Money: On-line tip sheets: the penny hasn't dropped

TIP SHEETS and market newsletters inhabit a border zone in the financial world, between advisers and magazines.

Some private investors looking to steal a march on the markets rely heavily on the advice tipsters give, and tip sheets occasionally do move markets. Their advice concentrates on niches too small, or too specialist, to attract the attention of mainstream stockbrokers. Penny shares, smaller companies and stocks in industries including sports and technology are the territory of the tipsters.

Tip sheets are expensive and exclusive. An annual subscription to a leading newsletter can cost well over pounds 100. For publishers, this price is not excessive. Print runs are small and tip sheets rely on postal distribution, adding further to the cost.

Putting tip sheets on the internet would solve both the cost and distribution problems and open up this source of investment advice to a wider audience. So far, few UK publishers have taken this route. A lack of technical expertise, and fears of lost revenue, are two barriers.

These are arguments that Andrew McHattie knows well. His company, the McHattie Group, publishes five investment newsletters. Mr McHattie came across the internet in the course of his own research and, after ordering CDs and books from the United States, was won over to its commercial potential. He started to create a site for his own newsletters and quickly realised that tip sheets were not making the most of the new medium.

He came upon the idea to create a single, central website for market newsletter publishers. By charging other publishers for using the site, his own publications go on the web, effectively, for free.

With finance and investment sites competing with thousands, or even hundreds of thousands of websites for surfers' attention, Mr McHattie has the germ of an idea. Grouping together like-minded publishers of PIA-regulated newsletters - even if they are commercial rivals - makes visitors, or "hits", far more likely.

So far, his site, tipsheet.co.uk, contains only rudimentary information about most tip sheets on the market. His own newsletters are there, along with sample issues. Other contributing publishers include Eire-based TechInvest, which tracks hi-tech stocks, and the AIM newsletter.

Mr McHattie admits that most tip sheets, his included, see the web first and foremost as a way to attract new subscribers to the paper editions. He is offering his own publications at a heavy initial discount, with changing web-only offers to encourage internet users to come back to his pages. He does not believe tipsters will turn to the net as a vehicle to publish their advice.

"I don't think any newsletters will want to go as far as putting their current information on the internet. It is not in their interests to do so," he says. Even if sites were protected by passwords, and only open to paying subscribers, he believes tip writers would hold back. Too many small investors would club together to share a subscription to the site, or pass details to friends by e-mail.

Publishers have to weigh this against the vast market potential of the internet. "There are not a lot of subscribers on the internet, but there are a lot of people on the internet who are not subscribers," Mr McHattie says.

So far, his own experience has been positive. "We were a little sceptical about the amount of business we would be able to transact using the site, but it has already been quite good. We have had a lot of investors using the site to seek more information about us and ask for sample copies."

Mr McHattie believes there is one area with potential for on-line publishing: premium information. Newsletter publishers usually put issues out monthly, and markets can move between publication dates, leaving the writers unable to contact subscribers. More up to date information is easily carried on the web, and publishers can charge more for the additional data and advice.

In the meantime, Mr McHattie wants to see something of an on-line community develop around his site. He has set up reader forums and hopes to run competitions to promote the pages.

For the site to meet his aims it needs to build up momentum, and that means persuading publishers to sign up. In the US, group sites for newsletter publishers are already popular, whether their motives are commercial or editorial. Meanwhile, Mr McHattie is working on his colleagues in the industry.

He is also encouraging publishers to put their track records on the site. Tip sheets live or die by their performance, and track records appeal to the public. In the domain of paper publishing, there is already a tip sheet that watches the tipsters, Tip Tracker. "Tip Tracker rates newsletters by their performance and quality," Mr McHattie says. "This site has an opportunity to perform a similar task - if investors use the discussion forums."

q Contacts: www.tipsheets.co.uk; US Tipsheets:www.financialweb. com/newsletters.html; www.margin.com/index.html;www.newsletteraccess.com/subject/invest.html