Nov
25
Battle of the Indices
Filed Under B2B, Blog, Industry Analysis, STM, Workflow | 1 Comment
Have a quick look at what is happening in the oil information markets. Major player Platts (a part of McGraw-Hill’s information division) produces the pricing data which underlies the valuation of West Texas Intermediate as traded on Nymex (the New York Mercantile Exchange). In turn, this index is used by the Saudis as their benchmark in pricing their crude oil exported by Aramco.
“Is” became “was” this month. From January 2010, the new measure of oil pricing for the Saudis will be the Argus Sour Crude Index, produced by a UK player that is a comparative minnow to McGraw’s Platts. Neither company is responsible directly for the change, which has happened because West Texas prices began to veer away from Brent Crude prices for technical reasons that nobody appears to understand or admit. But one up for the little guy, and a real revenue stream in providing access to the underlying pricing data.
Then a month elapses. Platts announces a new index, to cover oil production from the East Siberian fields. ESPO pricing is expected to be an exciting new prospect in oil price indexation, alongside Platts flagship indices, Platts Dubai and Platts Dated Brent. All part of the cut and thrust of competition in the energy sector, one of the most vibrant B2B information sectors of all (www.platts.com).
So why I am burdening you with all this unnecessary information? Simply as a way of underlining, if needs be, that like accreditation in training, index publishing is becoming an interesting value phenomenon. It creates lock-in around which workflow activities and value-add analytics can be built. It gives brand focus and recognition. It provides contract opportunities to supply and maintain service points on client intranets. In truth, it is sexier than it sounds.
But it is not without risk. As this story shows, you can lose an index and you can invent a new one where none existed before. Those who have them are inherently more valuable than those who do not. And the principle of indexation spreads far and wide across B2B information; if you can benchmark pricing you are in a position of strength. So why did the FT sell out its ownership of the FTSE , and why is Murdoch doing the same with the Dow? Answers on a postcard: entries including the words “death wish” will not qualify, as being too obvious.
Comments
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[…] energy and commodity data markets into a very powerful one . I wrote about this in November 2009 ( https://www.davidworlock.com/2009/11/battle-of-the-indices/ ) and envisaged the war between Argus and McGraw Hill’s Platts in oil markets as a […]