buisness-modelSirs,
As a thought exercise, I am wondering about the sustainability of creating an online buy/sell signal service for the foreign currency exchange. Suppose I (think) I have the ability to predict the rises and fall of foreign currency exchange rates with, say, 60% accuracy. Further suppose that I realize that I don’t have enough capital to make much money on this myself (10% interest per year on $1000 in principal isn’t much profit), but wish to sell the trading advice to subscribers to my website for say, $10 per month.
In reality, there are real businesses out there that claim to do this for subscribers. My question is whether or not this is really a sustainable business model.
To me this business model is unsustainable – your product is essentially a paid-for web page or email with a few sentences worth of advice about what to invest in this week. A product like this is so easily duplicated and redistributed that most anyone can subscribe to your website and simply repeat the information to others for cheaper than your original fee. Soon, all of your customers would migrate to your competitor who sells an identical product for cheaper. Your competitor, in turn, has the same dilemma. In a business model like this, no one would really care about brand name – customers just need the information for their own advantage, and only care about its accuracy or lack thereof.
To me at least, a financial market buy/sell signal service is an unsustainable business model. Am I right? Of the real businesses that claim to offer such services, it is unclear to me how they stay in business – perhaps they are doomed to failure.
I have met a couple of start-ups working like this.
You don’t need the signal to be public. If your signal is working, your clients will prefer to keep it rather than sell it. In finance, remember that execution means profits.
The feed can be by mail, or updating databases - not necessarly a webpage (that will help you know your clients and limit the risk of leakage).
However it seems that, if you found the golden signal, the most profitable business model is to create your own fund. Instead of 10$ per month per user, you could make profit on the performance you generate. If you convince enough investors, then you are good to go ;)
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