The Bloomberg Pay Wall – Revenue vs Traffic

Bloomberg’s paywall reignites debate on free content

Stuart Fieldhouse, Director, Hawksmoor Partners

Most hedge fund managers will be used to paying Bloomberg’s hefty fees for its data and trading services, but for the wider world Bloomberg is better known for its television and website news coverage, particularly financial markets news. It raised eyebrows in the financial media world in May however, when it announced that its web-based news would be going behind a pay wall.

Pay walls are still a major talking point among publishers of all kinds of content, raising questions like how much content to park behind a pay wall, what to charge for it, and how to maintain the sort of traffic advertisers will still be happy with.

Bloomberg’s decision comes a year after it experimented with its Businessweek property, which went behind a two tier pay wall. It is now bringing in a very similar model for its digital news, but also videos, newsletters, online television and several other features. Bloomberg is obviously happy with how things have gone with Businessweek, reporting that its reach has grown by 85% to a staggering 93 million unique visitors across both its on-platform and off-platform offerings.

Bloomberg has opted for a two-stream subscription package, with a $34.99 monthly digital rate and a $39.99 monthly all access rate. Users signing up for the digital rate receive access to videos, live stream TV, news apps on mobile devices and the main Bloomberg.com website. Those who go with the all access option receive Bloomberg Businessweek and access to Bloomberg Live events in addition.

Bloomberg has also been reporting record traffic levels for its Bloomberg.com website and its consumer news app is also hitting new highs since its relaunch. Digital revenues have been rising correspondingly.

Pay walls are still a major talking point among publishers of all kinds of content.

Stuart Fieldhouse, Director, Hawksmoor Partners

A hazardous experiment?

Bringing in a pay wall for your readers is something of a hazardous experiment. About 15 years ago Financial News became one of the first dedicated financial news websites in the UK to take the decision to bring in a subscription model for its online content. This was considered a little revolutionary at the time, as there were very few online portals charging for content. The head of sales at FN at the time admitted to me that she saw a drop of 90% in traffic to the site, but she felt this was more than compensated for by the new revenues realised through digital subscriptions.

In the case of Businessweek, Bloomberg says it saw its unique visitors grow by 20% and a 45% gain in new subscriptions through the site. At the time that the Businessweek pay wall was introduced, a former Businessweek editor claimed that the move was part of an effort to compensate for lost advertising revenue as Google and Facebook were increasing their domination of the online advertising space.

This year the House of Lords looked into the dominance of the Google and Facebook duopoly and openly questioned whether current competition law in Europe is going to be enough to regulate the digital economy. Phil Smith, the director general of ISBA, the UK advertisers’ trade association, told the Lords Communications Committee that many advertisers feel that the two companies’ dominance has reduced the amount of choice within digital media.

It is not just the Lords who are worried: many media owners feel challenged by the dominance of Google and Facebook. However financial and business news occupies a more specialist space. Companies that want to target new customers in the financial B2B market are less likely to want the mass market exposure delivered by Facebook.

To move to a pay wall, a media owner is running the risk that their traffic volumes will go down, but our impression in 2018 is that many financial firms still feel there is value to be had from advertising with media that sits behind a pay wall, because content is reaching a more dedicated and specialist audience that is paying to receive it. There is now a big difference between a casual browser on a site like dailymail.co.uk, and someone visiting a more specialist venue.

The launch of a subscription model can indeed complement an evolving and expanding advertising business. It can also serve as the basis of the new product innovations that are appearing, like text to audio and content personalisation. If there is more utility on offer to the reader, this in turn helps to justify the pay wall.

20,000

For Bloomberg it makes sense to add a pay wall because the firm’s business model relies on those terminals the hedge fund industry – and others – are paying for at over $20,000 per year.

Low hanging fruit?

For Bloomberg it makes sense to add the pay wall because the firm’s business model relies on those terminals the hedge fund industry – and others – are paying for at over $20,000 per year. The additional news revenue from, for example, online advertising and subscriptions to Bloomberg news, is what one analyst has described as low hanging fruit. Pay walls are becoming so prevalent in online media that it may well have seemed like an obvious play. It also brings the digital media business at Bloomberg more into line with the paid-for model of the company’s terminals.

There is some speculation at the moment that the decision is also being prompted by the requirement of some parts of the Bloomberg empire to start paying for themselves. It is not likely to be the pricing data and terminals side of the business which are still understood to be lucrative, but there are other loss leaders in there which are going to have to start justifying their existence.

For many consumers, the Bloomberg pay wall will not be a huge blow. They will still be able to view up to 10 stories per month without paying for access to bloomberg.com. This is a canny move which will no doubt please advertisers and keep online traffic from falling off a cliff. It also means that Bloomberg news still remains relatively easy for Google to search and index, another way for Bloomberg to keep those traffic figures up. It does not take much these days for a website to upset Google, and a ‘hard’ pay wall could have done just that.

For more high volume users of Bloomberg content, and I think the company has rightly calculated that these will be financial services firms and big businesses, the asking price is going to be over $400. This is a lot of money for the ordinary consumer, but small beer for employees at financial firms who will simply expense it.

Bloomberg is a financial publisher and if we’ve learned anything over the last 10 years, it is that big news brands like the New York Times and financial news providers like the Financial Times are able to introduce pay walls and do not see their customers leave. Sadly this cannot be said for other sectors of the market and more generic providers, like the struggling US regional newspaper market.

For advertisers and financial firms that are looking to target a specific audience – investors in hedge funds for example – both large and small financial media are retaining their validity in this new era, regardless of whether a pay wall is in place. On the one hand you have the attraction of a small but focused readership that is paying to read articles, on the other the wide spectrum proposition of higher traffic volume combined with better Google search rankings. It is a win-win scenario.

About the Author

Stuart Fieldhouse is a Director of Hawksmoor Partners and Press Halo.