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How to build a “Bloomberg for X” media company

If you had to rank the world’s most innovative media companies, most would put The New York Times at the top of their list. Over the past 14 years, it’s built out an entire suite of information products that work perfectly in tandem to drive quarter after quarter of record subscription growth.

But I actually think Bloomberg LP could give it a run for its money. It was co-founded in 1981 by Michael Bloomberg, who had recently left Salomon Brothers with a $10 million exit package. He plowed much of that money into developing a computer for aggregating financial data — initially calling it the Market Master terminal — and launched the product in 1982 with Merrill Lynch as its first customer.

The Bloomberg Terminal, as it was later renamed, has always been an expensive product; today, the company charges upwards of $24,000 per annual license to its rich clientele of financial institutions. In order to justify this price and differentiate it from smaller competitors, Bloomberg needed to remain the largest repository of market-moving information. To solidify its information moat, it launched its own news division in 1990 that consisted of just six journalists.

At first, most of that news content was distributed through the Bloomberg Terminal itself, but in the mid-1990s Bloomberg News spun off into its own separate operation and today encompasses everything including a website, print magazines, a cable news network, radio stations, podcasts, and in-person events. 

And while Bloomberg is now a fully-diversified media company that generates healthy revenue through a combination of subscriptions and advertising, its true innovation is the moat it’s formed around the Bloomberg Terminal, which has maintained its dominance as the top financial information product despite lots of lower-priced competition. It’s estimated that Bloomberg LP generates around $12 billion per year, and the terminal still brings in the bulk of that revenue.

One could argue that Bloomberg has established the gold standard for driving synergies between a traditional media outlet and a lucrative tech product. In recent years, many entrepreneurs have tried to copy its playbook, and it’s not hard to see why operators in both the media and product spaces are eager to form their own “Bloomberg for X” companies.

On the media side, traditional business models have continued to falter; not only are news outlets losing advertising market share, but their subscription products have also largely stalled out due to subscription fatigue and other factors. Selling a separate non-media product provides the opportunity for much-needed revenue diversification.

On the product side, customer acquisition costs (CACs) are often the largest barrier to growth; in order to acquire more customers, the company has to set aside a substantial marketing budget to reach these customers on other platforms, and this reach is cut off the moment the ad campaign ends. A media outlet can be a great vehicle for organic distribution, and a quality piece of content can continue attracting an audience long after it’s published. With the right marketing funnel in place, a media outlet can lower a product’s customer acquisition costs considerably, giving it a distinct advantage over its competitors.

There are lots of examples of companies trying to drive these synergies between media outlets and products. HubSpot acquired the business newsletter The Hustle to drive awareness of its CRM software and other SaaS tools. FreightWaves paired an industry news outlet with a Bloomberg-like data platform. And watch enthusiast website Hodinkee built out a marketplace where collectors could buy and sell designer watches.

The stock trading platform Robinhood is also erecting its own media apparatus. Back in 2019, it acquired MarketSnacks, a Morning-Brew-like newsletter that curates financial news. More recently, it brought on Joshua Topolsky, the founder of websites like The Verge and The Outline, to launch a dedicated business news outlet called Sherwood.

It’s early days yet, but Sherwood’s already attracted a great deal of attention for its Tumblr-like design and its mixture of both aggregation and longform reporting. Given that it’s launching on the back of a 40-million-strong email list, it has a huge leg up over most media startups, but it’s still too soon to determine whether it’s driving the synergies Robinhood executives are hoping for.

Its success certainly isn’t a foregone conclusion. Many companies that attempted to monetize media outlets with non-media products have stumbled, even in cases where the media outlet gained real audience traction. Dollar Shave Club, for instance, was widely praised for its willingness to fund MEL Magazine for several years, only for it to eventually shutter it due to lack of a viable business model. And Adweek recently reported that Hodinkee’s watch marketplace has sputtered due to the outlet's inability to convert readers into actual customers.

So what’s the secret to building a “Bloomberg for X” company that actually drives synergies between media and product? I can think of three components that are essential to its success.

Editorial independence

One of the biggest reasons these experiments often fail is that the executives who greenlight them don’t actually understand the unique dynamics of running a media company. Because the media outlet is viewed as a marketing channel, these executives try to apply traditional marketing frameworks to its content production, and it doesn’t take them very long to bristle whenever that content undermines their business goals.

Running a media outlet means having the stomach for pissing off potential partners and/or customers. Audiences are attracted to authenticity, and antiseptic, “brand safe” content is unlikely to generate much interest. It’s not uncommon for product leads to talk a big game about the importance of journalism, only to later cave the moment that journalism receives even a modicum of blowback.  

Its own business model

Yes, the entire motivation behind pairing a media outlet with a product is for the former to drive sales to the latter, but it often takes a good bit of financial runway before these synergies can actually be established. 

Meanwhile, the parent company is likely under constant pressure to show ROI for marketing spend. It’s all too common for organizations to ramp up their content production and then quickly cut bait when it doesn’t result in immediate sales growth.

That’s why I think it’s a good idea for the media outlet to establish its own business models that are separate from the main product. Part of the reason MEL Magazine failed, for instance, was because everyone involved seemed weirdly uninterested in monetization. This meant that Dollar Shave Club was forced to pull the plug the moment the parent company faced any financial headwinds. If the magazine had prioritized building out some sort of ad sales operation, it might have been able to extend its runway for a while longer.

An efficient marketing funnel

I know I just spent several paragraphs arguing that the media outlet should establish its own separate business model, but that doesn’t change the fact that the entire motivation behind pairing a product company with a media outlet is so that the latter drives sales to the former. The ultimate goal is for the business to achieve a CAC advantage.

But just because a media outlet is able to amass an audience doesn’t mean it can also drive conversions to its associated products. There needs to be a comprehensive strategy for educating the audience about the product’s core offerings and then triggering a sale at the exact point of need. Guiding users through that user journey is no easy feat, as I’ve learned firsthand.

***

So how does Sherwood stack up against this framework? From reading interviews with all those involved, it seems clear that they understand the importance of the first two recommendations. Topolsky confirmed to Press Gazette that he has editorial independence, and he also stressed that “its goal was to be profitable in its own right, not to act as a funnel for the app.” Indeed, you can already find programmatic display ads on the Sherwood website, and each edition of the MarketSnacks newsletter contains direct-sold, native ads.

What remains to be seen is how Sherwood contributes to Robinhood’s main business: getting people to download its app and use it to buy stocks. Right now, there’s hardly any Robinhood branding on the Sherwood website, and nobody from the company has indicated publicly how the two entities will be integrated.

Could Sherwood simply become profitable on its own, as Topolsky hopes? Sure, but then what’s the point? Robinhood’s current market capitalization is $15 billion. Currently, I can’t think of any digital-only, ad-supported media outlets that have sold for north of $1 billion. Why go through all the trouble of launching an adjacent business that will merely add peanuts to your bottom line?

Or to put it another way, sticking only to an ad-supported model would feel, to me, like a lost chance for Sherwood to prove out its true potential. Why settle for the traditional media revenue streams when a much larger and ambitious news gathering operation is within your reach? And given that Topolsky himself spent a year as Bloomberg’s chief digital content officer, you’d think that he, more than anyone, would grasp the opportunity at hand.

Quick hits

"While NPR still has an audience of about 42 million who listen every week, many of them digitally, that is down from an estimated 60 million in 2020, according to an internal March audience report, a faster falloff than for broadcast radio, which is also in a long-term decline." [NYT] From the same article: “According to internal documents obtained by The New York Times, about 51,000 people subscribe to [podcast subscription bundle] NPR+, as of early March, and the product has generated about $1.7 million in revenue since it was introduced in November 2022.”

Gmail is rolling out updates that will make it a lot easier for its users to unsubscribe from newsletters. I don't think this is necessarily a bad thing. [Android Central]

New York Magazine profiles Mehdi Hasan, whose post-MSNBC media startup already has 20,000 paying subscribers. [New York]

Air Mail launched a retail store in NYC. "It may be the only place in Manhattan where you can buy Carl Auböck desk accessories, Master Boddington children’s stationery, Christophe Pourny slippers, and Chez Dede scarves all in one place." [Air Mail]

"The DOJ’s lawyer collected data on 58,000 [book] titles published in a year and discovered that 90 percent of them sold fewer than 2,000 copies and 50 percent sold less than a dozen copies." So only 5,800 books published in a given year sell over 2,000 copies. [The Elysian]

A newsletter covering Annapolis, Maryland reached $200,000 in revenue only three years after launching. [Creator Spotlight]

Axel Springer has become increasingly influential in the US media space and even hopes to acquire The Wall Street Journal. Semafor takes a deep look at the center-right politics and ambitions of the company's CEO. [Semafor]

CJR profiles 404Media, the writer-owned cooperative launched by former Vice employees. [CJR]

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