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Their new push in end-user marketing won't go very far if they put that
"6-month-exit" clause in the advertisements.
Kent Rollins
----- Original Message -----
From: "Robert Hoff" <roberthoff@xxxxxxxxxxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Friday, June 13, 2003 5:10 PM
Subject: Market Data Sever letter, "Interesting"
I just got this email. (I'm an "individual user" )
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Dear M3 Market Data Server User:
IMPORTANT - Please read this email closely.
IMPORTANT NOTICE
There is a hard-coded June 30th expiration in the M3 Server. This was made
for several very important business reasons.
All users will need to email Annette at annette.boves@xxxxxxxxxxxxx to
receive an update to the M3 Market Data Server.
**Business Model and Pricing Changes** MarketStream, Inc. has had to make
some very hard business decisions related to the end-user and SDK markets.
A longer discussion about our end-user market continues below.
**Annual Licensing ** We will no longer be offering a free downloadable
version of the Market Data Server. We will be changing to an annual
licensing fee as we have been warning customers about for over a year.
Below are the new annual licensing fees:
M3 Market Data Server
Annual License $1,000 per year
Additional Annual Licenses $500 per year
M3 Market Data Server SDK (Only sold to individual users)
Includes 2 Market Data Server Licenses
Initial year $5,000 first year
Subsequent years $2,500 per year
Additional M3 licenses $500 per year
M4 Market Data Server SDK (Hedge funds, etc)
Includes 2 Market Data Server Licenses
Initial year $10,000 first year
Subsequent years $5,000 per year
Additional M4 licenses $500 per year
**Existing Users** Existing users using the free downloadable version
will receive the Market Data Server update upon payment of the annual
license fee. Other SDK and licensed users should contact Annette to
determine how many servers you are currently using, and then she can email
you an invoice. We will also be moving all multi-user Trading operations
such as Hedge Funds to M4 with a $5,000 annual fee. SDK's purchased less
than a year ago will not be charged until their year period is up.
**Other end-user licensing options** If you ever become overly reliant on
our products, you may enter into a longer-term institutional M4 license
agreement starting at $25,000 that includes source code to a feed driver
that you can support in an emergency. Also, if we ever decide to exit
the end-user business we will try to find data vendors that will take over
their own feed driver and end-user support.
**Decision Time** Over the last two years my long-term focus has been to
finalize our institutional product line. We are finally finished, but it
was not quick or easy to get things fully tested, debugged and in
production. During this time I put off decisions and any marketing related
to the end-user market while trying to solve the end-user feed driver
support cost problem explained below. This included trying to get data
vendors to support their own feed drivers, doing data vendor remarketing
deals who would support everything, and even several sell out scenarios.
Although, some of these solutions came close, no one deal ended up being
time saving or profitable enough to us over the long term. Now with our
institutional products ready to be marketed on a worldwide basis and
end-user business decisions long over due, we are now at the point that we
have to make some long-term business model changes for our end-user
market.
**Industry Changes and Diminishing Market** When I first started in this
business, in pre-Internet days, there were about 2,000 new users per month
in the U.S. that wanted to trade intra-day with real-time data. These
users had to spend about $5,000 in software and get their own satellite or
cable feed before they could do their first trade, 80% of these users
would then trade for a month, lose money and go away, never to be heard
from again, others would just last a little longer. This was the
pre-Internet market. These days, users get free software and Internet data
with their brokerage accounts and there is only a very small niche market
for this type of end-user software. Although, MarketStream has revenue
from our institutional market, it's not fair for us to lose money, and a
lot of valuable time that is better used elsewhere, to try to continue to
providing free upgrades and support for the end-user market as we have
done in the past. We are now making the pricing changes to our end-user
business model where it makes sense for us to continue with the end-user
business.
**Target Market** Our focus on marketing going forward will be the
institutional market. We really do not see any future to the individual
trader and third-party market for stand-alone servers because everything
is Internet based these days. We do see some end-user market potential for
stand-alone servers and SDKs to Hedge Funds and small trading groups,
which is expected to keep our end-user market going.
**Treating Users Fairly** Since we have been providing users with free
upgrades and support for several years while we resolve some end-user
business issues, we feel we have treated users extremely fair and users
have been relatively uncomplaining. With the new fees for upgrades and
support we do not expect many users to be happy about having to pay for
upgrades and support. However, we now have to make the decision to either
start charging for updates and support or totally exit the end-user
business.
**Feed Driver Support** Almost all of our business decisions related to
our end-user market revolve around how to provide ongoing support for
end-user feed drivers. We have put off charging for annual support and
upgrades for a couple years trying to resolve this problem. We may have
made it look simple, but feed drivers are extremely complex. Unlike the
core server which does not change often, feed drivers are subject to
constant changes, which could instantly make any feed driver unusable or
cause crashes. Even the simplest fix requires multiple days of work to
setup, fix, and then retest. To properly support multiple end-user feed
drivers with a couple of programmers and quality assurance (QA) testers
would cost us $250,000 to $400,000 annually. This amount would allow us to
keep up with data vendor changes and proactively watch for problems and
hopefully refine and improve existing feed drivers. During the last couple
of years we have tried many things including having some of our
institutional users that have source code and programming staffs to
provide us fixes. Unfortunately, these customers only focus on small
sections of the feed driver code that they actually use, they can create
bugs in code they do not care about, and do not even use the lower cost
feeds used by most of our end-user market.
**Feed Driver Support Going Forward** We really have not yet solved
supporting end-user feed drivers. However, after going through all of the
other options, such as data vendors supporting their own drivers, we are
now aiming at having a more comprehensive feed test lab set up by the end
of this summer at an institutional customer site where we can share feeds
and some other costs while only having only the starting overhead of at
least one programmer that can focus on end-user feed driver support.
However, if end-user annual fees can not pay for this, we will probably
have no option next year but to either exit from the end-user business or
do a deal with a data vendor where end-users would only have the choice of
a single feed driver.
**Hard Coded Expirations** One of the main reasons for hard coded
expirations is to make sure users do not use non-supported and degraded
feed drivers and upgrade their software on a regular basis. Additionally,
we wanted to be able to stop providing a free downloadable version of the
server as we have now decided to do, and without a hard-code expiration
any version we put on the Internet could be used forever with ever
increasing complaints about data quality we would not be able to control.
There are also older institutional customers that have continued to use
older and unsupported versions of our technology without paying contracted
license fees and third party companies that would continue providing older
copies to their customers while blaming us for data quality problems.
Other issues include that if we ever did sell out to another company, the
value of our software is higher with this additional control. We hate
having to do this, but the hard coded expiration was about the only way to
solve a number of very important business problems. This will continue in
the end-user versions of our software.
**Year-by-Year Decision** Now that we have made the decision to stay in
the end-user business we will start marketing once again to increase
revenue from this source. However, without ongoing support, feed drivers
will eventually degrade or stop, or if a data vendor has issues of working
with us, we cannot commit to support all feed drivers forever. We have
decided to commit to the end-user market on a year-by year basis with the
right to give six month notice as to price changes or not-to-renew in
order that we can exit from the end-user market in an orderly fashion if
necessary. Users need to be aware that they may have to change data feeds
quickly in a number of circumstances. This includes if a data vendor goes
out of business or does not allow us to work with their feed, or some
major feed change makes our continuing to support any feed non-viable.
**Six-Month Notice** Going forward we are committed to support users for
the entire annual license periods. However, we reserve the right upon a
6-month notice to change our pricing or even exit from the end-user side
of the business depending on market conditions. Also, there may be
situations where we can no longer allow use or support specific feed
drivers because of various issues or our access to various data feeds.
**Longer term** I have no doubt I will be in this business 10 years from
now, at least from an institutional standpoint. I actually see new
technology and business models that put me ahead of things related to
Market Data. We are now committed to stay in the end-user market as long
as there is enough revenue to justify continuing our end-user operations.
Alternatively, if we decide to exit from the end-user business we will try
to make sure that our users are covered either by turning end-users over
to a data vendor that wants the business or giving end-users the option to
enter into an institutional license.
Regards,
MarketStream, Inc.
Note:
You are receiving this email, because you asked to be notified about
updates. Please ignore this message if it was sent to you in error.
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