fsa investigation?
ADVFN PLC
24 November 2006

ADVFN PLC (the 'Company')

Exercise of Options

The Company announces that options to subscribe for 150,002 ordinary shares of
one pence each in the Company have been exercised at a price of 1.25p per share.
These shares have been allotted and application for the shares to be admitted to
trading on AIM has been made to the London Stock Exchange. Admission of and
dealings in these shares are expected to commence on 1 December 2006.

MM

"I think you will find that, without advertising revenue, the service could not be provided at all."

I am not saying that ADVFN is not trying to be competetive and the above sentence from you is totally correct, but there are other ways of funding and generating revenue which, at present, ADVFN fails to acknowledge as a viable proposition.

The main argument in respect of this is to charge everyone who uses it's site a membership fee, and that includes all it's integrated sites, in order that it will have a regular basic income year on year with which to maintain and improve the site. Anything charged beyond that would be a bonus.

At the present time shareholders are bearing the brunt of paying for the huge majority of users who pay nothing, but nevertheless expect the information to be there as and when they want to refer to it.

This has resulted in, and will continue to mean, further share issues and thus dilution of shareprice because current policies are not generating enough revenue from advertising and premium user payments to cover the current expenditure. It is also a dangerous game to have all your eggs in just two baskets especially when, if looked at in line with pure economics, those two baskets are likely to be affected by the same economic slowdowns at the same time.

With an effective revenue stream from membership fees, in which every user pays a little bit, it would be easier to re-structure premium rates in order that they are within a scale that ordinary investors find acceptable.

I'm all for competition, the secret is knowing the strength of the opposition, in relation to the particular product you are offering, and the faith that you have in that product and it's ability to impress the people you are trying to sell it to.

Once you have satisfied yourself on those points there shouldn't be a problem as, IMHO, users will not desert the best site, for a worse one, for the sake of a few quid a year.

So what is wrong with a service which charges a membership fee, charges premium rates for some of it's services and advertises to it's full capacity and finds any other ways of extracting a few quid out of it's USERS as opposed to constantly screwing it's SHAREHOLDERS.

Charging everyone membership would result in the death of the free BB as very few would pay, and with it the bulk page impressions that generate advertising revenue. An exclusively paid-for site would have much reduced revenue from advertising. The balance of free and paid-for BB and services is probably about right on ADVFN and here.

Haystack

We pay for everything else in this world but I would be interested to know if you are a shareholder in ADVFN. If No

Then I would ask if you are a shareholder at all. if yes

Does the company you are invested in provide it's services free of charge.

As for having a much reduced revenue in advertising, what is generated now is not enough and there is no guarentee that it ever will be. So why do they keep repeating the same model, which has yet to show a profit, over and over again.

That is taking unecessary risk especially when they have had the perfect opportunity to try something different on recently opened, but previously untried, locations, namely Brazil, China, Japan.

There are also those among us who do nothing but continually abuse the free BB system so let's not go too overboard on that score. They are the ones who would not pay because half of them couldn't afford all the names they have.

MM,

I was at a presentation at the LSE and someone made the statement that providers were charging too much for level ll.

I would love to see what would happen if they reduced the price, and tried the 'pile em high sell em cheap' sales method, rather than price it out of reach of the average investor.

bloomers

Plenty of companies in the computer and internet world provide some of their services for free. It is done for lots of reasons and has been shown to be a good business model. Take Sun for example - Java is free to download and use, Microsoft provide many of their features for free download. Many of us are used to freeware software and shareware.

It is unlikely that there would be enough paying members for ADVFN's premium BB. I started out as an ADVFN Premium BB member in 1999 and never did see any sign of any interest in people paying to be there. I rarely used it as there is almost no activity on it. If ADVFN started to have only paid-for services then the free members would just go elsewhere, such as to iii or here for instance. The economics of these financial web sites is more complicated than just paid-for members. Financial web sites get substantial incomes from providing services and data to third pary corporate clients. That is the area where revenue growth will come from.

As Andy and I have pointed out before the first one to break rank over level 2 prices will gain a foothold in the market and at the same time I feel will create a price war.

From there onwards the wholesalers will have to reduce prices.

Looks good to me.

If the LSE are going around saying that providers are charging too much for level 2 then that is a little strange. I was under the impression that the main cost for a level 2 provider was actually the licence fee to the LSE.

The document listing the licence fees payable to the LSE is this one, and I should think that the licence fee of 10,000 or 44,000 plus 15 per terminal (simultaneously connected user) would apply.

ADVFN and MoneyAM just purchase licences for the maximum number of users connected at the same time rather than the total number paying for level 2, but bearing in mind that each provider only has a few hundred or thousand paying level 2 users, the fees are still not trivial and of course from the profit margin the whole website and staff have to be paid for.

Haystack has hit it pretty much on the head though. There is little money in selling price information however you work it. There are only a few thousand private investors in the UK who actually require level 2 type information and no one is going to pay a ha'penny for the 99% cr*p that appears on the ADVFN free BB. Make people pay for the BBs or for basic price information and page impressions would literally be decimated, if not more, also decimating advertising revenue.

ADVFN's solution (or perhaps their desperate attempt to make money somehow) is to spread themselves far and wide, certainly at great investment cost, though it is not obvious to me why the services are being provided free of charge overseas. One would assume that in other countries, with different market forces, one could get away with charging for information. In the UK the number of people willing to pay for market information is much, much smaller than most people think.

I have always advocated that any fee charged would be for the maintenance and updating of the site and would include all day streaming in the package. Cut out the choice of whether a member pays or not each and everyone pays something.

Those who leave the site, from what I have seen, would soon return.

Kayak,

"If the LSE are going around saying that providers are charging too much for level 2 then that is a little strange.

I was referring to a comment made in a private conversation.


Looking at the licence fees charged by the LSE, surely the private investor licence fee of 10,000 would apply?

Surely there is some deal that can be done that would allow a reduction in charges?

For those of us that invest rather than trade level ll is not a requirement, but for a reduced price I would take it as an add on.


I do agree with yourself and Haystack that a pay for bb would not work, and people would migrate to toher boards, unless of course all boards decided to charge!

Maybe an idea would be to charge those that post, whilst allowing the majority that lurk to continue to lurk for free? That way hits will remain the same, and some semblance of control and order would reign over the BB's?

It is difficult to see how ADVFN are going to survive long term on the current course, the majority of their free bb threads are being trashed by the same small group of people, and the number of quality threads is at an all time low IMO.

Something will have to change, or the current BB model looks to have a finite lifespan, IMO.

Talking of profitable sites, Sharecrazy seems to be doing well and last time I spoke on the board to the CEO it appears the company is profitable and going from strength to strength.

Similar business platform to money am and advfn but as its own in house broker the 'Sharecrazy Trading platform', provided by Hoodless B and 9 per trade but Hoodless actualy charge 7 so I guess the extra 2 is all profit bar a little admin cost.

I hear Winnies t1ps.co. uk is also doing the same from after xmas so there must be some profit in this area.

goldfinger,

Interesting, Sharecrazy and T1ps are thinking out of the box and leveraging their client base in a different way.

Maybe level ii could be offered in a package that included a brokerage deal?

Just a thought.

I am surprised ADVFN have not partnered with a broker, but I guess they run the risk of alienating the other brokers who may choose not to advertise, thus negatively impacting revenue.

Surely any company would prefer to get as much revenue as possible from whatever source and I am sure there are ways of doing that which, as yet, AFN have failed to exploit. There is, or should be, no sentiment in business and you ply your trade accordingly.

For instance if subscriptions/fees and brokers premiums were to realise say 5mil there would still be an awful lot of advertising AS WELL and to say there would be any drastic reduction in user/page hits is as much speculation as any other argument. At some stage in business you have to take a chance or two.

There are many people who have seen the recent turmoil at AFN who have stated that they would willingly pay a small fee rather than see the site close and I can understand that. People tend to make many faceless aquaintances via this media and would miss it if it weren't there. I know I would but I am a premium user on ADVFN,

We all know that the 'unique user numbers' spouted are somewhat farcical and we know why, but the present shareholders will not continue to keep paying for further share issues unless progress is SEEN to be being made. There is no easy fix but I am sure, given some intelligent forward thinking, a monetry system acceptable to users and condusive to the needs of AFN could be implemented.

Failing that how long will we have to wait until the promises of the past 4 years start to kick in. If Ever.

I often get the impression that non-shareholders and shareholders look at this site in different ways because non-shareholders couldn't give a damn what the shareprice is as long as they can tune in each morning.

One wonders who this large buyer is and whether perhaps they know something of what will be announced at the AGM Wednesday. Cost cutting and profit forecast - we can only dream.

Perhaps the pressure they have been put under may start to bear some fruit?

DD

Everyone seems to think that as from Wednesday everything in the garden will be rosy.

The last set of figures were so late in coming that we have already passed the 6 months stage, so, whatever they have to say at the AGM surely can only start to have an effect as from now, which means that the interims COULD well be no better than the last set of figures.

As for the pressure you refer to, I take it you refer to the action group, I doubt very much if they will ever put their hands up to that, or acknowledge it's significance. It will be more a case of "we realised spending had, for reasons of expansion, begun to creep unacceptably higher and have made certain adjustments in order to try to correct that situation. We are hopeful that these expenses will prove to have been exceptional and we are 'excited' about the prospect of increased revenue in the future."

They won't say from what, where, when or why or just how much their
'excitement' will improve shareholder value.

I've also bought back in as imo those huge exes must have been mainly one-off.

should get USA sites update tomoro and figures of subscribers...must have increased by 50% imho overall...lets see if Clem can be honest for once instead of trying to use smoke and mirror tactics to confuse investors...

Subscribers or registered users?

maestro - hard to break the habit of a lifetime ;)

he won't give us subscribers...that would be asking too much...personally i'd stick him on a rack until he confessed the actual subscribers... i hate bloody secrets!

offer above 3p...amazing!..Clem has got to deliver tomoro or i can see him getting a good rogering