Wednesday, April 26, 2006

Reuters vs. Bloomberg: What's the Right Battle to Measure?

The Times Online notes the latest chapter in the perennial battle between financial content rivals Reuters and Bloomberg in their efforts to gain market share supremacy through their services to the global securities industry. According to The Times, Reuters is claiming through its slim eking out of another one percent of market share that its 27 percent slice of the pie now places it atop Bloomberg for the first time in a decade. As noted by The Times, though, this comes in part due to the absorption of user positions gained via the Reuters acquisition of Telerate last year - an indication of just how much potential redundancy there is in the financial content game - and a more accurate assessment of how data feeds contribute to the Reuters market share. So although Reuters has much to cheer about in terms of its efforts to revitalize and consolidate its product line, the gains in market share are hardly to be called organic at this point.

The broader concern, though, is whether this annual exercise in "mine is bigger than yours" is really telling Reuters shareholders what they need to know about their market position. Bloomberg is certainly facing major challenges as it tries to roll out expanded datafeed services and to fend off vendors nibbling away at their messaging services that are at the heart of their platform's value as a channel for deal-making; their monolithic pricing also faces stiffer opposition from clients as "The" Bloomberg becomes less of a desktop presence. All good news for the crew over in Canary Wharf, to be sure. But the broader issue of market share is not how much Reuters is slicing out of Bloomberg but rather the death by a thousand cuts that it is suffering from niche players, networks and content distributors more willing to bypass Reuters and Bloomberg services altogether to create a new fabric for financial content services.

A new generation of content services is emerging in financial markets thanks to the rise of increasingly independent content creators and network infrastructure and standards that eliminate much of the historical need for content aggregators to manage real-time market data. In this new era of financial content value-add service providers such as Reuters and Bloomberg are still critical components but they can hardly call the tune for the dance as they did when their global technology services were the only cost-effective way to glue financial content together effectively. We'll continue to see the annual Reuters market share studies come out, no doubt, but it would be refreshing to see them consider some of the emerging factors in the marketplace for financial content services more seriously. Otherwise these stats will have all of the heart-pounding relevance of major television network rankings in an era of online access.
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