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There was a time when daily prices for US Treasuries were hand-written on two or three sheets of paper from a yellow legal-pad and run by messenger to the Associated Press and Dow Jones. The AP needed the prices early enough to send to their members and Dow Jones was under pressure to make the deadline for the Wall Street Journal and their newswire. The messenger couldn’t wait for the closing prices. They had deadlines. No. A clerk would scribble the list furiously and send it off – smudges and all.

Bloomberg called it the modern day pony express. It wasn’t far off. Some poor runner would bolt into the respective newsrooms, hand over a precious few sheets of paper, and watch the operator enter the prices into their system. But in 1987, Bloomberg would change that.

Bloomberg’s terminals had found a quiet niche in the aggregation and analysis of Treasury pricing data. It had so much data that it had beat the Fed. Bloomberg had better, more up to date data than the Federal Reserve. It’s prices were more reliable than the Federal Reserve. What followed was perhaps one of the finest coups of earned media in history.

Rather than rely on legal pads and couriers, why not wires? Why not a Bloomberg terminal? The AP and Dow Jones each took at terminal. They got better data. They got closing prices. And each day, they ran a full page of Treasury prices, courtesy of the terminal and credited to Bloomberg.

Lesson learned: if you want media, earn it.

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From our first day in business, Bloomberg was making news, with numbers
Mike Bloomberg and a modest ambition

While most news organizations today are listing in the high seas of the digital world, Bloomberg News has proven to be an adventurous and successful competitor. They started with a key asset, the Bloomberg terminal, and a gaping niche – business journalism. As it has grown, it’s become an instrument of recognition for the entire Bloomberg enterprise, a sales tool, and a critical hedge against competition.

Bloomberg seems to have demonstrated that it’s possible to make money from reporting the news. It’s a fierce competitor to the Wall Street Journal, Reuters and other business reporting. It runs a thriving business. But Bloomberg isn’t interested in selling news feeds. Indeed, much of it is given away for free on the web portal. Bloomberg gives it away because it wants to eliminate the profit margin in delivering the news, so it can starve competitors and enhance the value of the terminal. It wants to make the news a commodity.

Bloomberg’s entry into journalism would push traditional news sources to improve their coverage and respond to Bloomberg News. The underlying dataset in the Bloomberg platform gave them a distinct informational advantage over the competition. The information and analytics on financial instruments was just not widely available and not something on which traditional news sources had focused. As Bloomberg says, they were already in the news business – just with numbers. The terminal had become, for example, the de facto source of pricing for US Treasuries and replaced the Federal Reserve’s daily pricing sheet with a Bloomberg terminal at the offices of the AP. Each day, when the AP published the closing Treasury prices, sourced and attributed to Bloomberg, they were effectively running a news story, or an advertisement – take your pick. This unique resource separated them from the competition, gave them pricing power and promoted the terminal – all in one stroke.

Business journalism at the time also lacked the luster of reporting on riots, elections, and wars. Journalism schools didn’t teach business and finance reporting. The mainstream, national press would gloss over financial markets on the way toward bigger stories. As Bloomberg remarks, “Even at the Wall Street Journal, it was rare to find top editors who included among their accomplishments daily stints covering stocks and bonds.” Bloomberg News would enter a seemingly uncontested field. In 1988, Bloomberg marshalled Matt Winkler to enter the fray.

Bloomberg News also provided a much-needed hedge against the possibility of losing key news-suppliers, such as Dow Jones. Bloomberg had already eaten into the Dow Jones Telerate business. While Telerate presented static images of Treasury prices, Bloomberg users were presented with live data on which they could run analytics. When Dow Jones did respond, they pulled the plug on their feeds to Bloomberg, expecting that Bloomberg customers would come back to Telerate and abandon the Bloomberg platform. It turned out that clients found Bloomberg News sufficient: at worst, good enough to get the job done and, at best, invaluable in combination with the underlying dataset. Dow Jones eventually relented six months later and resumed delivering their feeds through the Bloomberg platform. Telerate would later be shut down.

The rapidly growing news enterprise advanced and protected the Bloomberg franchise. It spread the reputation and influence of the Bloomberg organization, and this sold more Bloombergs. More Bloombergs funded more news, and Bloomberg news became increasingly visible beyond the terminal. It worked its way into radio and television first. Then it began traditional print syndication, and syndication brought Bloomberg’s business reporting to the New York Times, among others. With these outlets, the Bloomberg brand became more prominent, more potent. It sold more Bloombergs.

The news division at Bloomberg was never designed to sell the news. It was designed to sell Bloombergs. It started with a market niche and a key asset – business reporting and the terminal. But it rapidly evolved into an important hedge against the risk of key suppliers, such as Dow Jones, cutting off Bloomberg as a customer. When Dow Jones dared to do so, Bloomberg had won. Bloomberg news was good enough to be a substitute or an improvement on most serious business and financial reporting from Reuters, the Wall Street Journal, the FT, the New York Times, and anyone else who might have contact with their customers. Business and financial news reporting, at first an area of distinction for Bloomberg, had become a commodity.

Because Bloomberg doesn’t need to sell the news, those that do are at a disadvantage. They rely on profit margins from distribution, sales and subscriptions to the news. Bloomberg doesn’t. Bloomberg makes money through subscriptions, but they’re subscriptions to the terminal. The news is just another commodity, and it suits Bloomberg just fine to see it have commodity-margins. It just makes the terminal more valuable.

When I was an analyst, I used build my own network. I’d spot names in magazines where someone was quoted about a company and call them — that’s part of doing fundamental research.

Dan Chung, CEO, Fred Alger, remarking on how, back in his day, they didn’t rely on expert networks or outside consultants. No, they called people quoted in trade magazines themselves, asked all those probing questions, and walked uphill, in the snow, to school, both ways. Chung is the son-in-law of the gentleman behind the eponymous firm: via Marketwatch

Steve Cohen has had among the highest returns in the industry….Insiders in the business for a long time suspected that his special sources amounted to privileged information. The debate amongst insiders was, “Was the special information on the right side of legality or the wrong side?” But I think it was a pretty common view that it was close to the edge….

When you have somebody who doesn’t appear to have that readily identifiable edge, who nonetheless makes much higher returns than other people, you wonder.

Sebastian Mallaby, author of More Money Than God. He went on to share that “in the past, successful investors constructed their own expert networks,” just like Dan Chung, which he attributed to the master networking skills of those such as Julian Robertson, when who you knew was the currency, and those that were known were former executives and outside of the circle of those normally considered insiders. So if what Julian did was ok, why won’t Mallaby afford Steve Cohen the same safe-harbor? Is it any different than a service which will connect anyone else to former executives and others outside of the circle of those normally considered insiders? After all, it’s hard to see a difference in kind between what Julian and Steve are described as having done. The interview merely insinuates. It does not specify: via LA Times update – this was also posted as a comment on the LA Times blog-piece, but they seem to have removed it.

The McClellans might have thought that they could conceal their illegal scheme by having close relatives make illegal trades offshore. They were wrong.

Robert S. Khuzami, enforcement director for the SEC, commenting on a specific insider trading scandal involving the general misbehavior of consultants at Deloitte who misappropriated and tipped material non-public information to trade for their and their relatives benefit: via NYT

The facts do not owe their origin to an act of authorship.
Justice Sandra Day O’Connor (Feist v Rural Telephone, 1991)

But does the hunt, the research, the interviews? Or perhaps its organization into a story for the dissemination to a reading public? And can these be made exclusive? These questions have bubbled up as the newspaper industry wrestles with what the internet is doing to their business.

The Cleveland Plain Dealer’s Connie Schultz has argued fervently about the rights of authors and their newspapers to capitalize on their product. She came out against “the aggregators” as though they were a malfeasant band of marauders bent on destroying the institution of journalism and by extension democracy. Citing Daniel and David Marburger, she claimed, “parasitic aggregators reprint or rewrite newspaper stories, making the originator redundant and drawing ad revenue away from newspapers at rates the publishers can’t match.”

James Moroney, publisher and CEO of the Dallas Morning News takes a similar approach. He invokes the ‘hot news’ doctrine and asks congress to apply it to the internet. Says Moroney, “perhaps it is time for congress to establish a principle of ‘consent for content’ for breaking news–similar to the ‘hot news’ doctrine recognized by a few states.”

Copyright law sufficed to protect the written word, fixed in a medium, but these claims demand remedy for a larger issue. They aim to protect the investment required to collect the facts and write a story, when it might easily be re-written and distributed by another. But they ask for monopoly control of the story itself — indeed, ownership of the collection of facts and ideas that might make up a breaking story on government corruption, for example. Justice O’Connor, however, finishes with little support for these views: “The distinction is between one of creation and one of discovery.” And discovery is not subject to property rights.

The viewpoints of Moroney, Schultz and the Marburgers have their origin in the nature of print. Print leads to a confusion between controlling the medium and controlling the content – that is, the mistaken idea that breaking a story equates to owning it. The Supreme Court compounded the confusion in 1918 with its decision to augment copyright protection with “quasi-property rights” for the facts and events that make up a news story — the hot news doctrine. It was a legal solution for the disruptive impact of a new technology: newswires. News was paper, and these rights formalized the metaphor. They derived from the physical qualities of the paper, attached property rights to the news and would provide a legal basis from which to make, in this case, the AP’s news exclusive. Theoretically, the AP could then exclude people from learning of it or reprinting it without permission. They wouldn’t just report the news, they would own the news. Read the rest of this entry »

Doc Searls frames danah boyd’s recent talk on privacy at SXSW as a loss of control. The internet’s applications and engagement with society have resulted in a loss of control over one’s privacy. But this is misleading. It suggests that one might have had control in a more personal setting – that an in-person meeting might charter one’s ability to shut another up, impounding the information forever. Did we ever have that level of control? No.

But Searls has tapped into something. It stems from a fundamental disquiet around the social contract that Eben Moglen describes in Freedom in the Cloud with Facebook, among other social networks: “I will give you free web hosting and some PHP doodads and you get spying for free all the time.” He’s tapped into the disquiet around actual control over the architecture of social interactions. It’s control, not the lack thereof, that is startling.

The architecture of social interactions, to be sure, is a loaded phrase. For our purposes, it can be simplified and thought of along three dimensions. First, it reflects the conditions under which one might share information. One might share a status update with Friends on Facebook or tell a colleague of a weekend about town over coffee. Second, it speaks to how another might absorb the information – ranging from listening carefully to surveillance of Friend’s wall on Facebook. Third, it is shaped by how people think about their audience. Are these systems for addressing individuals or groups? A person or a public? boyd’s talk glances upon this, but does not tease out its underlying influence on sharing and surveying.

It would be wrong to say that we ever fully controlled sharing or surveillance in any of the real world interactions of which boyd speaks wistfully. These encapsulate a flexible, mutable set of considerations and circumstances that one might make or be subject to with each interaction. Should I tell so and so? Is this the right place for it? Will someone overhear? What will they do with the information once they have it? We can edit ourselves, choose the conditions of how we share information. But we have to make compromises. We can make judgments around the setting and the person. We might even influence how they treat the information. But we don’t control what they do with that information. We may be careful, but we don’t really control any of it.

Social networks and interactions on the internet, however, introduce actual control over how we share with and survey one another. Control amounts to the easy ability to publicize what boyd calls personally identifiable information and personally embarrassing information. There are two parts to this: the ability to share more effectively and pervasively; and the ability to listen and survey more broadly. It’s not that we are giving up control, as boyd says. We didn’t have it in the first place. It’s that we’re seeing it for the first time. Control is over publicity, not privacy, and it sits with whomever or whatever has the information.

A discrete email might feel selective and appear to impound the information forever, but it can just as easily be circulated to another and another and another. That email or Facebook photo or blog post, unlike hearsay and the slow erosion from memory of a coffee-shop confession with a close acquaintance, can circulate with alarming ease and absolute fidelity to the initial confession. Indeed, systems on the internet don’t so much impart control over privacy, but over publicity. In a matter of keystrokes, damaging, embarrassing or otherwise hilarious information can be shared, surveyed, and shared again – increasingly open to the deliberate or serendipitous surveillance of many more people than might otherwise be intended. Each digital footprint stirs with potential energy.

The rising claim that privacy is dead, boyd suggests, imbues these systems with a prejudice for publicity. Fulfilling Moglen’s social contract, social networks design their systems to increase the velocity of sharing and improve the powers of surveillance. The obvious example comprises the PHP doodads from Moglen’s quote, but the counterpart is how social networks change how people present themselves and the information they share. It’s a change that shifts participation toward publicity.

Social networks orient one’s sharing and surveying toward groups, not individuals. The orientation levels one’s relationships according to various categories of access. One group can see only your public profile. Another, your entire wall and collection of embarrassing photos. But everyone is addressed in the same way through status updates, postings: each according to their clearance, and without regard for who they are individually. A user wrestles with the idea of the public, not the idea of a friendship.

boyd characterizes Twitter accordingly and starts to draw a distinction from Facebook. She suggests Twitter “evolved to be primarily about those seeking an audience and those seeking to follow or contribute to a public in some way.” Users invent a persona and participate in a system designed for publicity. She argues that Facebook, however, is “still fundamentally about communicating with a specific set of people who are, by and large, your friends.” But suburban Facebook’s engineering, through likespostszombies, encourages addressing a group, a public, not an individual — even before the recent changes in privacy policies that accidentally may have led to some over-sharing by unsuspecting users.

Sharing with a public, surveying a public – these activities engage the public. They not only depend on the public, they drive publicity. boyd warns us with a distinction, “there’s a big difference between something being publicly available and being publicized.” But the shift toward control in the architecture of social interactions erases the difference between publicly available information and publicized information. Public information is publicized information.

The shift that we’re observing is one toward greater control, not less. Enhancements to one’s ability to share and survey information introduce massively distributed control and gear the engines of publicity. With each individual arranged as a node in the network, equipped to survey and share as they wish, oriented to an ever changing public, we are seeing a shift toward control, not away. And with it, the realization that more control means more publicity.

Each firm has lost business in, and has reduced investment in and output of United States equity research as a result of the free riding by Fly and other services. This is a bread-and-butter case of hot-news appropriation.

Benjamin Marks to US District Judge Denise Cote: via Bloomberg.

The case of Barclays v. Theflyonthewall.com provides a recent test of the hot news doctrine in the investment research industry. Claims that Fly on the Wall was just reporting the news from the free marketplace of ideas would not protect them. Instead, Judge Denise Cote’s findings of facts and conclusions of law following the March 8-11 bench trial would institute an injunction that embargoed recent headlines and materials from the plaintiffs from publication by Fly on the Wall. The news of her decision has lathered the industry into froth over whether Thomson/Reuters and Bloomberg may be next. But its application may be greater than that. Though the opinion ruled in an industry that is traditionally seen as different than the news industry – investment research – can its application in the broader news industry be far behind? Read the rest of this entry »

this push towards things becoming more open is probably the most powerful and transformative social change… We may be the company that really leads this movement….It’s not clear that anyone else is going to manage it correctly.

Mark Zuckerberg, outlining the steady erosion of the concept of privacy in our time: WSJ

Jessica Vascellaro’s cover-story in the WSJ seats Facebook in a tension between going public and Zuckerberg’s remarkable ability to “delay gratification” and take a seat in “a long queue of tech barons with grand ambitions.” The real story, however, may be in her subtle jibes at one who might become “world’s richest twenty-something.” More than a thinly veiled personal attack, Vascellaro may be hinting at something more substantial: that the question of privacy in the 21st century will be meaningfully shaped by an ambiguous and controlling figure. Read the rest of this entry »

[The portals] have made assumptions about using our content which are wrong, and we are prepared to demand appropriate compensation.

—Tom Curley, President and CEO of the AP, which now comprises 1400 member newspapers, and former publisher of Gannett’s USA Today: via WSJ

This is about what content providers must do in the digital era. That starts with doing a much better job of protecting the content we create

Tom Curley, AP: via FT

Thomson Reuters and other news agencies have begun working with third-party content identification firms such as Attributor to track the flow of their material across blogs, websites and aggregators. [FT] Any time you talk about a tracking system, the thrust of [the commentary] is about enforcing copyright. But what we hope is the outcome out of this is the ability to enable more licensed uses of  content. We want to keep the content open, we don’t want to keep it behind firewalls.

Jim Kennedy, the AP’s VP of strategic planning: All Things D

What we are building here is a way for good journalism to survive and thrive. The AP news registry will allow our industry to protect its content online, and will assure that we can continue to provide original, independent and authoritative journalism at a time when the world needs it more than ever.

Dean Singleton, chairman of the AP Board of Directors and vice chairman and CEO of Media News Group Inc, Fair Syndication Consortium and Attributor: via World Editors Forum

Nice container. Because they need it to protect such impressive stories as this.

[The portals] have made assumptions about using our content which are wrong, and we are prepared to demand appropriate compensation.
WSJ: Tom Curley, President and CEO of the AP, which now comprises 1400 member newspapers, and former publisher of Gannett’s USA Today

This is about what content providers must do in the digital era. That starts with doing a much better job of protecting the content we create
FT: Tom Curley.

AP, Thomson Reuters and other news agencies have begun working with third-party content identification firms such as Attributor to track the flow of their material across blogs, websites and aggregators. [FT]

Any time you talk about a tracking system, the thrust of [the commentary] is about enforcing copyright. But what we hope is the outcome out of this is the ability to enable more licensed uses of content. We want to keep the content open, we don’t want to keep it behind firewalls.
All Things D: Jim Kennedy, the AP’s VP of strategic planning

What we are building here is a way for good journalism to survive and thrive. The AP news registry will allow our industry to protect its content online, and will assure that we can continue to provide original, independent and authoritative journalism at a time when the world needs it more than ever.
World Editors Forum Dean Singleton, chairman of the AP Board of Directors and vice chairman and CEO of MediaNews Group Inc

Fair Syndication Consortium and Attributor

A friend recently directed me to an argument that flared up between Graham Hill and Doc Searls on the subject of Vendor Relationship Management (VRM) and Doc Searls’ VRM Project. Graham’s critique is essentially existential. He claims that VRM can’t exist, and if it does exist, it’s irrelevant and a giant step back for commerce and the consumer.

Graham makes a compelling case by dint of its organization. He outlines a dichotomy between CRM and VRM. Either customers own the data or companies own the data. If customers own the data, it would be subject to four claims. And he strings up VRM as a straw man to be invariably dismissed. Unfortunately, the dichotomy is false and the claims don’t match subject — VRM.

But that’s not so much the issue. Instead, it reveals two implicit claims: consumers have no interest in their consumption; consumers and their vendors would not benefit from the tools to organize and act on that interest.

Let’s start with the dichotomy – the existential question. Is VRM impossible?

Rather than companies owning huge databases of customer transaction data which they can mine for their own advantage, customers should take control of their own transaction data and selectively release it to companies when they want something from them.

For a customer to take control of their own transaction data doesn’t require companies to give up control. Isn’t this what ERP systems do when they manage and help negotiate with suppliers? That relieves us of the either/or. Lo — VRM can exist, and it can exist if we have the tools to harvest transaction data, understand it and act on it.

Moving to the fallacies. First, the data is already out there. I receive credit card statements, mobile phone bills, and other statements that give me the data. Second, of course people want control of the marketing sent to them. Does that mean that they don’t want the transaction data? No. Third and fourth, these arguments could be parsed as non sequiturs, bundled in a false dichotomy and finished by begging the question.

Starting with the position that VRM can’t exist, Graham proceeds to say, if it were to exist, it wouldn’t have access to data. If it did have access to data, people wouldn’t want it. And if VRM cleared these hurdles, it would do nothing less than attempt to supplant the free market system by way of managed markets and the principled dissolution of Apple as we know it.

The distillation proves extreme, but it’s revealing. It uncovers the two claims driving Graham’s post: consumers have no interest in their consumption; consumers and their vendors would not benefit from the tools to organize and act on that interest. VRM is a bet that these are both false. If they are, there’s interest and an economy, and that could be a business.

First, consumption. People are passionate, particular, and opinionated about the stuff they buy. We call those people enthusiasts, and we can find them in the Makers Mark Ambassadors program, Ducati owner groups, and even fanboy sites for the media they consume. They might obsess over any one step in the process: finding, acquiring, managing or consuming — or, all of the above. But people are interested in their consumption.

Second, organization, or VRM. Consumers benefit from tools to manage their vendors. Cellartracker.com comes to mind, and the Mint / Wasabi effort looks like an early attempt to better understand spending through parsing credit card data. The problem with these is that they may or may not make money.

So yes, the bet is right, but the question remains: does it make money?

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