Quote via Reuters, as noted by Paul Kedrosky:

The moves by NYSE and Nasdaq OMX come at a time when the exchanges are seeking to generate as much revenue as possible from market data, which now makes up for a larger share of revenue than equities trading. At Nasdaq, market data generates 20 percent of revenue, while at NYSE, the figure is 14 percent.

Call me Mr. Skeptic today, but something is amiss here. While a Kedrosky blog commenter asked “where’s the trading revenue data,” I’m more inclined to wonder about the rest…

Based on the Reuters statement, if data is a greater percentage in both cases, then at the NASDAQ data revenue plus trading revenue must be equal to or less than 40% of total revenue, while at NYSE the two combined would be equal to or less than 28%.

Where does the other 60% and 72% of revenue, respectively, come from?

Mr. Frommer says:

There’s a big future in distributed storage and computing, and Amazon (AMZN) is on the leading edge. Nimble startups benefit any time they can focus more on building their companies than building their server infrastructure.

I’ll add that some of the aforementioned companies suffering don’t have discernible revenue models (i.e. they are “working towards scale!”). It would seem that having to rely on cheap third party storage services might put a monkey wrench in that plan, at least every now and then.

Meanwhile, Markus Frind, who runs the highly profitable PlentyOfFish dating site on a quarter rack of servers (i.e. “scaling the bank account”), notes that Facebook is making heavy capital investments and coming up heavily cash flow negative as a result.

Where’s the happy median? Or has someone already patented it?

Thoughts on this, Mr. Anderson?