DEATH OF A MARKET DATA VENDOR: DATA BUSINESSES DON’T, CAN’T, WON’T STAND STILL

Ten Years Too Late

On 22/04/2021 Waters Technology reported that Money.Net had filed for Chapter 7 protection in the US. It is always sad to write about the demise of a business, especially when investors and founders find faith replaced by discord, however, there are always lessons to be learnt.

As a consultant I have dealt with many market data vendors of all types, big, small, strange, from right around the world, yet I have never come across Money.Net at a client or in person, though less than 4 weeks ago speaking to a client I suggested they include them on a short list of potentials to save money by cancelling Refinitiv Eikons terminals. Not good timing, so while I am unfamiliar with the company directly, except through research, and Money.Net’s prodigious publicity output, I am all too familiar with their market space.

Founded by former Bloomberg executive Morgan Downey in 2014, Money.Net set out to be a ‘Bloomberg terminal killer’, recently charging US$185 per access per month compared to US$2,000 for its ubiquitous nemesis.

So what could possibly go wrong?

  1. Certainly there would have been the siren calls of many businesses whispering “Bloomberg is far too expensive, build it and we will come”, only to find non-actions speak louder than words and pays significantly less. Money.Net initially launched with 10,000 subscribers with a dream for millions (NY Post) that sadly never materialised and in retrospect could not.
  2. By 2014 the professional terminal future business could be seen as finite.
  3. The reality is that there is way more to market data than terminals and that the market for data has expanded far beyond a simplistic PC on a desk sitting in a bank.
  4. Bloomberg is too entrenched. In a US$37 Billion vendor market, Bloomberg’s terminal revenues of around US$8 Billion makes up a large percentage but the new revenue drivers are now datafeeds, analytics, benchmarks and Data IP.

Lessons in Hindsight

What should other market data vendors and their data suppliers take away from the Money.Net experience?

• By 2014 it was simply too late to enter the professional market data terminal market where Bloomberg was taking a greater share of a shrinking pie and had long since eclipsed Refinitiv/Thomson Reuters, especially in equities and exchange traded markets.

The latter’s terminal woes ought to have been salutary warning

Bloomberg’s universe of linked users within a closed environment has proven notoriously difficult to break into, and the COVID impact of working from home could well have strengthened this network.

Nothing new here

Money.Net is a one trick pony selling a single product into the professional terminal market space and not moving beyond to offer anything unique in content terms, or data IP.

Other market data vendors offer more than just terminals

• Its only differentiator is price, whilst attractive to a professional market that did not subscribe to it, just too much for a cost sensitive retail market that Money.Net had little interest in.

It is not about price, but perceived necessity

• Ignored the rapidly expanding datafeed space for enterprise wide usage, which over the last decade also saw a significant shift from traditional phone broking to Direct Market Access, DMA, which banks love because it reduces their dealing room payroll, i.e. less terminals, and need for expensive office space.

Need to know the direction your market is heading

•Lacked trading connectivity to drive business towards the terminals like a Bloomberg, Fidessa, IRESS, Refinitiv, or Trading Technologies.

Data in itself has a certain value, and that value increases as it gets put to use

• The professional market is only one segment, maybe the highest margin segment, but saturated, the opportunities offered by mass media, retail and wealth management market are still to be exploited.

New markets = new revenue streams + new pricing models

Intriguingly, Sentieo has more recently taken a Cloud based delivery approach with research heavy content aimed at reducing asset managers costs by Bloomberg displacement. Will they succeed? 

Keiren Harris 26/04/2021

www.datacompliancellc.com

Please email knharris@marketdata.guru for a pdf or information about out consulting services

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