Several hundred BusinessWeek employees filed into an auditorium at the McGraw Hill headquarters yesterday morning to learn about their future. On the stage were top editors and execs from Bloomberg LP, which had just scooped up our 80 weekly (and its Web site) at an undisclosed (but no doubt fire-sale) price.
Here’s what we heard: Bloomberg, which sells its “box” for $20,000 a year, is swimming in money, unfettered by the grim advertising economy, immensely ambitious, and dedicated to becoming the leading power in financial and business news. Getting bought by such an outfit bodes well for many at BusinessWeek. While restructuring and layoffs are inevitable at a magazine losing $1 million a week, Bloomberg ranks as the closest thing in journalism these days to a safe home.
Still, I’m trying to think ahead 10 years and wondering about the future of Bloomberg’s model. They have a proprietary technology platform in a world moving toward open standards. Their box has an interface that requires training courses—this in a global market where simple, intuitive systems rise to the top. These limitations haven’t mattered to date, because Bloomberg holds a trump card: speedy and reliable data. Traders have plenty of incentive to pay for the boxes and figure out how to use them, because real-time data is a must. If their competitors get the news first, they lose. It’s this dynamic which fuels the 300,000 (and counting) subscriptions for Bloomberg boxes.
How much can this market grow? To listen to Bloomberg execs, they make money from the boxes and invest that money in more news-gathering power, which makes the boxes even more attractive. It’s a virtuous cycle which presumably leads to continuous growth. With BusinessWeek, Bloomberg hopes to extend its brand into the wider business audience, including c-suite executives, and open up further markets for their boxes.
I don’t see it. In my experience, every continuous growth projection encounters some force that disrupts it.
Seems to me that for Bloomberg to reach wider business dominance, it must leverage the power of its box outside the box—finding a way to sell premium data services for a fraction of $20,000 a year on the Web. This will require far more than the virtuous cycle. The company, which a generation ago innovated with the box, will have to innovate again, developing a new business model. Of course, it doesn’t hurt to have $6 billion in box revenue and and an immense news organization backing it up. But still, it will require establishing new and cheaper services that provide a dose of magic from the box, but without cannibalizing it.
The BusinessWeek acquisition may provide some of the missing pieces. Yet despite the ambitions expressed at yesterday’s meeting, I’d bet that the magazine will end up serving largely as a promotional tool for the company. The real business will be online. That’s where Bloomberg 2.0 will take shape.
(I postponed a flight to Colorado yesterday so that I could attend the meeting, and then I struggled to get a standby flight out here. By the way, I didn’t hear one word at yesterday’s meeting about how Bloomberg plans to use social media. If and when I get to meet the buyers, I’ll be asking them that.) (cross-posted on TheNumerati.net)