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Summary:

Bloomberg’s retrenching of its news operation around market-moving news briefs for traders and bankers — not to mention its deference towards the Chinese government — is a sign of how its terminal business drives every decision it makes

Bloomberg — the media company, that is, not the New York mayor of the same name — has been under fire recently for some of the moves it has made on the editorial side of the business, including the alleged spiking of a story that was critical of China. According to a report in the New York Times, this is just part of a much larger shift in which the news entity is retrenching, and going back to its focus on business-oriented news briefs.

This may or may not be a smart move for Bloomberg, since it is a business aimed primarily at brokers, traders and bankers who use the company’s terminals to get a jump on the market-moving news of the day. But what it arguably shows are the risks of structuring a media entity around a subscription model, where the only thing that matters is selling more subscriptions (i.e, terminals).

Easily digestible facts for traders

In the New York Times story, which appears to be based on multiple interviews with anonymous sources both inside and outside the news company, the authors — including media writer David Carr — describe how the editorial operation is being refocused around the needs of “paying customers”:

“Executives on the business side insist that short bursts of market-moving news, not prize-winning investigative journalism, are what Bloomberg’s paying customers want. Editors are increasingly asked to send only brief, bullet-point news reports to terminals — easily digestible facts for traders and hedge fund managers.”

bloomberg-terminal-old-school

This de-emphasizing of non-business content and refocusing on short briefs that are of assistance to brokers and traders (including the new First Word service, which consists of short, Twitter-style updates and appears to be very popular with Bloomberg customers) is just one sign of how the company is retrenching around its core user — as is the fact that some news execs are quoted in the NYT piece saying a minority of users even read the longer pieces the service produces. China is arguably another sign, as the NYT story describes in reference to a critical story that Bloomberg ran in 2011:

“Angry Chinese officials told top editors in Hong Kong that Bloomberg’s information distribution license permitted it to publish only financial news in China, not political news, according to employees with knowledge of the discussions. Editors ordered the article in question deleted from the website, even though the site is global and not China-specific, these employees said.”

The terminal business is under pressure

As Joe Weisenthal of Business Insider pointed out on Twitter, there is one fact that helps explain Bloomberg’s dilemma, and that is the part in the Times story where it says: “The total number of terminal subscriptions increased by 23,000 in 2010 and 14,000 in 2011, but only by 1,000 in 2012 and 3,000 so far this year, according to several employees’ estimates.” For a business that makes so much of its money from terminals, that is not a good statistic at all.

Stalwart tweet

The tension in the newsroom over the company’s coverage of China is connected directly to that problem: according to the NYT story, “Bloomberg News’s tough reporting last year about China prompted officials to cancel subscriptions for the lucrative terminals, frustrating the company’s Beijing sales staff.” It seems obvious that senior executives didn’t like that at all.

“To the bankers that run the place, you have a redheaded stepchild that is a rounding error in the scheme of things that is managing to create a lot of trouble… if you have a $9 billion company that is about to be crippled by a news division that loses $100 million a year, shouldn’t you take a breath and think about the implications of what you are doing?”

A paywall model can affect your journalism

Newspaper paywall

I’ve argued before that Bloomberg and Reuters — another business-focused news operation, although one with less of a reliance on physical terminals for revenue — are going through much the same transition that newspapers and other traditional media entities have, but it is taking longer for that disruption to be felt because their businesses have deeper “moats” around them. In other words, their market has higher barriers to entry than a mainstream news operation does, and that has helped protect them for awhile.

But just as newspapers like the New York Times and Washington Post are being driven to rely on subscription-powered revenue as their advertising businesses come under pressure, Bloomberg is being forced to consolidate its business around its terminals and the institutions that pay for them. And relying on subscribers — whether they are NYT readers or trading firms — for the majority of your revenue can have an impact on your journalism, as Bloomberg demonstrates.

Advertising-driven businesses have their own problems to face, of course, as Financial Times writer John Gapper noted on Twitter, such as an assumed “dumbing down” of their journalism in order to boost pageviews. But that risk is relatively well known — now we have Bloomberg to thank for reinforcing the risks that exist on the opposite side of the media-funding crisis as well.

Post and thumbnail photos courtesy of Shutterstock / Jamie Duplass and Shutterstock / Voronin76

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  1. I think Bloomberg has always focused almost exclusively on its terminal business. I imagine its venture into investigative journalism, sports, etc., was an experiment to see whether it could create original content that would further drive its brand and sales. If that’s the case, I’m not sure I would say it failed – Bloomberg came out of nowhere to become a major presence in the global news market. But the effects of long-term brand building on terminal sales are most likely difficult to gauge, and for now at least it appears as if its renewed focus on the bottom line is driving a decision to pull back on original journalism and invest more heavily in short-form news syndication.

    On that topic, I agree that there is huge demand for short-form news, particularly among investors. At Seeking Alpha we identified this trend early on and our Market Currents team (seekingalpha.com/currents/all) has grown to the point that we’re producing 600-odd short-form news and analysis briefs for investors per day, and covering over 4,000 discrete stocks every month. I’m obviously biased (I’m SA’s editor in chief), but I think Market Currents was a driving force in Bloomberg’s decision to create and invest in First Word.

    Bloomberg does a great job, and each team has its nuances (obviously I think we do some things better). First Word is a terminal-only product. And we’re more than happy to continue what we’re doing for free – please let me know how we can do things better! But yes, I’m very bullish on short-form “atomized” news, especially as news consumption moves increasingly to mobile.

    1. SA Market Currents are fantastic — and I especially like the new presentation format, with the additionally editing and formatting … very valuable and essential reading. Wouldn’t change a thing (other than “please take 600-odd per day to 1,000 or more, lol =)

  2. William J. Brown Tuesday, November 26, 2013

    While Bloomberg News provides much rich content, and I consume that content largely “for free” (I am not a terminal customer), I would argue that it’s also always known where it’s bread gets buttered. Look at the coverage of JP Morgan’s monumental and really unprecedented fines tied to its various alleged misdeeds during the period of 2006-2009 … who should Bloomberg frequently request (and seemingly solely) request to comment on the matter of whether Jamie Dimon should continue as Chairman and CEO? Why, JPMorgan investors like Mike Holland, and long-time friends of Mr. Dimon like past-SEC and Bloomberg Board member Arthur Levitt, of course, among others. All the while, nothing is mentioned about the ongoing WSJ & NYT stories probing JP Morgan’s apparent conflict-of-interest hirings of the children and others who have ties to Chinese senior government leaders.

    Mr. Levitt himself typifies the paper-thin veil of a barrier between the “news” and “subscription” businesses with Bloomberg. No doubt brilliant and accomplished in his career, at the same time he’s on the Board of Bloomberg (a private company, so I don’t really know what “Board Member” means in such context), he is also “special adviser to Goldman Sachs”, and regularly opines on the air, lending “gravitas” and a stamp of legitimacy to such revolving door industry nepotism as recent Treasury Secretary Tim Geithner’s hiring as “president” of Warburg Pincus. See > http://www.newyorker.com/online/blogs/currency/2013/11/tim-geithner-and-the-revolving-door.html

    So, I would posit that Bloomberg has always been very focused on the “real customer”. That some small cadre of journalists and intrepid editors “hadn’t gotten the memo”, requiring a “reminder”, while a credit to their journalistic instincts and desire to use the mammoth resources of Bloomberg to foster true “investigative journalism”, shouldn’t be so shocking or all that surprising.

    Just turn on Bloomberg TV or Radio and listen for 15 minutes. Gone are the academic economists, replaced by staff economists at Wall Street’s big banks, along with any of half a dozen senior “leaders” at PIMCO, providing all the commentary that fits (Wall Street).

    1. In the last three years, many of Bloomberg’s better news and money reporting journalists have left. Those like Susan Lei, stayed on because of their looks, but their reporting was about as misleading as an artice you would read in the NY post.

      Lisa Murphy was the latest journalist to leave, she was teamed with a hard right wing journalist (who is still there) but Lisa only wanted to do hard news about the money market and well she is not there anymore. I’m glad I got rid of Bloomberg TV from my cable chanel package.

  3. Does this increase Bloomberg’s incentives to seriously enhance its enterprise solutions, feed business, to compete with Thomson Reuters?
    Bloomberg entitlement system is crap compared to DACS and Bloomberg IPR for its fixed income data likewise, and its FX coverage not better than any other random vendor.
    But do they tend to invest, improve, and create usable usage policy’s now when the terminal business is bleeding?

    Cheers,
    J

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