Is Faster Better?

When it comes to information, is faster always better? As information users, we all want to have the freshest possible information possible on which to base our decisions. But, as many data publishers have learned the hard way, while everyone wants up-to-the-second accuracy and currency in their data, not everyone is willing to pay for it. Indeed, we’ve noted with concern the growing trend towards “good enough data,” where users are willing to sacrifice some amount of accuracy and currency in favor of a significantly reduced price. So, on a practical basis, a data publisher could be excused for concluding that the most accurate and current data shouldn’t be a top priority.

Things, however, are a bit more complicated than that. The speed of information updates does matter, a lot, in specific applications and markets and people in those markets will happily pay a stiff premium to get hold of such data. The obvious place to look for proof of this is the world of finance. If you have information that can move the price of a stock or the entire market, speed matters. Consider that Thomson Reuters used to charge a premium for those who wanted access to an important consumer sentiment survey just two seconds before everyone else.

There are more mundane examples of this in non-financial markets. Consider sales leads. While every second may not matter when it comes to sales leads, there is added value in delivering them quickly, particularly if based on a real-time assessment of a prospect’s online browsing pattern.

Given all this, it would seem that a new service called Now-Cast Data has a winner on its hands. That’s because the company, run by economists, is preparing to offer a real-time economic forecasting service. Real-time delivery is actually something of a breakthrough in the world of economic forecasting, which is used to monthly, quarterly and even annual reporting. Clearly, by accelerating forecasting, the financial types will gain an information advantage for which they will pay handsomely. Or so it would seem.

But as an article in the Wall Street Journal notes, Now-Cast Data has some convincing to do. The core issue is that while Now-Data is certainly accelerating forecasting, at the end of the day, it is still offering forecasts. It can’t be sure what will or won’t happen, or whether specific events (e.g., inflation) will persist. As an economist in the article notes, “When a big outside event disrupts the economy, those are hard things to forecast. By definition you can’t build them into your forecasting model because they haven’t happened yet.” In short, we’re guessing faster, but we’re still guessing.

So where do I come out on speed? Is faster data always better? At least for now, I don’t think it is. Right now, it’s only really valuable in a specific, limited set of applications. Keep in mind too that we’re already drowning most of our customers in data. Getting the fire hose to pump faster just makes things more unmanageable for them. And speed is a relative concept as well. If a company changes its address, that’s a valuable, time-sensitive piece of actionable information. But if you already pass that information to your customers the same day you learn about it – say 8 hours at most – accelerating that to 8 minutes won’t improve either customer sales results or your bottom line. As data publishers, we want to be continually looking for ways to obtain and move information faster, but speed is something that’s ultimately defined by your customers and your competitors.

Monetizing Your Unfair Advantage

In the news today was the announcement that BusinessWire, a press release distribution company owned by Warren Buffett’s Berkshire Hathaway, had decided to stop offering direct access to its press releases to high frequency traders. This follows on the heels of a decision by Thomson Reuters not to sell advance access to market-moving economic data that it publishes. I find myself concerned about these decisions. That’s in part because what these two companies were doing was actually quite different. And as you dive into the details, you start to see issues that a broader range of data publishers may ultimately have to confront.

The Thomson Reuters situation involves two indexes: Consumer Confidence and the ISM Manufacturing Index. These are both major indexes that can and do influence the stock market broadly. In both cases, Thomson Reuters had licensed the rights to publish them. Nobody argues that Thomson-Reuters should have the right to monetize these indexes. But it’s one particular aspect of this monetization that raised concerns. Thomson Reuters openly offered to sell access to these indexes either a few seconds or a few minutes before they were released to the public. That’s more than enough time for computerized trading systems to analyze the news and place buy or sell orders accordingly. And by the way, it’s all legal, and Thomson-Reuters wasn’t hiding any of these arrangements. But is it fair?

The BusinessWire case is even more innocuous. BusinessWire is in the business of pushing our press releases far and wide. To that end it offers direct electronic access to anyone who might benefit from it. Some smart traders figured out how to take that innocent feed, process it, and make buy and sell decisions on it very quickly. BusinessWire was just going about its business. Third parties figured out how to profit from their activities, with no help or encouragement from BusinessWire. And while press releases don’t sound that interesting, keep in mind it’s the way many public companies first announce big events such as acquisitions.

I’m not a lawyer, so there may be nuances to this I am missing, but I understand that public policy recognizes the value of a level playing field when it comes to the stock markets, in part to build confidence. And as an individual investor, providing advance peeks to savvy stock traders doesn’t feel right to me. But as an information professional, my view is why not? The entire B2B information industry largely exists to provide unfair advantage. In fact, I know data publishers who have seriously considered variants of “Your Unfair Advantage” as corporate tag lines.

Given the murkiness of the legal issues, I think it’s fair to conclude that both companies stopped these activities primarily for reputational reasons. And that’s important to think about. These two events are very different, but you’d never know that from a quick scan of the headlines they generate. Our products are complex, sophisticated and nuanced. Typically, they are used by a range of users in a range of ways. You can’t – and shouldn’t – police what users do with your data. But you should put some thought into how you position your data and its uses, especially if there is potential to use your data for stock trading. It’s too easy to get painted as the bad guy even if you’ve done nothing wrong.

The bottom line is that as data becomes more powerful and important, we’re all going to receive more scrutiny. And the complexity of our products works against us in the media. That’s why sensitivity to how we present our data products is going to become increasingly important. And if yours is one of the companies considering a tag line that includes the words “unfair advantage,” may I politely suggest a re-think?