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Tag, You're ItEmbracing the Internet might salvage the SEC chairman's legacy.

By Chadwick MatlinPosted Friday, June 27, 2008, at 1:07 PM ET

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At least one site is already preparing for the new XBRL age. Wikinvest, a startup out of San Francisco, applies the Wikipedia crowd-sourced model to business coverage. Users can edit nearly anything on the site: tweak text about a company's financial past, add annotations to a company's stock graph, or input data to something called WikiData. Currently, WikiData relies on users to transcribe data from EDGAR reports and provide links back to the files to prove the numbers. This, obviously, is not ideal. The creators of Wikinvest say that once XBRL goes universal, the data will automatically port into the site. When those data are combined with the site's graphical and editorial content, Wikinvest believes it will offer users a contextual experience that only the bigwigs currently get.

This should make fiscal middlemen sweat. Financial journalists will soon be competing with the masses to find the juiciest contextual stats in the reports, just as their political brethren did during the primary season. Institutional investors' database transcriptions will no longer be needed if their clients spend the time to build their own parser. That means a loss of revenue for many of the data intermediaries as their business model becomes wholly focused on providing smart analysis, not raw data.

The institutional investors I talked to seemed to welcome that change; XBRL allows them to redirect resources from transcription to analysis. That shift is an advantageous one, according to Suresh Kavan, president of the investment and advisory group at Thomson Reuters. Kavan told me that transcription revenue is so small, "I wouldn't even call it a pimple; it's smaller than that. It's maybe a small, pink dot on the underside of my foot."

When I asked Kavan whether he felt threatened by opening up financial data to the masses, he was quick to shoot the question down. "I love the idea," he said, and he added that smart financial companies are preparing for a new financial landscape in which analysis on the Internet was just as integral to making financial decisions as reports from professional analysts.

But Kavan was adamant that XBRL and the added presence of financial tools on the Web aren't a risk to institutional investors. The folks at Reuters Thomson are paid professionals with years of experience and access to sources of information bloggers could only dream of. He made an analogy to the news industry, where he suggested that the public trusts information created by trained professionals more than the thoughts scribbled by amateurs on the Internet. Logically, he's right. But practically, the current state of the newspaper and newsmagazine industries shows that institutional investors' wallets may have reason to be anxious.

The stronger argument is that XBRL is not a fundamental change for highly active traders. Real movement in the markets occurs as companies hint at the kind of profits or losses expected this quarter (as seen in Lehman Brothers' recent dive). That's well before quarterly reports are filed, so XBRL won't provide any added insight until after the markets have made much or all of their moves. The technology is better suited for casual traders looking for more information about the historical performance of a company.

It's this last point that justifies Kavan's confidence. High-profile clients aren't going to turn their backs on institutional investors for the blogosphere anytime soon. But for average independent investors who already rely on the Internet for much of their data, XBRL could provide some fancy new tools to play with. It's possible that XBRL is a win for nearly everyone. For that, Chris Cox and the SEC should be applauded. Even a lame duck can sometimes lay a golden egg.