TheStreet.com has closed its UK site and reduced its US operations in a bid to cut costs.
TheStreet.com, one of the biggest independent online financial portals, has announced it will shut down its UK operations and reduce its US staff by 20%, ending its joint venture newsroom with the New York Times. Online customers have come to expect fast and free quality information – but this is a model that is proving difficult to make profitable. The Street first dabbled with a subscription model, which failed; it then turned to advertising to generate revenue, which has also proved insufficient. With the dotcom glory days a dim and distant memory, shareholders are stamping their feet for a sign of investment value and it is time for online businesses to honor their promises.
Disenchantment with plummeting stocks means that traditional metrics for judging success must now be applied to the new economy. Online companies need to stop the cash burn and turn a profit. TheStreet is not the only financial site to suffer hard times: competitors MoneyeXtra and iii announced similar troubles earlier this week. MoneyeXtra has sold its B2C operations to Bristol and West in order to focus on its profitable B2B core competency and iii has reported virtually no growth in users or revenues since spring. US financial news provider Jagnotes also closed its European site two weeks ago, for the same reasons as TheStreet. However, Bristol and West and iii remain optimistic about their financial prospects because both companies can at least count on their strong financial backing to invest and grow their business.
If the ‘big boys’ like iii, MoneyeXtra and TheStreet cannot play the game, who can? Market saturation and shareholder pressure will force the smaller players to act. Probable outcomes will be more mergers and acquisitions, divestments and partnerships. Players must also ask themselves whether it is worthwhile maintaining extensive and expensive newsroom operations, rather than licensing in some of their content from external providers.
The sites that succeed will be those with strong ties to financially solid partners, with the brand and customer base to support them, and those that can provide the necessary levels of service at the lowest possible cost. It is time to take off the rose-tinted screen saver and face reality.
