Yahoo! Finance/Seeking Alpha - Turn on the Bright Lights

Very, very interesting. At least to me. Whether or not this deal is truly "disruptive" (per Michael Eisenberg of Benchmark) or "noise" (per Howard Lindzon of financial blog fame) is not the point. I do think the deal is instructive because, at its core, it emphasizes the two key criterion for extracting value from internet content: understanding the relevance of the information being provided to the reader and the reputation of the provider of that content. Without these filters the signal/noise ratio is simply unbearable, and those in the investment business know that information overload is THE problem plaguing investors everywhere. These principles of relevance and reputation apply not only to financial content on the web but to the other verticals as well, but the Yahoo! Finance/Seeking Alpha alliance is a great example of taking highly relevant, highly reputable, specialized content and delivering it to a much broader (and interested) audience. Isn't this what the power of the internet is all about?

There were several other interesting points raised in the comments to the Seeking Alpha story, including that of David Jackson himself, CEO of Seeking Alpha (from the story in Venture Beat):

By putting the bloggers on a par with Dow Jones, Street.com and other mainstream sources, Jackson thinks Seeking Alpha will encourage even more bloggers to participate. Seeking Alpha’s aggregated content may soon dwarf the content produced by mainstream sites, the thinking goes.

So now you are getting the full image — the image of that revolutionary, proverbial long tail. “We’re tapping into the long tail,” Says Jackson referring, to the long line of contributors with a good opinion about stocks he thinks will transform analyst coverage of mid- and small-cap companies that newspapers and other sources don’t have the resources to cover.

I think David is onto something here. He's clearly right about the long tail. If you combine the long tail, and the ability to filter by relevance and reputation, you've really got something. Yahoo! Finance and Seeking Alpha have done this, on a small scale. What does Seeking Alpha have, 200 contributors? This a great start, but not what I would call disruptive. My guess is that there is a lot more relevant content out there from reputable content providers that is simply not being packaged in a way that fits the Seeking Alpha mold. What about the tens of millions of bloggers out there whose ranks are growing every day? Some of these people know stuff - good stuff. What about the tens of millions of great web pages from the government, regulatory agencies, unions, special-interest sites and the like? What about the tens of millions of interesting and relevant non-RSS enabled pages? I guarantee you that Seeking Alpha's contributors are not catching and analyzing all this information. Sorry, but the Yahoo! Finance/Seeking Alpha platform, while a vast improvement over MSM and clearly a wave of the future, barely represents the tip of the iceberg. Sorry.

The real juice comes in when you can combine the drivers we've touched on - the long tail (read: the ever increasing body of content across the wide, wide web), relevance and reputation - and combine that with technology that is intelligent (knows finance), scalable (can process millions of lines of text a day in real-time) and robust (Wall Street uptime, my friends). This, from my perspective, is the definition of disruption. The Yahoo! Finance/Seeking Alpha deal shined a bright light on the opportunity and value drivers for those within a focused domain. Relevance? Check. Reputation? Check. Breadth? Well... We are in maybe the second inning of a nine inning game. The question is: who will show up for the later innings?

Comments

[Roger]

David and Rob, I really appreciate and value your getting straight into the dialogue. You both raise really good points. As noted earlier, I do think that Seeking Alpha/Y!F does represent a peek into the future by combining intense vertical competence with a platform for broad distribution. My only issue is that what you've built thus far is a necessary but insufficient tool for extracting maximum value from the content that is out there. This requires technology. And maybe the market ends up being segmented into aggregation platforms like Seeking Alpha which kind of bridge the gap between MSM and the blogosphere, and those that are more driven by technology/machine learning/AI to rip through millions of pieces of text per day, bucketing it based upon the investor's particular interest (company, investment theme, etc.) with automated filters to address the reputation and relevance issues so critical to extracting value from this wild and wooly data set. Also, by using an aggregation model it is hard to see emerging themes in the data, since subsets of this data set are being reported by individuals who themselves might not have the tools and technology to see the full picture. Time will tell. I like the deal for what it stands for. It is directionally correct. But again, we are in the early days of what this will eventually become.

[Rob Sanheim]

(disclosure: I'm a softare developer with Seeking Alpha, but my opinions are my own only and don't represent my employer)

Bill: I wanted to make one quick point regarding the post breakdown from the morning. From time to time the WSJ, Baron's, and Cramer summaries will "flood" the front page as many of those types of articles are posted at the same time. I think if you read Seeking Alpha over a longer time span, you'll see that original analysis from bloggers (well known and otherwise) is well represented.

Wrt current contributions: we have quite a few things in the works to open up contributions to a much larger community, and right now you can submit a post without being a SA "regular" at all. We are working hard to make the site far more personalized, with customized email subscriptions being an initial step we just finished. We realize that right now the site is suffers due to information overload, but we think we can combine some great technical talent (ahem :) ) with the financial expertise to really filter and dial in content on an individual level. Vertical search/content networks is definitely where things are headed, and everyone at Seeking Alpha truly "gets it" and is very passionate about what we do.

Thanks for the quality discussion, I'll definitely be adding this blog to my reader.

[David Jackson]

Quick follow-up: here's a link that shows what's going up on Y!F from SA, just so there's no doubt about bloggers and other authors getting access to Y!F. You'll see that the articles going up on Y!F are exactly the same as the articles going up on SeekingAlpha.com:

http://biz.yahoo.com/salpha/archive.html

[David Jackson]

This is a great post -- thought-provoking and fascinating.

I just wanted to clarify some factual points:

1. Every single post carried on Seeking Alpha by any kind of blogger -- "A" list or unheard of -- gets distributed on Yahoo Finance. The criteria our editors use for accepting or rejecting a post submitted to us are purely merit and relevance-based (we can't carry technical analysis for example, which is why we don't carry some of the best stock market TA blogs like Trader Mike). The popularity of the author's blog does not enter the equation. Because Seeking Alpha's position on the quote pages is currently equal to that of AP, Reuters, MarketWatch and the mainstream contributors to Yahoo Finance, that means that bloggers now have equal footing with these media companies.

2. Positioning on the Yahoo quote pages, where most of the action happens, is determined by timing. As soon as we get the post up on Seeking Alpha, Y!F grabs it in a short time. We tend to try to get most posts up before market open, but many of the other media companies that contribute to Y!F seem to have honed the art of releasing their stories under multiple stock tickers at times that make them the top headline and push down older stories. For example, TheStreet.com published an article at market open this morning under multiple stock tickers saying "the market opened slightly up"; that pushed down everything below it, and reduces the visibility of the blog posts. We're working on that...

3. The finance vertical has a peculiar and unique problem: credibility/trust matters much more when people may trade off what they read. In the CNBC interview with Yahoo Finance Product Manager Peggy White yesterday morning, she was attacked by the presenter who argued that blogs are "the wild West", and questioned how she could possibly allow them on Yahoo Finance. Her response was that many blogs have outstanding content, and that Seeking Alpha's human editors provide protection against junk, stock manipulation and spam. In other words, it's the human filtering that makes blog content workable for Yahoo, and the need for that was exactly what the interviewer pounded her on. Perhaps at some point technology will provide protection against stock manipulation or lousy quality, but right now there's no alternative to human beings.

4. Although Seeking Alpha uses human editors to scan content, the model is scalable, at least for the foreseeable future. We have the capacity to review any blog post that is submitted to us for inclusion on Seeking Alpha and thus (automatically) on Yahoo Finance.

5. One of the goals of Seeking Alpha's proprietary content is to further increase exposure for bloggers' views. For example, our daily One Page WSJ Summary is immensely popular and links to SA contributors' views on stocks mentioned in WSJ stories. If you haven't seen it, here's today's:
http://seekingalpha.com/article/16801

6. We think we'll get submissions from non-finance bloggers who have important info about a company and would like to get instant credit for that via visibility on Yahoo Finance.

Bottom line: Y! F is now open to every blogger. Seeking Alpha provides a human filtering and editorial layer that reduces the risk of manipulation, spam and low quality.

If you want to see this in action and you're not currently a contributor, go to www.SeekingAlpha.com, submit a post and watch what happens...

Best Regards,
David Jackson

[Yaser Anwar]

You have to give the Seeking Alpha/Y! Finance venture some time to develop. Bill talks about in his first comment how only 3/20 posts are from bloggers, well today you will see a lot more posts which are not annotated summaries of cramer or the WSJ.

It will take sometime for Y! Finance readers to adapt to the ideas & rely on SA content. Seeking Alpha has an excellent arsenal of contributors with expertise in various industries. Their expertise will be noticed, as time passes by Y! Finance readers as well as Institutional investors will realize the value of the content.

Suzanne gives a great example of the Microsoft Zune incident. I'd like to point out a some what similar situation where a SA contributor, Yehuda Fruchter, detailed a bullish case for BSML, which was bought out next day. http://seekingalpha.com/article/11862

You can call this blind luck and/or a great call, in either case the point is that this value will slowly unravel as SA gets more exposure thus growing its reader base exponentially & monetizing at the same time.

Sorry if I was off topic.

[Greg Battle]

Roger, you missed one very important aspect when combinbing the blogosphere (everyone's opinion on record) and technology: the ability to accurately record people's predictive capacity. It won't merely be "oh, this posting is interesting/relevant" but additionally, "this blogger has a prediction error of X%." Applying a conviction matrix to information is the logical next step in the process.

Maybe you were saying this.

[Suzanne]

To both Roger’s and Bill’s points, once someone reaches blogger “rockstar’ status, they are no longer part of the long tail – they are mainstream.

The real value of blogging for those “seeking alpha” will not come from a community of financial experts discussing interesting topics. It will come from finding information posted by bloggers from other walks of life –employees, industry experts, consumers -- before it hits the mainstream news and having the expertise to recognize that the information is monetizable.

Take the example of a blog beating Bloomberg from last month. A Microsoft marketing employee confirmed on his blog ZuneInsider.com that Zune's feature set would include video support. Bloomberg broke the story 2 days later, and the stock price jumped 5%, with a 280% jump in trading volume (2x the 3 month average volume) on a day that the market was relatively flat. This is where the long tail is valuable, but you need to be able to eliminate the noise and news regurgitation to find the valuable nuggets – and that takes both technology to process massive amounts of data and domain expertise to understand what matters and why.

[Greg Battle]

While I agree with Bill and Roger that this Yahoo/Seeking alpha deal is somewhat of a non-event, I do think that Roger's vision can be extended much further. It's not merely the aggregation of long-tail information from millions of disparate data sources organized via the popularity ranking du jour, but creating flexible frameworks for independent taxonomies and weightings. Namely, if you and I have the same collection of information (ie. a benchmark index for our mutual funds), our value is measured by how we organize and prioritize that information (ie. how we overweight or underweight each name in the index).

The truth is that information aggregation is fast heading toward being a commodity. For most access and distribution services, the switching costs are zero (as is the price for consumers). The wisdom of crowds philosophy utilized by these sites represents more of a "passive" consensus index/benchmark. Consensus or market opinion should always be the cheapest to deliver. The value add is where "active" information managers apply their individual private predictive knowledge frameworks across this information to express a view and extract uncorrelated realizations.

Sounds familiar? Of course it does.

[Bill aka NO DooDahs]

The more I think about "long tail" the more I realize that the phrase obfuscates rather than clarifies. The initial exposure I had to the phrase was from internet marketing of music, and its reversal of the 80/20 rule. Basically no matter how obscure the choice was, like Jennifer Warnes singing Leonard Cohen's hits (nice album, by the way, "Famous Blue Raincoat"), there was a buyer if you put it on the site.

When we try to apply the phrase "long tail" to the distribution of information and analysis, it falls flat, in my opinion. We need to be more specific.

In the information and analysis realm, we have four areas of interest.

1. level of agreement with consensus
2. awareness of source within realm
3. acceptability of source within realm, i.e. reputation
4. cogency and quality of analysis and information

What I would characterize as "long tail" would be high on 4 but low on 1-3. What I would characterize as "mainstream" would be high on 1-3 and 4 is not a factor, i.e. it could be anywhere from gold nuggets to garbage.

I agree that the SA and YF business models won't ever capture but a small slice of the "long tail," partly for your reasons and partly for mine. The producer of the content has limited incentive, and when/if they become aware of the workings of the business model, they'll have less incentive. You mentioned monetizing on SA and YF, which actually has been the subject of a post of mine recently. You might find it interesting. Might not.

http://www.billakanodoodahs.com/?p=20

[Roger]

Bill, I kind of buy your characterization of what constitutes "long tail" and what does not. In my analysis once someone reaches "rock star" status in the blogosphere they are still a blogger, but probably don't warrant inclusion in the long tail (otherwise, how can the long tail mean anything?). To me the two most interesting elements of the Seeking Alpha are: (1) blogs matter; and (2) vertically-oriented, domain specific content really matters. The true long tail, in my opinion, cannot be accessed in the way Seeking Alpha operates. Accessing, analyzing and monetizing the long tail requires technology, powerful technology, to harvest, aggregate, filter, process and score the information coming through. Otherwise, signal/noise will be deafening. Seeking Alpha has chosen human means to achieve this goal. This is a massively limiting fact which is why I find the Yahoo! Finance deal interesting, but neither disruptive nor transforming.

[Bill aka NO DooDahs]

If you want to define "blogger" as simply "one who blogs" then I don't think that's a useful definition. I think at some tipping point of mainstream awareness you should lose your "blogger" credentials, but I don't know where that point is, exactly. Your mileage may vary. I'll accept your definition for the purpose of argument, and move on to something more important – the meaning of "long tail."

If most of the pieces published by SA on YF are recaps of market action, or summaries of Cramer's picks or the WSJ, then it's an echo chamber, and not part of the "long tail." It adds to the noise without enhancing the signal.

When input comes from a blog, it's not necessarily part of the "long tail." Take Michelle Leder for example, who does footnoted.org. It's a site I like, I've blogrolled it, I mention it from time to time in my posts, never corresponded with her but I like her work, so don't take this as a dis'. Michelle has been on the TV for years, she's got a book, she was a business journalist for a decade before going freelance, and she's been a freelance journalist for half-a-dozen years. She is not a part of the "long tail."

When Mark Cuban or some other member of the glitterati blogs, or when Herb Greenberg or some other member of the mainstream financial press blogs, that is not a part of the "long tail."

[jonathanm]

"The question is: who will show up for the later innings?"

I wonder who you think that would be?

[my2cents]

Bill, I think you have misunderstood the meaning of blogger and blog. Just because one has published books (Tom Taulli), has a television show (Jim Cramer), or owns a basketball team (Mark Cuban) does not at all mean that they are not "normal" bloggers. It is a different story that these bloggers are well known and because of that their blogs may get more attention from the media. Nonetheless, their blog is like any other blog but with probably more readers. I think you are completely missing the point of the blogosphere and blogs; anyone can create a blog not just the "average Joe", yes even the rich and famous. As for a "victory for the blogosphere' it truly is because blogs are gaining more importance and media coverage through collaborations such as the one mentioned in this post and thus revealing their true power and significance in this day and age.

[Roger]

Bill, I hear you, but I think you are looking at things in a vacuum. This particular story is "buzzy" but not necessarily impactful from an investment perspective (I mean, how much is this deal going to effect Yahoo!'s market cap at this point?). Therefore, using the coverage of the Seeking Alpha deal as a proxy for the power of smart investment pros/content creators in the blogosphere is mistaken in my opinion. The real value is in knowledgeable people with domain expertise writing about products, companies, macro trends, technical analysis, etc. This Seeking Alpha story about Seeking Alpha is newsworthy - just not very investable. Nobody is going to get a near-term investment edge by reading someone's content on this issue. This is classic "the news is already out so let's write about it" coverage - and you are right, just like MSM. Just my two cents.

[Bill aka NO DooDahs]

This morning there are 20 posts at Yahoo from Seeking Alpha. Of those, the vast majority are from their "one page annotated WSJ summary." Coming in tied at second are summaries of Jim Cramer's picks and broad market recaps without commentary.

Only THREE posts of the 20 are from actual "bloggers."

Two of those are from Rob Black, and those are, again, just summaries of market action. Rob does blog, but he's a 10-year veteran of financial reporting.

The other "blogger" with a post up this morning was Tom Taulli, who's written six books and often appears on CNBCbubbleheads and Bloomers, and is frequently quoted in the WSJ et al.

Unless something changes, it would be hard for me to see this as a "victory for the blogosphere" - it looks to me like mainstream media.

[howardlindzon]

yep - good post