BW staffer unconvinced as to how deal will help Bloomberg

Stephen Baker, a writer for BusinessWeek, posts a commentary where he has difficulty understanding how the magazine’s acquisition by Bloomberg will help that company expand beyond its core business.

Baker writes, “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.”

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