As of today, SeekingAlpha.com is now providing financial content to Yahoo Finance. Just as Newsvine has changed how news is gathered and reported with a community approach, I believe this deal will cause signficant changes in financial analysis; here is why.
Back in January, I wrote a piece titled, "Sounding The Alarm For Publishing's Decline". In that rather gloomy analysis, I predicted that the tyranny of too much, the overwhelming proliferation of blogs, TV channels, Internet media, and advertising, would cause wholesale deflation in the average value of content. I further predicted that this deflation would push branded media companies to enter a land grab for high-quality content to differentiate themselves from the average. I concluded with a prediction that companies like Google and Yahoo would be the most successful aggregators in that land grab.
Today's deal between SeekingAlpha.com, where my writing is regularly syndicated, and Yahoo Finance is just one of the proof points for those predictions. But this deal also illustrates another interesting trend: the rise of open analysis.
What do I mean by open analysis? Here's my definition:
Open analysis is the aggregation, interpretation, and distillation of public data by a community of independent writers.
Open analysis relies upon a large pool of expert analysts who sift and analyze news events, stocks, and strategies, for their own businesses. That pool of content is then itself graded, sorted, and organized into a single, branded site such as SeekingAlpha.com (and, as of today, Yahoo Finance).
This approach contrasts with traditional business coverage that relies on a set of select journalists who can only cover the biggest stories of the day. Because a traditional publication can only afford to support a limited number of journalists, economics forces it to pre-select the topics it considers worthy of analysis. And that pre-selection often misses big opportunities and bigger stories brewing in less covered subjects.
Why is open analysis important? Because it:
- Broadens business coverage. Even the hundreds of reporters at Dow Jones can't possibly cover the thousands of diverse businesses on the NASDAQ, to say nothing of the tens of thousands of startups. Why? Because they can't parlay that coverage into a hit story that will drive revenue to pay their wages. Open analysts have no such constraints. They can choose to write articles for an audience of ten; their only risk is their own time.
- Creates more insights. Open analysts, writing from their own business interactions, often deal with small and unknown companies regularly. These interactions provide new points of view and deeper insights than any press interview could -- and those insights get passed along to readers.
- Fosters honest opinions. Despite Chinese walls, no Wall Street analyst wants to critique the business strategy of a company if the sell-side of their company is trying to find buyers for that company's stock. Yet most open analysts make their living being independent from the big guys and calling shots as they see them. Open analysis gives independent research and opinions equal time with those that have a larger agenda.
- Parallels other social networking businesses. Open source software development has created the GNU Linux operating system and Apache Web server, both of which rival commercial products produced by Microsoft and others. The open encyclopedia, Wikipedia, now has far more articles than the Encyclopedia Britannica and on average has fewer factual errors, despite being developed entirely by volunteers and open development methods. Open analysis applies similar methodology and community to the task of analyzing business. And while we're at the beginning of that process and therefore don't know the results yet, this method is certain to introduce new voices and ideas into mainstream media, where readers can judge its success and failure themselves
So open analysis is important. But there's a dark side too, that I mentioned in the beginning. Open analysis adds to the tyranny of too much content.
In an era of three TV networks, it was easy for 80% of America to choose to watch The Ed Sullivan Show when there were only two other choices. In an era of 250-300 TV channels, we never see 80% audience shares even for the Super Bowl. Too many choices dilute content value.
Ironically, as we've been given more choices on the Internet, the more we've turned to a very small number of content aggregators -- companies like Google and Yahoo -- to overcome the tyranny of too much. It is only as those companies have grown and tackled this new tyranny of too many choices that open analysis has become possible. They have taken the wealth of Internet knowledge, and branded not the content itself, but how you get to it. So while the Internet landscape has been growing, Yahoo and Google have been building superhighways to connect users to that content -- and selecting where the off ramps to the best locations are.
My original article forecast a bleak future for traditional publishing and media. But in any serious decline, a few companies always manage to keep their heads and figure out a way to thrive on change. Yahoo Finance and SeekingAlpha are using today's deal to open up some new territory around open analysis. And while there's still a lot of construction here on the frontier, it feels like it might drive a lot of growth around here too.