‘Concentration’ and ease will determine winners and losers in changing news industry

Facing pressure to differentiate their services and add greater value, niche providers of financial news are expanding into new content offerings and delivery mechanisms, focusing on specific areas of coverage, curated content, and simplifying integration, in a bid to keep pace with evolving client requirements and the changing face of the news industry.

“Back at the end of the 1990s, before the internet was widely used as a mechanism for distributing news to the capital markets, news might represent 50% of a terminal’s value,” says Douglas Taylor, founder of douglasbtaylor International Consulting. “Now, news may account for closer to 25% of a terminal’s value, and that value would be made up of contextual and analytical pieces—for example, pre- and post-earnings announcement analysis to prepare you for or help you understand events.”

Event-driven, breaking news would no longer be the biggest contributor to a news feed’s value, Taylor says, since breaking news increasingly surfaces first on social media, which firms—and aggregators of social media—routinely monitor and interpret. For example, news of a plane crash is more likely to be reported first by eyewitnesses on Twitter, which analysts can use to quickly assess the potential impact on the share prices of airplane manufacturers or airlines, before it is verified and reported by traditional news sources.

While major newswire organizations have a wealth of other, non-financial content that firms could potentially find value in, news providers that focus exclusively on financial consumers are broadening their services to offer more value.

For example, Bethesda, Maryland-based MT Newswires has recently developed two news services tailored at specific investment trends: an environmental, social, and governance news add-on developed with Morningstar-owned ESG specialist Sustainalytics, designed to help investors understand ESG ratings and research, and a second service providing coverage of pre-IPO companies, responding to growing interest in gaining exposure to private markets.

MT Newswires previously only focused on publicly traded companies. However, with growing investor interest in private companies one day going public, CEO Brooks McFeely says broadening the company’s focus to private companies that “should be widely known” represents a natural complement to its coverage of publicly traded companies.

“The IPO market is red-hot globally, and SPACs (Special Purpose Acquisition Companies) are also gaining traction outside the US. So it was clear that the investment community needed a solution,” McFeely says.

Now MT Newswires has created a dedicated team of journalists to monitor and report on pre-IPO companies that have filed an SEC S-1 form registering their intent to go public. The vendor will take a traditional approach to reporting on pre-IPO companies, focusing on the same metrics it would provide in stories about public companies, such as revenues, margins, growth, and industry comparables, and—specifically for SPACs—company management and experience, as well as what industry the SPAC will make acquisitions in.

“Management is especially important with SPACs, because you’re betting your money on management’s ability to be successful and identify a viable investment,” McFeely says.

Meanwhile, Alpha News Stream, a recently launched company based just north of San Francisco that provides curated feeds of news headlines via APIs, is expanding the sources from which it captures headlines to serve a broader range of needs of institutional and retail investor clients, fintech providers as the vendor seeks to expand its user base.

Currently, Alpha News Stream captures headlines and links to stories from free news sources that have RSS feeds—personally selected and curated by founder Frank Cioffi, with the results then filtered automatically based on metadata tags applied to the headlines—but this year plans to “flesh out” its coverage by identifying more quality news sources that deliver “editorial diversity,” especially from trade and enthusiast publications that might provide niche and exclusive insight into specific industry sectors.

In addition, the vendor plans to improve its filtering capabilities by tagging each headline with additional categories of metadata—which will make it easier for developers to tailor their news flow even more precisely, to deliver more focused results—in addition to existing tags such as a company’s ticker, sector and sub-sector, as well as whether the full story is free or behind a paywall.

“As we add more data points to each headline, that makes the filters more accurate,” Cioffi says. As well as better serving existing clients, this will allow the vendor to create a new business line, providing custom-curated news feeds based on clients’ specific demands around what sources, keywords, or topics they want included or excluded.

“Frank appreciates the value of curated news versus a ‘fire hose,’ so he works hard to build out those capabilities,” says Taylor, who has served as an advisor to Alpha News Stream for almost two years. Since then, Taylor has assisted with interviewing users, and helping Alpha News Stream’s distribution partner, Xignite, to understand the feed’s strengths and weaknesses.

Xignite founder and CEO Stephane Dubois says that when company first met Cioffi early on in Alpha News Stream’s development, the startup hadn’t even built its API yet. Xignite had offered a news API for some time, but it was never a huge seller, so licensing a legacy news feed from a major newswire didn’t fit the vendor’s model. However, Dubois liked that Cioffi wasn’t trying to integrate every source under the sun, but was deliberately focused on the segments that mattered most to a financial audience.

“As a result, it was very concentrated. So we said, ‘Why don’t you build the API and we’ll put ours on top.’ We did, and it worked well. Then all he had to do was make sure the service could scale and was reliable,” Dubois says.

Using APIs is important because they make it easy to integrate services with other in-house or third-party platforms, adding value to those platforms—especially the latest generation of third-party tools that expect sophisticated services to come with simple integration.

“Probably 60% of our clients are in the traditional fintech or ‘millennial tech’ world, where companies are born in the cloud and used to APIs,” Cioffi says.

“The market is looking for simplicity of integration, as well as reliability, and cloud access, in contrast to legacy feeds,” Dubois says. “Most of our clients operate a wealth management or trading platform that is focused on stock analysis, and they need to drive engagement and keep clients using their service. It’s all about customer engagement. And as Frank has refined his service over time, now it is very valuable for our customers in terms of driving engagement with their clients.”

For example, trading software vendor Sterling Trading Tech offers a consolidated feed of news from a variety of sources pre-integrated in its trading platform.

STT president Jim Nevotti says having an integrated news feed makes it easier for traders to quickly find and respond to news during periods of market volatility, and to apply news directly to their trading workflows.

“The importance of offering a news feed within the trading platform is that users do not need to leave the platform to view news, which can be essential during times of extreme volatility,” Nevotti says. “Utilizing the news feed within STT platforms allows traders to link news about a particular stock symbol to their charts and order entry windows, meaning the stock symbol from the news article will automatically populate in the linked window(s). Linking news to trading windows allows users to quickly take advantage of news-driven trading opportunities.”

Beyond trading users, Taylor says Alpha News Stream’s focus on curated and customized news feeds should appeal to any budget-conscious consumers who need a tool to help them sort through headlines for relevant items. Alpha News Stream’s detailed tagging allows users to make API calls against live and historical news headlines.

STT’s integrated news feed also includes a search and filter function so users can easily find news relating to specific stocks.

“News is easily available in countless forms, but when every second matters, having a cost-effective consolidated feed within your trading platform is a necessity,” Nevotti says.