What does the rise of Napster and the subsequent collapse of music prices have in common with the rise of zero-fee ETFs? More than one might think, according to an Autonomous NEXT note on SoFi, Square and Twitter.
The destruction that afflicted the music industry in the late 1990s and early 2000s, when online music sharing (and downloading) forced the industry to rework its business plan, meant musicians and the businesses around them had to focus on selling merchandise, concerts and convenient access to online streaming—notably not music. Similarly, investment management, with its increasingly pinched ETF fees, is giving way to the sale of asset allocation, financial planning and a subscription to an easy-to-use financial services offering. SoFi was the latest to throw "bricks through the window of the finance industry," the research firm wrote, with the planned launch of its zero-fee ETFs.
Where do Square and Twitter fit into the picture? The payments innovator and social media company are both led by CEO Jack Dorsey, while the CEO of SoFi, Anthony Noto, is the former COO of Twitter. That means the three companies, "the horsemen of the fintech apocalypse," have a common "fact base, institutional talent overlap and a likely vision for the future," according to the blog post. Get ready to see investors tweeting about buying a no-fee ETF with money from a peer-to-peer payment received on their phone.