As the financial news site MarketWatch celebrates its 10th anniversary next week, the stalwart Web 1.0 company stands on the precipice of change. It has launched a community initiative that lets people comment on stories, rate stories, and compete for points by making market predictions. As part of Dow Jones, MarketWatch will become part of the News Corp. empire next year, meaning it could face layoffs while being combined with a new, free version of Wall Street Journal Online (something still under consideration by News Corp. honcho Rupert Murdoch).
But to understand MarketWatch’s possible future, you first have to know where it’s been. After the site’s ’97 launch, MarketWatch became the place for the individual investor revolution, as stock investment became a pastime for the masses during the dot-com heyday. CBS jumped in as a partner in the startup, which became CBS MarketWatch, and it had a booming IPO in early 1999, with its stock gaining 473% on the first day of trading. After the dot-com bust, MarketWatch was sold to Dow Jones in late 2004 for $520 million.
While the site has been aggressive in posting business news in real time around the clock, it has also suffered from ethical lapses. In 2004, MarketWatch co-founder and commentator Thom Calandra resigned after the SEC investigated his trades of a stock before writing about it extensively and mentioning it on TV. More recently, columnist Bambi Francisco took a stake in a startup, Vator.tv, and started working for the company while continuing to write about dot-com startups covered on Vator.tv. She later resigned.
Chris Roush is an associate journalism professor at the University of North Carolina-Chapel Hill who writes the Talking Biz News blog. Roush told me MarketWatch has established itself as the alternative to the mainstream media view of business — but that trouble lies ahead with the News Corp. takeover.
“I think [MarketWatch]‘s biggest accomplishment is that it is the go-to website for investors who want information about stocks and the market from a non-traditional media site,” Roush said via email. “A classic example of this is Herb Greenberg’s blog and column. He writes about companies and stocks and takes a look at them from a view that other media haven’t thought about…MarketWatch needs to do a better job of branding itself, or it’s going to get lost in the increasingly cluttered business news market.”
Right now, the business news world is being consolidated and blown to bits — at the same time. Huge online portals such as CNNMoney and Yahoo Finance are trying to aggregate various sources while smaller, specialized blogs and podcasts are catering to the Long Tail of niche interests. As News Corp. pushes its new Fox Business Channel and the Dow Jones acquisition, MarketWatch could easily get lost in the push for consolidation.
To take a snapshot of MarketWatch before its big transition, I visited its San Francisco offices in the 201 California Street high-rise tower it shares with Dow Jones and various other companies. The office includes a nice video production studio, as well as great views of the city.
I was ushered into the office of managing editor Alexander Davis, who has been with MarketWatch since before its birth on the web. Davis was not allowed to talk about anything related to the News Corp. acquisition, but he defended his site’s relevance in a Web 2.0 world, and noted MarketWatch journalists’ ambivalence toward interacting with readers in the forums. While MarketWatch is experimenting with social network functionality, Davis is wary of jumping into citizen journalism or crowdsourcing for reporting. The following is an edited transcript of our discussion.
What have been some of the highlights in the 10-plus years you’ve been at this company, and what have been some of the hard times?
Davis: Just launching MarketWatch was a highlight because it was an exciting time. Everyone wanted to get into this game. That was a craze, when ordinary people were craving news and couldn’t get enough news about stocks and IPOs. And to have CBS come along and say they wanted to hitch our wagon to them was a big jolt to us. We came into this with the hope of making the most of the medium, and to have a big brand name that like to make us more visible let us know right away that we were on the right path.
When we became a public company, a year after that, in a record-setting debut on the stock market was a highlight too, because it was a great story. By that time, we really felt like we were making an impact both with people who were investing in us and in our knowledge about what’s going on. A similar thing happened when we were acquired by Dow Jones. It was scary at first because we were used to being an independent entity, agile and small, and we were confronted with a new position, or so it seemed. But it turned out to be a fine position…We have been run after that as largely an independent entity as far as the news is concerned.
As for the low points, when the market started to peter out and people started to wonder if anyone would care about the stock market again, that gave us a bit of a start. But it was an opportunity for us, we recognized that if we wanted to make it through we had to push through to a more diversified way of covering personal finance so it wasn’t just about what’s hot in the stock market. It never was only about this, but we made a concerted effort of getting a good mix. And we teamed up with some big partners such as Thompson Financial to do news for the institutional market so we didn’t have to be so centered on using the Internet to serve individual investors.
With the shift toward Web 2.0, a lot of people think of sites that were around in the ’90s as being Web 1.0. What have you done to change in that time, or maybe you don’t need to change?
Davis: We need to consider that type of evolution, and make sure we’re trying new things to remain appealing. That said, I think that a lot of the social media virtues haven’t really proven themselves, at least for financial news. We’re finding out more about that right now because we’re trying out the MarketWatch Community, a vast portion of our site where people can connect. People can sound off on our stories and connect with one another. I was more than a little dubious about it myself, but it’s turned out to be very cool and very interesting to see out in the open how your audience is reacting to our take on the news. We have a lot of columnists and commentators who are out there, and now the audience can join in.
When I say I don’t know how valuable it is to the market we’re in, when you look at our demographic, you wonder whether they would really be interested in that kind of thing. But that’s not necessarily why we did it. We did it in part to make sure we would bring along people who were younger and were more interested in novel ways of using the Internet.
Why were you dubious?
Davis: Even though I’m at an Internet operation, I’m a bit of a purist when it comes to journalism. It gets back to what I said about our demographic, and I don’t think they are that interested in it [new ways of doing journalism]. At the same time, we have to look at ways of getting beyond our core audience.
One of the more interesting things to me about community on our site, and one of the reasons financial journalists should be getting in this is because we’re trying to help individual investors by leveling the playing field. Over the years, there’s been a really big movement in shareholder activism. Individual investors, by connecting to one another and exchanging information and empowering each other and organizing, can push management of the companies they’re in. For that reason alone, it’s a compelling proposition for a financial news site to get into [community functions]. Movements form in social networks, and it’s a valuable thing that fits in with our mission.
How do your reporters interact with the community online?
Davis: Very carefully. [laughs] We don’t know who they are out there, and that makes me approach the topic gingerly, and that’s one of the reasons we have to remain vigilant. We encourage reporters to join in the discussions that are out there. They can respond to questions, to comments, without bothering to get into combat. We give them guidelines according to our Code of Ethics, you’re not supposed to take a position on [what stocks to buy]. Most of our reporters are not really into [the community]. It’s hard for them to get into the groove because we have so many demands on them. They already have to get their stories done, to talk to the right people, get the facts straight, so it’s a bit too much of an extra-curricular activity for them so far.
I think we’ll find ways to make that happen, certainly with our more senior people and personalities who are a natural fit to be part of the community. They are natural targets and objects of interest. Sometimes they get in and have pretty good banter in the threads. It’s an experiment.
It doesn’t seem like there’s a real large social network for investors. Why is that? There’s always been chat and the online bulletin boards, and they’ve been abused. Maybe that’s the problem. Maybe people don’t trust them because of what’s happened in the past.
Davis: Yes, I think it’s run its course a little bit. For several years, the boards were where it was at, they were in vogue. My sense is that a lot of people have moved on, and did recognize that they could be abused. Some people gain a following or establish an identity and people might find what they’re saying as authoritative or credible and get something out of it. The problem is what’s to stop someone else from coming along and posing as that person?
You have to build in a system of trust, where you can trust people are who they say they are.
Davis: I assume they could create communities on their own, and build some gatekeeping functions. But all of that is why I never bought into it the way that others did, or feel that MarketWatch needed to do a whole lot with it early on. For many years we did have very active chat boards and they could be very animated, but they could also be very thin and not well trafficked — and that was in part because we didn’t do enough as editors to make them visible. That’s one of the hardest challenges in this business, there’s so much that you want to do, but there’s only so much you can get across with limited real estate to promote them. You’ve got to make it easy for people to get into it, you have to tempt them.
There’s been a lot of talk about citizen journalism or crowdsourcing, or having a reporter work together with interested people to help them on their beat, with a closed network. Does that fit into financial journalism?
Davis: There are some examples of what we’ve done, but we haven’t made it a regular part of our process. We have looked into doing some of that on running issues. We have a group of investors who are interested in a particular issue. But it’s something we should take a closer look at.
I saw your Code of Ethics posted to your website, and was wondering if you can explain what your rules are about reporters and editors owning stocks.
Davis: MarketWatch’s formal policy is the same as that of Dow Jones. Prior to becoming part of Dow Jones, senior editors [here] weren’t allowed to own stocks. That was during the dot-com boom. If you might have a conflict you were supposed to bow out of the story, or if you couldn’t do that, then you had to disclose it.
So now you can own stocks that you write about?
Davis: Our folks still cannot trade stocks that they write about but they generally are allowed to trade a stock as long they hold it for at least six months, and subject to other restrictions. As a senior editor, I am allowed to trade now, subject to those restrictions. Before joining Dow Jones, that wasn’t allowed. Even though the Dow code allows it, I still don’t trade individual stocks, other than shares of Dow Jones received as part of my compensation package.
How did the change of ownership with Dow Jones change things at MarketWatch? What kind of synergies have their been and how did it play out?
Davis: We do some things with our brothers and sisters at the Dow Jones Newswires and the Journal. We do our own thing pretty much the same way we’ve always been doing it. It doesn’t change what our site looks like except that we promote certain Wall Street Journal stories. The Journal puts a couple stories out for free that are accessible from the MarketWatch site. We let the Journal editors know what we have planned so they can look at those stories to see if they want to use them in print or on the wire. So they are getting more depth and more speed, more importantly. We’re a real-time news organization, that’s our bread and butter.
Since the time of the Dow Jones buyout, the traffic at MarketWatch has been pretty much the same — about 5 million unique visitors per month. Why do you think that is?
Davis: It’s hard to say what has happened to our traffic. I think we did take a hit when we lost the CBS side of the equation, lost their promotion. It was a really meaningful thing for us, more than we had thought at the time. We didn’t think it would be that much of a loss to us. On the other hand, we did pick up promotion from the Dow Jones side of the equation. We’ve had visibility both in print and online with the Journal. Beyond that, all I can say is that there’s been ever-growing interest in the big portals to get financial news, Yahoo and MSN. We’ve found ways to exploit those relationships, including new ones with MSN and Google and it’s showing up in the numbers.
Is part of the problem the maturity of your site and the competition? You’ve all been around for some time and you can’t go up in traffic forever.
Davis: Yes, I think it’s a little bit about that too. The audience is finding other ways to do what it needs to do. It’s an emerging issue that there are mobile platforms that people are using to get financial news, and we’re pushing into that too.
What fundamental or minor changes do you see coming down the pike at MarketWatch?
Davis: I don’t see any fundamental changes, but just sticking to our game plan. But I can’t predict what will happen. There are a lot of possibilities out there when you get acquired by a bigger company, [especially with] one that has a lot of balls in the air that are in this arena. I would say that we’re going to place a bigger emphasis on community and think about what we as editors and reporters can do to assist that project and use it to enhance our readers’ experience. That could be something as simple as having it on our front page packaged with our top news story, including something someone has posted to the community page.
What about working with bloggers outside of MarketWatch, either buying them out or doing ad deals? Do you think there’s still a divide between what you’re doing and what bloggers are doing?
Davis: Blogging is such a slippery slope as a topic. We do have partnerships with commentators who are bloggish. There’s 24/7 Wall St., there’s Minyanville, you’ve probably saw their stuff on our site. There will probably be more things like that to come. But we want it mostly to be about MarketWatch, our own personalities and newsroom. We have done our own blogging, too, and will surely have more of our own.
What do you think about MarketWatch as it turns 10 years old? Do you think it can evolve with the social media world, or that it has to change? What do you expect will happen to MarketWatch after the News Corp. buyout of Dow Jones? Share your thoughts in the comments below.
Photos by Jennifer Woodard Maderazo. To see more photos from our visit to MarketWatch, go to this Flickr set.
UPDATE: I got an email from Thom Calandra, the co-founder of MarketWatch, who is now working on a novel called Pablo by Numbers. Here’s his take on MarketWatch’s future under the News Corp. umbrella:
A lot has happened since I left the company under those thunder clouds three years ago. One thing I am certain about is this: MarketWatch must become part of News Corp.‘s broadcast apparatus in every way. MarketWatch and Fox Business News and so on must all, at some point soon, be one and the same. Or else, yes, as you point out, it gets lost in the shuffle of so-called community journalism.