Stock Trades The Latest Use Of The 'Free, With Ads' Business Model

from the discount-discount-broker dept

The world of finance has so far been incredibly resistant to the changes being brought about by the web. Sure, all of the banks and brokers have web interfaces for their customers, but at its core, it's still a very tightly controlled industry -- no doubt aided by the fact that finance is one of the most highly regulated industries. Now one of the initial investors in Skype is backing a new online broker that promises to do away with equity commissions. The company figures that a trade costs about $2 to execute, but that most brokers, even discount ones, have to charge much higher than that in order to recoup their heavy marketing budget. Just as Skype took off based on word of mouth, if this company can do the same, it will have a significant cost advantage over its competitors. And as for how it will recoup its incremental trade expenses, the company plans to sell advertising on the site. But while the prospect of free trading sounds nice, it likely won't be enough to lure customers away from the established players. When you're dealing with thousands of dollars, a $10 commission isn't such a big deal; instead investors care about execution, analytical tools, solid security and more. The real revolution in finance will be when someone really figures out how to bring Skype's peer-to-peer model and applies it to trading, cutting out the need for the established exchanges. But considering how regulated this area is, that's unlikely to happen soon.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    Jordan, 21 Sep 2006 @ 2:43pm

    I think there is a very large market for people who want to get into the stock market, but only have a limited amount of funds, and don't want to see that get destroyed by excess charges.

    I'm a college student with disney stock from my childhood (shitty stock to have btw), and I haven't gotten into investing because i don't want to have to deal with these sort of institutions or a broker. If they get the business model right, they could go far.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt

Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Discord

The latest chatter on the Techdirt Insider Discord channel...

Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.