
Jinfo Blog

31st July 2007

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Pam Foster The last few months have seen established information companies increasingly offering free quality data. At the same time, changes in the way broker firms are distributing their research is making it more difficult for companies and other organisations to obtain embargoed research. There's also a move towards using machines to extract meaning and sentiment from content. And what about those mergers? Activity in the sector shows no signs of abating.

Business models keep on adapting

There's been a surge of new and free quality data services from respected heavyweight information providers, as companies continue to adopt new business models, which are either heavily supported by advertising, or are used as tasters to persuade users to purchase in- depth premium data to supplement the free data.

Such models are by no means new, but they are indicative of an industry that is increasingly realising that as information becomes more of a commodity, its value is declining. This is resulting in more and more vendors examining how their information is valued and sold.

The Hoover's Index <http://digbig.com/4tgrs> offers a monthly guide to the leading 1,000 public and private companies, non-profits and associations that represent the brand leaders, up-and-comers and 'buzz' creators, driving the US and international economies. The Index, which is a bit like TV rating for companies, is based on a comprehensive collection of search methodologies, including Internet search metrics of business professionals, to reveal monthly spikes in company search activity. These spikes represent a relative ranking of companies generating interest and exposure, independent of pure fiscal performance measured by most business ranking indexes.

The Index is complemented by expanded editorial coverage on the biggest movers and shakers that have had a significant change in their index ranking, and that show the most dynamic momentum in a number of key areas, including market interest, valuation, executive movement and market potential.

Of course, Hoover's is hoping that people will use the Index and then proceed to purchase its in-depth reports. VIP took a quick peek at The Hoover's Index and reported that it 'will become an excellent free resource for discovering which companies are attracting most interest' <http://web.vivavip.com/go/vip/42>.

Two McGraw-Hill companies, Capital IQ and BusinessWeek, have joined forces to launch the Company Insight Center (CIC) <http://investing.businessweek.com/>, described as 'one of the most comprehensive free business and financial information resources on the Internet'. The CIC combines BusinessWeek's editorial content with Capital IQ's global coverage of companies, markets and people. Users can search over 42,000 public and 322,000 private companies worldwide; find stock quotes and charts, news and press releases, financials and key competitors; research compensation figures, biographies, and board relationships of key company executives; and read current global sector and industry news.

VIP's opinion is that the site looks to be very comprehensive and is well worth a visit. <http://web.vivavip.com/go/vip/42>.

By moving to a traditional search engine business model and incorporating relevant advertising, ZoomInfo <http://www.zoominfo.com/> is now able to offer free access to information that was previously available on a subscription basis only. The newly enhanced ZoomInfo.com provides free access to information on millions of companies, people and jobs. It also claims to offer enhanced search options and an integration of Indeed.com's job search. ZoomInfo.com's new search engine crawls millions of corporate websites, press releases, electronic news services, SEC filings and other online sources, and then tags, aggregates and organises the information into profiles, which ZoomInfo claims are optimised for business users searching for information on people, companies, products and services, and industries. Information is available on more than 3.5 million companies, including detailed descriptions, M&A activities, revenues, key employees, competitors and current job openings.

Additionally, ZoomInfo has also launched ZoomExec <http://digbig.com/4tgwq>, which provides access to information on 1.3 million decision makers, including work history, education, contact information, and Web references. For a monthly upgrade fee on ZoomInfo.com, users can use ZoomExec.

More comment on Zoominfo's new services is available in VIP <http://web.vivavip.com/go/vip/41>.

There's an abundance of free quality information for business researchers, but if anyone should think that the free Web now has business news covered, it's time to think again. Research by Outsell on Targeting Power News Users - who they are, what they read and how they use the news <http://digbig.com/4tgwr> - reveals that power news users consume more news and have higher incomes than other news users, and are news sharers. If it does nothing else, this should nail the myth that free news sources threaten priced ones at decision-maker level. Further comment on the Outsell report and other news services is available in VIP <http://web.vivavip.com/go/vip/43>.

Changing landscape for investment research

Changes in the way broker firms are distributing their research is making it more difficult for companies and other organisations to obtain embargoed research. Investment research reports are typically distributed, initially, only to brokerage customers and subscribers, and are embargoed from public release for several weeks. The less expensive embargoed research can be found on many information services offering financial data. Thomson Financial's Investext database is one of the best-known products, offering aftermarket original-format research reports, written by expert analysts at nearly 900 top investment banks, brokerage houses, and research firms.

More and more, however, brokerage firms are moving away from third- party distribution to offering their research directly. Towards the end of last year, for example, Citigroup and Morgan Stanley announced that they were changing their distribution model for embargoed research, and were removing their research from all the Investext collections. More recently, Merrill Lynch has said that it too is limiting access to its investment research as a result of the 'Napsterisation' of its sell-side research.

The reason why broker firms are deciding to offer their research directly is one of economics. According to a Booz Allen Hamilton report <http://digbig.com/4tgwm>, published last year, analysts are feeling the pinch. The report predicts that sell-side research revenues will fall by up to 50% in the next few years.

Not only does this withdrawal directly affect users of the Thomson products, it is also having a knock-on effect on services offered by well known aggregators such as Alacra and OneSource. It seems very likely that this trend - removing research from third-party vendors - will increase, as investment research companies offer their research directly to subscribers.

Purchasing research directly from broker firms isn't an option for the secondary market, ie, those companies, organisations and individuals that rely on obtaining embargoed broker research via their aggregated service provider. Even embargoed broker research is priced highly and the only way many users can afford to buy it is by the page, which is why Thomson and the likes of Alacra and Yahoo! Finance offer per-page pricing. If the trend continues, users will have to adapt by using independent providers rather than relying on large and well-known research suppliers.

More comment on this topic, including feedback from VIP subscribers, is available in VIP <http://web.vivavip.com/go/vip/41> .

Machines, not humans, extract sentiment and meaning

Linguistics applications that can process not only the facts but also the sentiments behind content are becoming big business.

Reuters has expanded its machine-readable news offering to include analysis of news sentiment. The Reuters system can now 'read' news articles and score how positive or negative they are. According to the company, the system will enable customers to analyse news across thousands of companies far more quickly than can be done by humans, enabling trading machines to react to market moving news in milliseconds.

The technology is powered by a linguistics application from Corpora. It works by assigning numerical 'sentiment scores' to words or phrases which are then processed to give an overall positive, neutral or negative score to the company in the news article. These scores can be added together to calculate the prevailing sentiment for a company, a sector, an index, or to assess global market sentiment. The new product will be targeted at the high-growth area of algorithmic trading, and will be connected to the Reuters Market Data System platform. More comment is available in VIP <http://web.vivavip.com/go/vip/42>.

It's crucial to monitor what's being published online about a brand or company. Magpie has launched Brandwatch <http://www.magpie.net/>, which provides details of 'buzz' - who is saying what about a brand and why. The Magpie Web crawler visits these sites daily (sometimes several times a day) and picks up any new pages. Once it has collected the data, Magpie then analyses it to make sense of it. Firstly, each of the new pages found is matched with a list of brands and products. Once it has the matches or mentions, Magpie does some further analysis on the sentiment being expressed, and attempts to understand the topic or theme that is being discussed. As well as sentiment, Brandwatch measures the credibility of a site, which adds value to the overall score. For an in-depth review of Brandwatch see VIP < http://web.vivavip.com/go/vip/44>.

In a similar way, Northern Light's new product, MI Analyst <http://www.northernlight.com/>, offers a search engine that is able to read and analyse the tone of market intelligence reports and articles, in order to tell you what is in them, suggest what business issues are reported on, and direct you to documents that are the most relevant to you, not from a search relevance perspective, but from a meaning perspective. This means that it is possible, for example, to conduct a search on a product line and have the search engine zero in on the reports that describe threats to a company's market share or pricing strategy. Or a search could highlight who the innovative new companies are that might emerge as threats or acquisition opportunities in the future. More comment is available in VIP < http://web.vivavip.com/go/vip/43>.

Such products look set to save research professionals time as they do part of the work for them by identifying key themes, trends, and the sentiment of reports and articles. For a view of what the algorithmic future may hold for humans, try "Ahead of the tape", published in The Economist, 21 June 2007 <http://digbig.com/4tgsg>.

Merger activity shows no signs of abating

According to IRN Research <http://www.irn-research.com>, last year was a record period for M&A activity in the European information industry. Merger activity shows no signs of abating and it looks like 2007 is also going to be a memorable year in the international business information market. The following mergers have recently been covered or are currently being flagged in VIP:

News Corporation's bid for Dow Jones is still dragging on. The Dow Jones' Board of Directors has issued a statement saying that it would be prepared to approve and recommend to the Dow Jones stockholders, including the Bancroft Family stockholders, a merger agreement with the News Corporation. Will Murdoch get his way? He still needs to convince some members of the family who are upset at the idea of The Wall Street Journal falling into his hands
In the meantime, Dow Jones has moved further into Europe by acquiring the privately-held UK-based media company eFinancialNews Holdings for GBP26.1 million. EFinancial News' properties include the weekly newspaper Financial News, the eFinancialNews.com subscription- based website, and Private Equity, a weekly publication focused on the European private equity sector. The company also offers training and events for people in investment banking, asset management, and private equity and trading. The acquisition will provide Dow Jones with a bigger foothold in the European newspaper market, where sales of the print WSJ Europe have fallen
A rumour that was circulating earlier in the year concerning Candover Investments' plan to sell Bureau Van Dijk Electronic Publishing has been resurrected. Reuters is currently reporting that a deal is now in the offing. Reuters claims that BC Partners and Cinven are the only two partners remaining from an initial range of private equity firms and publishers that included Dow Jones and Pearson. The sale is believed to be worth between EUR650 million - EUR700 million
Acquire Media, in partnership with a consortium of Icelandic investors, including Baugur Group, has completed its acquisition of NewsEdge from The Thomson Corporation. Earlier this year, Thomson announced that it was putting NewsEdge up for sale, following a realignment of its Business Intelligence Services. In May this year, Thomson sold Profound to MarketResearch.com
Informa surprised the industry by making a GBP513 million cash bid for Datamonitor. The price astonished some analysts as it reflects more than a 10% premium over the firm's market capitalisation. However, it should be remembered that Datamonitor has recently acquired Ovum and Butler, so the price isn't really that surprising
OneSource's owner infoUSA is to acquire research company Guideline. The total transaction value, including the assumption of debt, will be approximately $41.6 million. Founded in 1969 as FIND/SVP, Guideline services approximately 1,500 corporations in industries such as pharmaceuticals, financial services and consumer package goods. Last year infoUSA acquired Opinion Research Corporation, which has many synergies with Guideline. Together, the two greatly increase infoUSA's market research presence.

Comment on changes in ownership and what this means for information companies and their users will continue to be monitored in forthcoming issues of VIP <http://www.vivaVIP.com>.

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