An article in last week’s Inside Market Data (subscription required) entitled Could Google Be the Next Data Vendor? explores whether or not Google provides answers that are good enough to threaten the traditional news aggregators’ market positions. The article focuses on ways in which Factiva is making its content more available – transaction-based pricing models and integration into Microsoft Office 2003 are given as examples. But the real challenge for Factiva, LN and Dialog NewsRoom is not making the content more available, it’s adding value to the content in ways Google (or Yahoo!) cannot or will not. Factiva’s new Reputation Management service and LN’s Company Dossier (containing legal information) are examples of products that would be difficult for Google or Yahoo! to replicate, at least in the near term.

There will always be clients who need the content that is available via Factiva, LN and Newsroom that is not freely available on the web. Trade journals, the Wall Street Journal, and New York Times archives, for example, are not served up by Google News. So knowledge workers in financial and professional services, who need comprehensive and complete “news runs”, should be safe markets. It’s the marginal, price sensitive user that will become increasingly difficult for the premium services to win over.

The bigger risk is not that Google or Yahoo! develops a competitive premium service, but that the free services provide an additional catalyst for a devastating price war between the three premium players. While this may sound fantastic for business information consumers, in the long run dramatically lower margins can lead to dramatically lower levels of service.