Bloomberg Media Disruptor

VC Paul Kedrosky points out the irony that Bloomberg LP is a huge success as a growing, profitable media company, while many traditional media companies languish.

As a media columnist at Slate summarized:

That Michael Bloomberg, who now presides over New York City as mayor, created in a little over two decades a news and information giant worth $5 billion-plus speaks as much to his enterprise as it does to the sloth and myopia of the conventional press. Better than anyone, Bloomberg perceived in the early 1980s an untapped need for instantly transmitted, market-moving news for traders of stocks and bonds. He understood that with new and affordable computer technologies he could leapfrog the old guard at Reuters and Telerate (once owned by the Wall Street Journal's parent, Dow Jones).

Slate has it right. Bloomberg correctly identified two service aspects that were not good enough for the many financial industry professionals who subscribed to data services from Reuters and Telerate, and he focussed Bloomberg News on perfecting those attributes using new technology:

• Ability to collect, manipulate and compute financial data;
• Ability to communicate instantly with colleagues, whether fellow traders, brokers, bankers or analysts inside or outside the organization;

As the CEO of a major brokerage, and a Bloomberg customer, complained many times, "Bloomberg is the most expensive e-mail system in the world."  There's an element of truth in that statement. Although Bloomberg is a simple system, it is very powerful and its customers become locked into its data and communications links. As a result, no modern financial services company would consider setting up shop without Bloomberg terminals.

At the same time, Bloomberg correctly understood what were the commoditized aspects of  a financial news service that he had to supply, but which would not allow Bloomberg to win customers from the incumbent suppliers:

• Standardized financial news: Quarterly financial results, commodities reports, bond auction details etc;
• Speed of transmission.

Bloomberg went on to apply levels of standardization, automation and what Bloomberg people call "ticketization" to streamline the news-gathering process and to elimnate non-value-add steps.

While traditional newsrooms are largely under-managed and reporters are self-directed (or not), the Bloomberg service brings a trading-like discipline to all aspects. For example, Bloomberg automated some of its radio news reports years ago, such that no human is required to write, edit or read the top-of-the-hour summary with weather, sports and business highlights.

To me, the rapid rise of Bloomberg News is a classic case of a disruptive innovation. Bloomberg himself is a serial disruptor, from his days as head trader at Salomon Brothers to the launch of Bloomberg News, to his career in politics.

**Other Sources**
Bloomberg By Bloomberg: From the horse's mouth, the story of Bloomberg News. There's an ego element to the story, but Bloomberg tells in great detail how he disrupted the financial news market.

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