It has to be said that Larry Kramer does not look like a media mogul. He is not huge. He is not smoking a cigar. His eyes do not look predatory. And he takes an endearingly self-deprecatory line on his own appearance.

But then Kramer is about tomorrow's media rather than today's. And his enthusiasm and energy for what the internet offers both journalists and readers is everything that a sceptical European expects from a west coast American.

Seated in an office in the elegant Financial Times building overlooking the Thames, Kramer is in London to explain his latest venture, a free internet service designed to bring financial news to Europe's fast-growing army of private investors.

The service, www.FTMarketWatch.com, is a joint venture between the Financial Times, owned by the media group Pearson, and MarketWatch.com, operator of one of America's leading financial websites. In a deal typical of the intricate webbing that laces new media companies together, Market Watch is part-owned by the American broadcasting giant, CBS.

The venture represents far more than just another online news service. It is an indication of just how seriously the big players in traditional media now take the new digital world. Faced with the arrival of rival internet services starting from scratch, the big media groups are coming together in an attempt to crush the upstarts.

FTMarketWatch.com already exists in US form as CBSMarketWatch.com, America's biggest financial news site. Kramer, chairman, chief executive and co-founder of MarketWatch.com, hopes to replicate in Europe the success of the US service, where demand for financial news has surged on the back of investor enthusiasm for fast-rising share values in technology companies. "There are only two things that motivate people to go to a financial site: fear and greed," Kramer says. "They have been there throughout history. Greed is about people who want to get rich and make a lot of money, and they believe there are ways to do it now that weren't available to them before."

Fear, on the other hand, has a broader impact. Individuals are having to take more responsibility for their own finances, a trend established in the US and becoming prevalent in Europe. The result is that people are fearful of being left behind: they see huge sums being made in the stock markets, and feel they must join the game.

If Kramer is right, this powerful combination of fear and greed will drive people to internet sites rather than traditional media such as the Wall Street Journal or the FT. This necessitates a fundamental change in the way such newspapers do business.

US experience with CBSMarketWatch.com has taught Kramer that the service has three key advantages over traditional media: it is free because it is funded by advertising; it is available on the internet and via partnerships with powerful new media players such as AOL and Yahoo; and it can offer very close to real-time news. When an investor has savings tied up in a volatile share, he or she clearly wants the most up-to-date information possible.

Kramer says that as a result far more people now turn to CBSMarketWatch.com than read the Wall Street Journal. Traffic growth across CBSMarketWatch.com has been astronomical. One year ago what would have been a good day now covers about four hours of activity. Capacity has had to increase by 40% a month for the past four months. "It is just exploding," he said.

This pedigree, coupled with the power of the FT brand, will make FTMarketWatch.com a formidable competitor for the fledgling services being started in Britain by companies such as TheStreet and BreakingViews, being set up by former FT journalists Hugo Dixon and Jonathan Ford. Already up and running in the US, TheStreet will be launching a British version of its service imminently at TheStreet.co.uk.

Kramer says pointedly that CBSMarketwatch.com is four times the size of TheStreet.com in the US. But the reality of the internet is that a competitor can close the gap quickly on a rival if better content is provided: users have little brand loyalty to keep them faithful to one site. So the one sure outcome is that financial journalists are suddenly in big demand.

FTMarketWatch.com will be edited by Thom Calandra, editor of the US site and a journalist with experience on the San Francisco Examiner and at the Bloomberg wire service. He will hire 35 journalists within six months, by which time the service will be up and running.

Using the FT's affiliation to other European papers such as Les Echos in France, the service will offer national services to each major European market over the next year to 18 months.

Kramer argues that the coverage FTMarketWatch.com will offer - market-driven news for the general public - has not existed before in Europe.

News editing is crucial: in the US the service has five editors remaking the "front" page endlessly, giving users a fast glance at the most important stories of the minute and the day.

"A lot of other news organisations, especially TV and newspapers, that went to the web automated that process. We erred on the side of more news editors. We felt people wanted our assessment of what is important.

"This should be music to the ears of journalists. Ours is a site built by journalists and it understands the value journalists bring to coverage, that you can't automate some things." Kramer argues that the news judgements are crucial given that investors will be making rapid decisions on the basis of what they read.

Originally a reporter on the San Francisco Examiner, Kramer became a financial reporter on the Washington Post, then assistant to executive editor Ben Bradley, before returning as executive editor of the Examiner. He also has an MBA from Havard.

Despite his enthusiasm for the internet, Kramer believes newspapers will survive. "A paper like the Financial Times has a long future because it is thought-provoking. It lets you take a deep breath and think about events and go at them. Newspapers have their own portability, and the written word still carries weight. Maybe they will be the second, not the first, draft of history. You will not see newspapers breaking news.

"Look at the newspaper business in the US. The newspapers that survived and flourished are the Washington Post and New York Times and LA Times which put things in context. The ones that died are the ones that survived on breaking news, afternoon papers and tabloids. The role just changes."

Kramer argues that financial news occupies a special place in the news market. Sports fans, for example, will use the net for information but their first stop is the game itself, to see the action. Similarly on entertainment, where users will use the web to supplement the experience of reading a book or seeing a film by visiting related websites.

But, he says, "In the financial world, we are the game. We are the entertainment as well as the coverage. You watch the game in real-time on our site. On top of that, every element of financial services is on the internet and they need a medium to advertise on in that world."

Kramer says the potential for advertising revenue is huge as a result. Magazines in the US like Business Week and Fortune, he says, make $300m-$400m a year in revenue from advertisers who reach 1m people. CBSMarketWatch had 4.6m monthly visitors in the third quarter last year. Given that an internet service has fewer costs than a conventional publication, the prospects for huge profits are clear.

Kramer finishes with a final piece of evangelical prophecy: "The internet is the medium of choice for financial news. It is better than television, it is better than radio, it is better than newspapers because financial news has a shelf life. This is the fastest way you can get information to people and if you can do it for free that is how they are going to get it."