We’re not talking about Mayor Bloomberg here, but rather the mutibillion dollar financial media empire he founded. While there are a lot of alternatives for traders these days, including CapitalIQ and Reuters, most traders still use the ubiquitous Bloomberg terminal as the interface between trading and research.
For the unacquainted, Bloomberg terminals are the de facto research platform for traders and asset managers. Financial institutions pay almost $2k per terminal per month for access to Bloomberg. Once inside, a trader or researcher has access to most of the information and data on the planet. Bloomberg provides a lot of information as part of its basic service. Many trading platforms plug directly into Bloomberg so that traders can go from research, to financial modeling, to trading and reconciliation — all on the same machine and interface.
Lot of basic data included
Much of this functionality, like basic data on equities, fixed income, and market news comes built-in. So, too, basic portfolio analytics and risk tools. But as the financial world’s most powerful aggregator, many other 3rd party services are also available for delivery via Bloomberg for additional fees. These can include everything from First Call, a service that aggregates sell-side research, to foreign exchange price discovery and trading.
Additional 3rd party revenue opportunities
Bloomberg charges a lot for its basic service and then provides a gateway service for investors and 3rd party data and service providers through the firm’s terminals. When I wrote about the online brokers developing App Store like platforms, allowing 3rd parties to sell through and reach their account holders on their platforms, Bloomberg actually was the model for this.
Bloomberg, as a financial information platform, provides a necessary structure to the news, data and information industry for investors. I previously established the 4 roles platforms play in the financial space:
- Aggregate content: Investors don’t have to hunt down information by doing hundreds of Boolean searches on the Internet. By serving as content aggregators, Bloomberg serves as a clearing house and central node to access all types of information and services.
- Establish an orderly market: Platforms create order by creating certain standards for their products and partners. Bloomberg has established syndication guidelines with which partners must comply to be on the platform.
- Create viable business models: It’s not clear to me that many investment research products could survive on a stand alone basis. Investors don’t like to pay for content, and by aggregating numerous sources on a single site, Bloomberg actually creates a viable business model for its partners and shares it out with them.
- Consolidates usage to make single a jumpoff point to reach users: By consolidating the market, making it orderly and putting viable financial metrics behind it, Bloomberg is the gateway to users. It’s too hard, complicated and expensive to reach investors directly. Bloomberg acts as a market maker for investment content bringing suppliers and consumers of content together.
So, it’s interesting to read that PaidContent.org has uncovered that the New York Times is selling a real-time feed of its content via Bloomberg. Of course, most of us can access a free, almost-real time RSS feed of the NYT’s content using a basic feed reader, but PaidContent says that this is the first time the paper has licensed a real-time feed.
What does this mean? It means that Bloomberg recognizes that traders value - in fact, put a premium on - real-time news. Being able to read a breaking story on your Bloomberg terminal before the rest of the investment public has been pushed the story is valuable. The New York Times (NYT), as it wrestles with trying to find a viable business model, understands this as well. One revenue course that many of the leading financial content providers might take is to follow in the NYT’s footsteps and create a tiered subscription model where those who value the real-time-ness of news pay for it, while the rest of us shlubs read it online after an embargo.
Now, it’s unclear exactly how much the NYT would see from this, but it’s another channel and one that can find an audience willing to pay up for valuable, actionable content.
Content stays free and what subscribers pay for is delivery. Not so different from the old model of newspaper print — just updated for today’s financial investor.