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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.”
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.
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
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.