Wednesday, May 14, 2008

Perils of Pearlstine: Norm Pearlstine Takes on Repositioning Bloomberg Content

In years past one could visit the head office of Bloomberg, L.P. and peer into the newsroom right off of the main lobby. Mike Bloomberg's office was right off of that news floor, with a glass partition that segregated him about as much as a head of an investment bank trading floor is separated from his or her operations. This was a natural for someone whose career took off in the trading rooms of Merrill Lynch driven by traders responding to real-time news events, but it also underscored the importance to Bloomberg of making authoritative market-moving news a key component of its success.

Times change, and now Bloomberg has announced the appointment of Time Inc. and Wall Street Journal veteran Norm Pearlstine as their first Chief Content Officer, a move that one presumes will enable Bloomberg to leverage its news and data assets more effectively in rapidly changing professional and consumer business news markets. Certainly this will help Bloomberg to move its revenue base more heavily away from professional markets, where its ubiquitous content displays are encountering fewer seats in an increasingly automated and specialized securities trading industry.

As I've noted for several years the financial information industry, like many enterprise content sectors, is moving away from a "bell curve" market model, in which lots of money is made off of many people equipped with subscription content delivery, to a "U"-shaped market model, in which lots of money is made off of highly automated content services and highly analytical services for a small cadre of decision-makers, with your typical "seat" revenues being realized more profitably through a media model where delivery has been commoditized as a benefit. Bloomberg has been relatively slow to respond to these changes, sticking to its highly profitable professional products but only recently beginning to up investment in its media brand audiences.

That's a challenging formula for growth given the continuing evolution of both Thomson Reuters and Dow Jones in supporting media markets more aggressively. Bloomberg 's online operations have grown audence significantly in the past year, almost doubling its online portal audience, but still trails Reuters and Dow Jones significantly for global markets. Thomson Reuters reported 18 percent quarter-on-quarter growth in its media sales in its first combined reports, an indication of how its global presence in online news markets has helped to fuel profits. So while Bloomberg's online, television and licensed content is strong, there is room for growth, especially in overseas markets.

But undoubtedly the increasingly sophisticated presence of Dow Jones has to loom large in Bloomberg's radar as much as the newly combined forces of Thomson Reuters. News Corp has managed this acquisition very wisely so far, retaining an online subscription base that both Thomson Reuters and Bloomberg lack while beefing up its Enterprise Media Group with its Generate acquisition. As these kinds of products that create professional value out of media sources begin to be adopted to Dow Jones' online media offerings Bloomberg will be challenged to devise both more powerful media offerings and a subscription community willing to pay for them. This will be at least as tricky as building a global content brand out of its existing news operations. The real challenge for Bloomberg is to respond to both new opportunities for media revenues and new challenges to high-end content analytics and real-time sales intelligence services in its core markets from newly strengthened players such as Dow Jones.

Pearlstine brings a deep and impressive legacy in the content industry to Bloomberg, but more importantly he brings an outlook on the media business which recognizes that the days of a handful of news monopolies dominating news gathering and dissemination are drawing to a close. To succeed with an electronic news brand one must not only excel at traditional journalism but as well one must excel in making news valuable in whatever context an audience finds it to be valuable. While it's not clear that Pearlstine's insider view of the media industry will lead Bloomberg to new successes in adapting to this more contextual view of the content marketplace he is likely to help open doors for Bloomberg to build out a more competitive brand for both online markets and for print markets seeking out new sources of editorial content.
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