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June 24, 2020, 12:04 p.m.

Newsonomics: Bloomberg’s Justin Smith is investing in news when everyone else is cutting

“You want to move your business and your model to the place on the media chessboard where the dollars are going to be going” — the TV money that will follow audiences to streaming.

“Bloomberg” is a Rorschach test of a word.

For many, it represents the unique New York City politician whose presidential flirtations reshuffled our politics for a time. For some, it’s his immense wealth and the places — both philanthropic and political — it flows. Then there’s “the Bloomberg,” the business news terminal that built Michael Bloomberg’s company and fortune, and which remains a cash cow today.

What it didn’t represent until relatively recently was streaming video — an online channel first known as TicToc and then, when the app TikTok annexed the world’s mindshare, rebranded as QuickTake.

QuickTake is Bloomberg Media’s latest product push, and another piece of evidence that the company is a long-term, high-impact news media players — even though it gets relatively little coverage compared to its peers.

As COVID-19’s financial damage deepens, there aren’t many media companies in the position to be able to take advantage of a recession — and invest. Bloomberg Media, headed by CEO Justin B. Smith, is investing in QuickTake, with a staffing up to 100, and big plans for fall.

“Starting in September, we’re actually creating full streaming programming with anchors and shows and new series,” Smith says. “We’re going to be unveiling a whole slate of new programming.”

Smith is known as an innovator, viewed by many of his peers as a transformer. As CEO at Atlantic Media, he assembled and led a team that built a respected and talented company, emerging out of (very) Old World magazines into a diversified B2B and B2C leader — a model operation that owner David Bradley has been selling off piece by piece for several years.

Smith moved to Bloomberg Media in 2013, and I first captured his strategic plans for growth there in 2015. The company includes the various verticals of, Bloomberg Businessweek, the recently bought-and-relaunched CityLab, and the expanding QuickTake.

All of that’s powered by what is probably the largest number of journalists working for any single company outside of Japan: 2,700 reporters, editors, and analysts working in 120 bureaus around the world. That’s scale, and it’s produced a big consumer business:

  • Bloomberg Media reaches an audience of 90 million per month.
  • About 30 percent of its revenue comes from outside the United States.
  • Ad revenue contributes about 55 percent of that total revenue, with subscriptions and licensing adding about 20 percent a piece.

Bloomberg is one of the Digital Dozen, a term I first identified in my 2010 book Newsonomics. It’s one of the limited number of enduring, largely global news brands for which the Internet was a true opportunity for expansion, financially, editorially, and in terms of audience. It’s taken most of those news companies more than a decade to transform their businesses for digital — but they’re now seeing the fruits of that effort.

Adaptability has always been key to Smith’s strategies, and it remains so today. In this Q&A, we talk a lot about consumer reader revenue — a business line Bloomberg Media came relatively late to, in 2018

“You need to constantly evolve your business model,” he told me. “I mean, what we’ve been talking about here, basically, is taking a huge global business media company and turning it into a reader-revenue company, and turning it into a company that is playing in the global OTT, full video space. And then the third leg of the stool, is live events piece.”

(Live events are on hold, of course, and we also cover the quick move to virtual events — its challenges and longer-term opportunities.)

Bloomberg is — like the Times, the Post, the Journal, CNN, The Guardian, NPR, and others in the Digital Dozen — a case of the old and the new working here. Targeting well-heeled business news readers with high digital subscription prices…while moving aggressively to lure a younger demographic into business news video, hopefully leading them into long-term Bloomberg customers. One foot on the shakier ground of today, one looking for a step forward.

With advertising’s coronavirus recession, why lean way into a new ad-driven model with QuickTake?

“The answer is that, if there is any part of the advertising ecosystem that you actually want to be leaning into for 2020, 2021, 2022, it’s this demographic on mobile, on social, and in video,” he says. “When things come back, as they will, I think that traditional advertising will probably suffer, and you want to move your business and your model to the place on the media chessboard where the dollars are going to be going” — the TV money that will follow the audience to streaming.

Amid all the model evolution, though, Smith is perhaps stronger than ever before on one key element: It’s people who make the difference. “At the top of every one of my lists, the super ingredient is talent,” he says.

Talent, scale, superior tech, and continuous innovation are the keys to the Bloomberg Media model. In our conversation, lightly edited for clarity, we talk about selling advertising in a Google-Facebook-dominated world, remote work, virtual conferences, paywall lessons, and QuickTake’s future.

The news year so far

Doctor: I’ve reported on big COVID bumps in both traffic and subscription acquisition. What’s been your experience?

Smith: We reached about 150 million in audience. It’s come back down, but it’s still, I’d say around 20 to 25 percent above the 2019 averages.

On subscriptions, we saw a 178 percent increase in March. While we’re seeing the spike from COVID-19 level off, we’re still seeing higher than average new subscriber acquisitions, with May being up about 75 percent versus the January and February benchmarks.

Doctor: Do you think they’ll stick? We saw really good retention rates in the industry after the Trump bump. Will that be the case here?

Smith: Early data suggests our new subscribers from March and April are behaving similar to previous cohorts. It’s stable.

Doctor: Is that just the extraordinary news year?

Smith: It’s a combination, obviously. The interest in the ever-expanding news stories — from coronavirus to the economy to the social unrest and the social justice movement. All of that. And in our case, all of that impact on the economy. It also ties in with our increased investment into the subscription business. We’ve invested into it incrementally beyond what we were planning to do this year, and so we’ve been able to capture more subscribers due to increased investment as well.

Doctor: How early did you realize the impact the cororavirus would have?

Smith: We’re clearly one of the most global media companies. We have large operations in China and in Hong Kong and in Asia, and we were closely monitoring the situation in Asia when the outbreak began in Wuhan. It began seeping into Hong Kong and many of our employees in Asia began working from home from the middle of January.

We were monitoring that and managing through that, but it was a different crisis for our New York-based staff. There was very little connecting of the dots early on, that this was going to sweep the entire planet and that those radical changes to everyone’s life and approach to working would in fact be affecting us months later.

Doctor: Are there things you would have liked to do weeks or a month earlier than you did?

Smith: We could have a done a few things on the margin. We could have prepared a little bit more for a work-from-home world. We could have had a little bit more time to plan for this transition — it ended up being quite abrupt. We made it through that.

If you think about the scale of what we do around the world, we operate six global media platforms that all operate internationally. They are headquartered between the Americas, Europe, Middle East, and Asia Pacific.

I think it was in the middle of March — March 10, March 15, around the — that we literally moved everyone into work from home. One of the advantages of having the Asian operation is that we did learn quite a bit about how to produce live television in a work-from-home environment — how to do a live hit from your balcony.

I’m really proud to see this large, multi-platform organization literally move into full 24/7 operation without any reduction in content volume, any reduction in speed, and in my view, in accuracy or in content quality to a large extent.

Today we’re operating at about 97 percent work-from-home globally.

The subscription business

Doctor: Let’s talk about that advantage you have in being global, and global for a long time. At The New York Times, Mark Thompson has said he believes 20 percent of the 10 million subscribers he forecasts for 2025 will come from outside the U.S. What’s your percentage?

Smith: Bloomberg Media’s audience is truly global — 40 percent of our subscribers are outside of the U.S.

Doctor: You were late in moving to a paywall.

Smith: It was May 2018, so it’s now two years old. We’ve had a very strong first year, strong first 18 months, exceeding all of our expectations. Our paywall model is unique and different in that it’s a very premium-priced model. We charge $34.99 a month after the initial trial. The initial trials, which range from one month to three months, obviously we discount. But within three months, everyone is moved up to the full price of $34.99 a month or $415 a year. We don’t discount beyond the initial offers, and we don’t play games with extended initial offers.

Our biggest lessons were in the discounting of the initial offer. That’s where we’ve experimented a lot and have been able to really increase our volume of profitable subscriptions. We don’t acquire subscriptions that are not going to be profitable on a relatively short-term lifetime-value perspective. We’re not interested in just growing the number for growing the number.

The other area we learned was in the relationship between the meter and the advertising inventory. We started with a meter of 10 articles a month, because we have a very large digital advertising business which has done very well across the years. We obviously didn’t want to put that in jeopardy — not that we were selling out 100 percent of our inventory, but we were still nervous about calibrating the right meter level to not cannibalize or hurt our ad business.

Doctor: Is it a universal meter or are different parts of the site differently metered?

Smith: It’s a universal meter. We put our coronavirus coverage outside the meter for public service purposes, and at times when we introduce a new product — like, when we launched Bloomberg Green, I think we put it outside the paywall for a period of time, from a promotional perspective. [Bloomberg is now doing the same with the just-relaunched CityLab, which it acquired from Smith’s old employer, Atlantic Media.] We’ve ended up tracking very similarly with what The New York Times and The Washington Post have done, and obviously where the Journal has been for a long time. It’s actually ending up at a very, very tight meter.

Doctor: What are you at? Are you at two or three?

Smith: Two to three right now.

Doctor: The $400-plus price point is a high one. Who is in your competitive set — the other global business players, right?

Smith: Obviously, The Wall Street Journal is the largest incumbent competitor. And the Financial Times would be the second, both in terms of subscription volume and pricing. They’re both premium-priced global business news brands, and to a large extent that’s a core micro market that we operate in. We actually wanted to be the most premium priced offering in the market.

Doctor: So what kind of a pandemic bump did you see?

Smith: 63,000 new subscriptions in one month, March — about 4× normal.

Doctor: Wow — what your total subs now?

Smith: We’re not going to go on the record with that right now.

Doctor: I have often cited your various 10-point and 20-point summations of digital transformation, back to your days at Atlantic Media. In entering the paywall business, what made the most difference?

Smith: Well, because we were later entrants into the paywall business, we really did have the benefit of being able to study a lot of the successful incumbents. There’s a lot that you can learn from the outside — from a technology perspective, from a marketing perspective, from a pricing perspective, from a product perspective.

At the top of every one of my lists, the super ingredient is talent. I need a more exaggerated, even stronger name than “super ingredient.” Because the more I’m in this business, the more that singular point comes important. It’s just amazing.

I mean not to sound dramatic, it’s sort of a life-and-death question, really. If you are exacting about your talent standard, and if you have patience and are smart and thorough, you can commit to building a world-class talent culture that is going to attract this very rarefied talent and retain it. You live and thrive.

Doctor: So what did that mean in terms of going to a paywall?

Smith: Right — not just the greatest talent, but talent within the handful of organizations with the greatest success and the greatest experimentation.

That’s a principle of our success — creating a powerful cross-disciplinary, collaborative, team culture and operational approach. Because there are deeply connected functional components to executing a successful paywall. It obviously starts with the journalism and the editors. And then there’s like a chain link pulling to the digital product people who are capturing the journalism, the digital product format, who are deeply linked with the digital consumer marketing experts, who are deeply linked to the engineers.

Obviously, the name of the game in digital consumer marketing is being able to test and learn, test and learn, test and learn, test and learn, and having a technology infrastructure that fully enables you to do that rapidly and quickly is an important advantage. I know that some other people, if you don’t make that decision early on on the technology front, it can be a real hindrance. Fortunately, we knew that from some of the great talent that had experience and we were able to make those choices.

Bloombergian scale

Doctor: Bloomberg as a media company popped into the news earlier this year with Michael Bloomberg’s presidential run and all the questions of potential conflict for Bloomberg’s journalists. Then it receded again. Few people understand the remaining size, scale and impact of the Associated Press, Reuters, and Bloomberg News, each still with more than 2,000 journalists, I believe.

Smith: Bloomberg Media is powered by a newsroom of 2,700 journalists and analysts in 120 bureaus around the world. In Bloomberg Media, we have 1,200 people. We have a significant competitive advantage in global content because of the scale and size of the Bloomberg newsroom, 2,700 journalists around the world. More than a thousand are based across Asia Pacific, for instance.

The challenge and an opportunity for Bloomberg is that we don’t come from a consumer media offering, which was very competitive. Honestly, from a product perspective with the Journal and the FT, we actually create more content and publish more content than the two main incumbents. So as we looked out at the opportunity for our consumer subscription business, the world is truly our focus and hopefully will be our oyster, because we have regional editions on the website. You can go to the menu and get an Asian sort of filter, or an African filter, or a European filter, or a Middle Eastern filter. They’re really just filters — they don’t restrict the rest of the content. They’ll just surface the regional content more prominently on the app and on the website. That’s really been a huge area of growth.

Doctor: It’s a weird time for that, with borders shutting and lots of anti-globalization populism. But that’s where you are making your bet.

Smith: The facts are that Bloomberg Media is already by many metrics the No. 1 global business media company on the planet. I mean, there is no one in our category that operates simultaneously six different global business-focused media platforms all around the world at the standard that we do.

We have Bloomberg TV distribution in 300 million homes around the world. Local-language joint ventures, where we actually produce Bloomberg TV in a local market in a local language — Bloomberg TV in Mexico in Spanish, Bloomberg TV in India, Bloomberg TV in Turkey…even in Mongolia, we have a Bloomberg TV partnership.

The digital platforms, in an average month, is 60 million on platform, 60 million off-platform — so a 120 million global footprint for our digital properties. We have a local-language Japanese which is one of the top Japanese-language sites. And we’re growing our digital presence with these new verticals and brands like Bloomberg Green and Bloomberg CityLab and a number of other things.

Doctor: A lot of people don’t understand how the Bloomberg pieces fit together.

Smith: Bloomberg LP is the top company — the holding company essentially, right? Bloomberg Media and the terminal business are divisions. The terminal business is called Financial Products. Financial Products also has the Enterprise Data business, which is a B2B data-licensing business. And then there’s Bloomberg Industry, which houses Bloomberg Government and Bloomberg Law.

And then this is Bloomberg Media, designed as a vertically integrated model where — the way Bloomberg Media was originally conceived — the media is designed to drive value in numerous forms to the Bloomberg terminal business, to Bloomberg’s Financial Products business. And obviously, we’re building the brand, driving influence.


Doctor: In December, you renamed TicToc QuickTake in order to get out of the way of the TikTok juggernaut. How’s that new business going, and is it suited for a time of ad recession?

Smith: The numbers are great. [QuickTake has 414,000 YouTube subscribers.] Obviously, the news cycle has been significant, and QuickTake’s been doing a lot of content around the U.S. social unrest and obviously the George Floyd story. That’s been a major, major focus. We’ve been doing some longer-form content and continue to get very large audiences. Total video views across all social platforms in Q1 2020 grew 64 percent year over year and 17 percent compared to the fourth quarter of 2019.

QuickTake hit its highest number of video views in March, with 137 million total across platforms. In March, it also surpassed 1 million followers on Twitter and doubled in number of subscribers on its YouTube channel.

Doctor: So these are 90-second or so business news videos, explainers of a kind?

Smith: Some are longer — some are up to 5 minutes. QuickTake’s dedicated journalist team of almost 100 people around the world are part of the Bloomberg, the overall editorial empire, but they’re actually dedicated to QuickTake.

The whole logic of QuickTake is to leverage the broader Bloomberg news ecosystem and news gathering operation. When we want to do a story for that large target audience of global 20-somethings, global 30-somethings, we want to do a story on the disappearance of the North Korean leader, we can spin it out very quickly by doing a split-screen interview with the Bloomberg news reporter who’s the expert on it. The same would go for a story on a new development at Amazon or a new development in U.S. politics or with the coronavirus. It’s a layer on top of the large, 2,700-strong Bloomberg news organization.

Doctor: As a business, QuickTake is ad-based at what seems like a less-than-perfect time. This isn’t a subscription business.

Smith: The answer is that, if there is any part of the advertising ecosystem that you actually want to be leaning into for 2020, 2021, 2022, it’s this demographic on mobile, on social, and in video. When things come back, as they will, I think that traditional advertising will probably suffer, and you want to move your business and your model to the place on the media chessboard where the dollars are going to be going.

The huge transition of television dollars moving to OTT is a great place to be. And our platform modernization is actually a growth area, because you put a really compelling advertising offering by creating content and segments that live on the platform and that form sort of a brand space, brand unit on a platform.

It allows you to actually challenge platform dollars, which can then be shifted over to a publisher. You’re effectively offering a high-quality content unit that exists in a platform, and that’s been successful, too. We’re going after the platform dollars, by offering quality brand space content that is units, if you will, that exist on platform and amplified on platform. I think that’s going to be a major area for innovation.

Doctor: Google and Facebook take 60 percent of national digital, 70 percent of local digital. So in this case, you’re able to use Instagram, YouTube, Twitter, and Facebook — you’re able to use those spaces within those platforms — to create your own branded space, which is valuable both for new readers and new advertising.

Smith: Exactly. A move forward is going to be how publishers and platforms collaborate on mutually profitable efforts —serving content to platform readers that is getting created by publishers and creates more equitable monetization models.

Our Twitter deal with TikToc actually was that. I’ve talked at length in the media about how Twitter really allowed us to launch QuickTake because they customized an advertising monetization agreement that made it actually profitable for us to be able to build a specialty media brand on their platform.

Doctor: So with the opportunity you see, you’re actually expanding in this recession?

Smith: We are going to be launching Bloomberg QuickTake OTT — the streaming channel, global streaming channel — with, at the outset, 10 or 11 hours of streaming global video news content. That will complement existing social video content. We’re going to be moving towards around-the-clock streaming of very high quality independent, fact-based business and general interest video news.

Our internal editorial tagline or north star is “The world decrypted,” and we want Bloomberg QuickTake to be that for the next generation of business leaders and young influentials — that 20-something, that 30-something audience that’s effectively consuming their news and their video news on mobile, on social, and soon will be consuming it on OTT.

QuickTake was designed to be our sort of global video. Obviously, both eyeballs and ad dollars are shifting, globally, to social video spending and to OTT spending. The transition of ad dollars in America and around the world to OTT, over the next five years, is staggering. It’s like $150 billion or something.

Doctor: Where does QuickTake fit with Bloomberg TV? How does a user or potential user think about what this product’s going to do for them?

Smith: As people around the globe cut the cord and are beginning to develop new relationships with new global news brands, sure, they’re all familiar with CNN and maybe familiar with Bloomberg TV if they’re in business and finance. But Bloomberg QuickTake we’re looking to wedge into that younger audience.

Doctor: Bloomberg TV, which has been around for a long time, is disproportionately an older audience, right?

Smith: It’s an older audience and it’s more markets-and-finance focused than what Bloomberg QuickTake will be.

Doctor: You know, this is one of few significant investments we’re seeing in the news business in mid-2020.

Smith: It’s a market that’s very hard to enter into because the scale that’s required to compete.

What we’re seeing now — and I say this with a lot more sadness than competitive happiness — is that all the players that were experimenting and trying to do this as well are retreating because of the coronavirus crisis. You’re seeing major job cuts and major pullback from any of the next-generation disruptors. And you’re seeing also pullbacks, frankly, from the large globally scaled traditional news organizations.

Virtual events

Doctor: You’re deeply experienced in the events business, back to Atlantic Media’s early leadership there, and you’ve expanded that business at Bloomberg. With the shutdown, how much light are you seeing in the virtual events business?

Smith: Marketers are beginning to assign more emotional value to virtual events, which is good. Virtual events are clearly going to become an additional event format in the future that didn’t really exist before. When we come back to live events, when it’s safe to, I think virtual events will be another tool in our toolbox as publishers — which is exciting. Because it’s obvious they can reach very, very large audiences and serve very engaged and interactive audience experiences.

Doctor: Most of this is an ad business. So sponsors are seeing the value of it?

Smith: They’re starting to.

Doctor: Lower pricing, and clearly lower costs. Do you think it turns out to be a higher-margin or lower-margin business compared to physical events?

Smith: I think the jury’s still out on that. I’m pretty sure there’ll be a discount in terms of the revenues one can generate on virtual events versus live events. Obviously, the cost structure is lower than live events, but it’s not nothing.

That’s the other thing about virtual events: To do them really well is more complicated than just pulling together a quick Zoom call. There’s much more sophisticated virtual event software and other technology integration to make the experience much, much better. That actually does have costs associated with it.

We’ve pivoted our live event staff towards virtual events. It’s the same people doing that. I think we’ve had to complement our live events staff with more technology talent — getting some of our engineers and other folks from digital products much more involved. That’s been the main change.

Doctor: But that virtual events business was ready, in a sense, given your investment in the physical events business.

Smith: The live events piece which we’ve built is really a great point of pride for our company.

Doctor: I remember at Atlantic Media, when you and Margaret Low built that. I remember that it had gotten up to something like 20 percent of the revenue there, right?

Smith: It did.

Doctor: Can you give us a sense of what it is at Bloomberg now?

Smith: In 2019, it represented about 15 to 20 percent of the business.

Revenue promiscuity

Doctor: Clearly the last decade has been a revolution of reader revenue. But it’s amazing, Justin, all the people I talk to in publishing who say: “Advertising is dead.” It’s amazing what you’re seeing happen right now — newspaper companies laying off the outside salespeople who have business and community relationships. They’re just getting rid of their advertising staffs.

Publishers act as if it’s a binary choice — reader revenue or ad revenue. To me, it’s all the same revenue in a sense, in that it’s all relationship revenue. If you build those relationships, right, with customers and with advertisers, you figure out what they need and how you can provide it virtually and physically. The product will change over time, but if the relationship’s in place, you’re going to do really well.

Smith: That’s absolutely right. I once heard the term revenue promiscuity.

Doctor: A term from another pre-COVID age.

Smith: The idea that you shouldn’t turn your nose up at any revenue stream.

I think of one little micro-innovation that we’ve developed at Bloomberg in particular — and we started with this a little bit with the launch of Quartz at The Atlantic. When you take a single brand like Bloomberg or The Atlantic and you diversify, you diversify all the way — as far as you can.

You start with ads, then you go to paid stuff, and then you try e-commerce, and then you try research, and then you try marketing services — and at one point you’ve tried everything, right?

But when there are just no more diversification options, you actually can come up with the new form of revenue diversification by jumping the wall and creating a new business, an adjacent business that leverages all the assets of your core business but is an entirely new business.

Photo of New York City’s Bloomberg Tower by Bernhard Suter used under a Creative Commons license.

POSTED     June 24, 2020, 12:04 p.m.
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