MediaWatch: Justin Smith - Bloomberg's New Media Warrior CEO?
Brian Morrissey at Digiday, profiles Justin Smith, the new CEO at Bloomberg Media Group. He says that his track record at the Economist, The Week, and at The Atlantic, will likely result in an embrace "of new media models in the service of supporting quality content."
He picked out some quotes from an introductory email Mr. Smith sent to staff:
The quotes cover such things as uncertainty and the need to accept confusion and chaos. The need for quality media as a way to differentiate Bloomberg from new entrants. And the need to fight complacency in order to, "navigate the relentless waves of disruption that we'll continue to face in media."
This was my favorite quote -- about the need for talent:
Because we're in the business of making and selling ideas, talent is the ultimate driver of media success. In a digital and social world, a talented individual journalist can rival the influence and impact of the world's greatest media brands.
A brilliant marketer can dream up a creative idea that generates millions of dollars of brand value.
An innovative salesperson can beat the competition by selling ideas-based programs rather than commodity advertising.
World class, A+ talent is the super-ingredient for media success, and the organizations that recruit and maintain their top talent -- and manage it well -- will win.
Foremski's Take: There's a widespread fallacy that content isn't very scalable because you need more people to make more content, such as at Bloomberg, where journalists have to be paid to make more content.
The Silicon Valley approach is that software engineering is far more scalable since you mostly just need to plug in more servers and run the same software to expand your business. Therefore, use software to harvest free, or nearly free content, and publish it. That's a far more profitable media business than all the other traditional media businesses.
This is why Flipboard, a magazine format publisher, which creates absolutely no content, and harvests its content from what people share online, has a far higher valuation than old-school media companies such as McClatchy. [Analysis: The Bubble In Pretty Design: Flipboard Versus McClatchy Newspapers]
However, this misses an important point. In 2006, tongue-in-cheek, I named Foremski's First Law of New Media: Content is infinitely scalable (at no cost).
With one story you can, in theory, imprint the entire Internet. No additional servers required. That's scalable to a much larger degree than using servers and software.
With a few name brand journalists, columnists, investigative journalists, photographers, their work can be scaled to the eight corners of the universe.
Bloomberg's new chief seems to understand this idea and it'll be interesting to see how he puts it into practice. Bloomberg is known for its solid, accurate, and fast reporting. It is less known for its brand name reporters. Will Mr. Smith embark on an acquisition strategy of sorts?
An example for others?
Also, will his forays into new media models be something that others can follow? This is unlikely since Bloomberg's media business model is still tied to its lucrative terminals business. Or are changes on the way?
With the steady income from the terminals business there's less urgency to experiment with new models, a point that Mr. Smith appears to be trying to shakeup in his memo to 2400 editorial staff.
The fact of the matter is that the economics of the media business do not favor an organization with 2400 journalists that has to rely on traditional revenues from advertising, paywalls, and events.
The New York Times recently reported two years of consecutive declines in print and digital advertising revenues. It's paywall subscriptions are rising but not fast enough to battle the continued disruption in its core business. [Media Disruption Continues: New York Times Reports 2 Years Of Declining Print And Digital Ad Revenues]
Thanks to the terminals business, Mr. Smith is in a safe position to experiment with new models but his successes are unlikely to become models on which other, struggling media firms can build on. For example, he doesn't have to deal with print and digital advertising. His prior positions: This Week is in trouble, and Atlantic Media is growing but needs to grow faster to keep up with the decline in the value of print and digital advertising.
Today's successful new media organizations, such as Buzzfeed, LinkedIn, Mirror Online -- are journalism-lite models requiring huge volumes of traffic. Smaller media organizations cannot find solace in those models and the same will be the case for Bloomberg's future ventures.
At least at Bloomberg he can rest a bit since he'll be sheltered from the continuing ravages of the media economy. There's no amount of innovation or experimentation that can be done at a single media organization that can turn this situation around.
Quality media is a valuable resource and that value can best be exploited by the financial sector, which is happy to pay for access -- as is the case with Bloomberg's terminals. Asymmetric information creates an arbitrage opportunity and that's how money is made: the old fashioned way.
Will the SEC step in and demand a level playing field for news? Unlikely, as the case with Thomson Reuters selling University of Michigan economics data two-seconds before its public release. [Thomson Reuters Gives Elite Traders Early Advantage] A level playing field is of little use without an equal means to make use of that information.
There's many ways that Mr. Smith's nearly two and a half-thousand journalists can make money from rich subscribers, we probably won't know about the methods, or see the results since they will be hidden inside the organization. The Thomson Reuters case means that there are lots of other arbitrage opportunities that Bloomberg can offer as an additional service to those with the means to pay and profit from them.
Information that has little value wants to be free -- the rest costs a lot.