The Lex column in the FT today considers the outlook for the news wire services run by Thomson-Reuters and Bloomberg. I couldn’t function without my EcoWin service - it is invaluable to be able to call up data on virtually anything when teaching in the classroom or when preparing an article or student handout. The market for news wire services is basically an oliogpoly. And economies of scale really matter in this industry given the dominance of fixed costs in providing real time information services to subscribers. How will Bloomberg and Thomson-Reuters be affected by the downturn in the financial services industry?

Bloomberg has reported a fall in the number of Bloomberg terminal subscriptions - they are down by 2.5% from a subscriber base estimated at 300,000. Terminal sales account for about 85 per cent of Bloomberg’s revenues and each can be rented for $1600 a month!

In a world of great financial and economic uncertainty and incredibly heavy newsflow one might expect the demand for news wire services to be fairly recession resistant. But the collapse of many hedge funds and steep cutbacks in employment in other areas of financial services is having a negative effect on both news information companies. Is a price war in the cost of renting a terminal imminent? Or will the two giants continue to compete in non-price terms? The latter is more likely - just recently Bloomberg announced it has added Associated Press to its service - offering yet more breaking news for subscribers!