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April 30, 2007

Influence Peddling

It's always nice to see your ideas validated by the market. For two months now, the GIO team has been hearing deep dive participants in the media and content focus area talk about the value of measuring the influence of content. The idea is that even though the market seems increasingly unwilling to pay for content, there could be interesting business models that emerge if you could only determine that content's affect on the public. And now one of the first of those business models is becoming a reality, thanks to Reuters, the global news agency and GIO partner.

In the "Moving the Market" section of the Wall Street Journal today, you'll find an unassuming little story about Reuters' nascent effort in the algorithmic trading market. Algorithmic trading has been around for a while. It is the practice of using computers to act on stock trades based on predetermined factors in the market. For example, when a stock reaches a certain level, the computer automatically generates a buy or sell order, depending on what the trader has programmed.

Pretty straightforward, right? But Reuters has a new take on algorithmic trading. Leveraging it relentless coverage of the world financial markets, Reuters has developed an algorithmic trading platform that trades stocks based on the whether a company is receiving positive or negative treatment in the press. In milliseconds, the software can scan the Reuters universe of news content, determine the overall sentiment of that news towards a particular company or industry, and place trades accordingly. The company will charge between $200,000 to $1 million for the software, which will initially only scan Reuters stories, but ultimately will expand to include other news sources as well.

It is a classic example of what many in the media and content track of the GIO have been talking about. Monetizing the impact of content is an important next step in the development of the media industry. And this won't be the last business model to develop as a result.

April 30, 2007 in Media and Content | Permalink


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