The “pendulum” of power in global media has finally started to swing away from Google and Facebook in a signal that their domination of global media is not guaranteed, says the chief executive of Bloomberg Media Group, the world’s largest business and financial media organisation.
Justin B. Smith identifies a series of indicators that suggest a potential weakening of the so-called “duopoly” stranglehold that the two Silicon Valley companies currently have over the world’s advertising market. “The realities of 2017 and 2018 for these two companies, especially Facebook, [are] that they are facing pretty significant commercial model [and] civic responsibility questions, significant global political questions, they are under massive scrutiny in Europe and growing scrutiny in the US, and all of that is fuelled by consumer scrutiny fundamentally,” he says.
Speaking to The Drum on a visit to London this week, Smith says these challenges for Facebook and Google must also be considered in the historical context of cyclical shifts in global media’s tectonic plates. “If you look at the top five most valuable companies in the world five years ago and 10 years ago, they are different than what they are today,” he says. “15 years ago I was working on digital media properties and I had the same [duopoly] attitude towards AOL and Yahoo.”
All this could mean that the duopoly might be weakened, Smith says: “The pendulum is swinging toward the possibility of change which we have not seen recently.”
In a joint interview, John Micklethwait, editor-in-chief of Bloomberg, speaks of “a political sea change” in attitudes to Facebook and Google among lawmakers in Brussels and Washington, corporate advertisers and media companies. “There is no doubt that they are much more encircled than they were before,” he says.
As a declaration of interest, I have previously done work for Bloomberg Media Studios, a commercial arm of Bloomberg.
Criticisms of Google and Facebook’s advertising share have become commonplace in the news industry, with BuzzFeed founder Jonah Peretti, Dow Jones chief executive Will Lewis, and Guardian editor-in-chief Katharine Viner being among the voices calling for a change in the playing field.
But Bloomberg’s observations don’t carry the desperate tone of some other media organisations. Founded as a financial data company in 1981 by Michael Bloomberg, the privately-held business makes annual revenues estimated at more than $9bn, 80% of which comes from its financial data terminals, for which subscribers pay around $24,000-a-year.
Indeed, Smith’s view of the media ecology and of Bloomberg’s place within it is a hugely optimistic one, based on the conviction that recent disruption to digital advertising revenue acts as an incentive for media companies to innovate and take back control of their own destinies.
“Prior to seeing any pendulum swinging, when the duopoly were literally dominating the media business, one perversely positive effect was that it made a lot of us think ‘How the hell are we going to grow in this environment when digital advertising used to be our great hope for the future?’ and that has been a question at the top of our minds for the last couple of years,” he says. “Our guiding principle is that the only way you are going to grow is through innovation and the places you should innovate are around the areas where the platforms can’t compete with you.”
Teaming up with Twitter
Central to that plan of innovation is Tic Toc, Bloomberg’s new 24-7 news network on Twitter. It has found 150,000 followers in 10 weeks and Smith and Micklethwait are hopeful that eventually it can replace the biggest international news networks as the trusted global go-to destination for big breaking news. “Tic Toc is a multi-year, very ambitious, global venture that is looking to become the next generation global news network,” says Smith. “I talk about it as disrupting CNN, disrupting BBC, these are multi-billion dollar legacy markets. That’s our long-term vision.”
The logic for basing Tic Toc on Twitter rather than Facebook is clear, he says. “Twitter, I would argue, is today the world’s biggest news platform. Twitter is much, much larger in terms of audience and engagement with news-seeking consumers than any other media platform. So building hybrid products between a content and journalism based company and the social media platform that has the most news consumers in the world makes a lot of sense.”
Smith has a proven track record. At his previous job as president of Atlantic Media, he took a venerable but ancient American magazine and turned it into a digital powerhouse, while also launching business-focused Quartz as a digital-only sister brand. He joined Bloomberg in 2013.
Tic Toc is a revolutionary idea, he maintains, because while other news brands are using Twitter to publish video they have not created a product bespoke for and native to the platform. Tic Toc offers hourly five-minute global news round-ups, beside contextual video stories, live coverage of breaking stories and a safe advertising environment for its seven launch sponsors. “A lot of the traditional TV players cut up chunks of their linear television and put it on digital platforms but it’s not a 24-7 live channel on social media, it’s more episodic,” Smith says. “They’re tethered to their traditional business models and subscription fees and can’t make that content available for free.”
Under Smith, Bloomberg has pursued a multi-platform publishing approach. It has a linear television platform that is distributed in 450m homes around the world but it also streams its video on its digital outlets to mobile phones and desktop computers, and via an app on OTT platforms including Roku and Apple TV. “Our strategy is to push the linear television in the digital environment as quickly and aggressively as possible,” says Smith.
Micklethwait joined Bloomberg three years ago last month. He was previously the editor-in-chief of The Economist for a decade, playing a key role in its rise as a profitable global news brand during a period of chronic industry upheaval.
His job at Bloomberg, which has 2,700 journalists (nearly 20 times as many as The Economist) is quite different. Firstly he spends “most of my time” working on the data terminal, the core business. This, he says, is “doing very well” despite reports that it faces pressure from spending cuts in the banking sector. Bloomberg TV is also “core” and helps to drive subscribers to the terminal.
But Micklethwait also recognises the importance of social media as a news platform. A “Social Velocity” team of more than 30 people scan social platforms for signs of breaking news and are alerted by use of words such as ‘gunfire’ or ‘resignation’. “They sit there trying to verify as quickly as possible things that happen around the world,” he says. “If there’s a shooting or an explosion they move markets so we follow that.” The team’s authentication of stories is helpful not just to Tic Toc, but to Bloomberg’s highest-paying customers. “This is news verification which is immensely complicated, very high-tech and worth a huge amount of money to the core terminal business.”
Broad coverage but 'no Kardashians'
In modernising the newsroom Micklethwait has looked to put it on a more global footing. When he arrived he was staggered to find that the Bloomberg Politics site covered only American stories. “A lot of this is not rocket science,” he says. “We have still got a long way to go – we would love to increase non-American viewership on television, and [Tic Toc] we are trying to take as global as possible. [Bloomberg magazine] BusinessWeek we see as one of the biggest opportunities if we can get it to be as global as other magazines I may have worked for. That would change its numbers very dramatically.”
While he acknowledges the strong competition in the business and financial news sector he thinks that Bloomberg’s genuine global reach puts it ahead of rivals who concentrate their strengths in a single region. Furthermore, he believes the appetite for business news is expanding among the wider public. “The general business audience is growing and becoming by itself more global – you can have any kind of business anywhere and be disrupted by something miles away,” says Micklethwait. “The broader audience of clever people who are interested in business is something we can tap into. The core part of the people we are chasing are business people, but you can also find people along the way; the university professor who wants to subscribe to BusinessWeek and the student who looks at TicToc because she thinks it’s a better way to discover what’s true on social media.” Tic Toc takes a very broad definition of business news, although Micklethwait has imposed a “no Kardashians” guideline.
Having a diverse product portfolio helps ensure that Bloomberg is not as reliant as other news media companies on Facebook and Google for distribution and advertising revenues.
Nonetheless, if the duopoly were to change their position as a result of the growing pressures they face, the whole news media could benefit, Smith observes. “[It] could change on a dime,” he says. “It wouldn’t take a significant shift in the division of revenue to actually create tons of value for the media companies and totally change the media landscape overnight. So there’s a world in which this could look a lot better very soon.”
But in any case, while Facebook and Google might dominate in direct response digital advertising, most brand advertising – worth $100bn – is still going to television companies and only slowly migrating to online platforms, he notes. This shift is coming at a time when the duopoly are under attack over brand safety and facing a public and regulatory backlash over content. “It does create a moment where, as this $100bn of advertising moves over, quality environments with distinctive offerings can compete more effectively than they have for many years.”
Bloomberg has learned from the duopoly.
During his London visit, Smith has also been promoting a new commercial offering, which seeks to take advantage of Bloomberg's global reach and immense pool of data to provide clients with a service that includes not just advertising and custom content but business consultancy, brand strategy and marketing. “We own the business international audience around the globe, whether it’s in Indonesia, Saudi Arabia, London or San Paolo,” he says. “Much in the way Google and Facebook have built these massive internal data science-driven agencies that help them target at scale… we are creating a one-stop shop.”
Assessing Bloomberg’s commercial future, he says: “We want to be more like McKinsey, selling solutions, than we want to be like a traditional media company.”
Ian Burrell's column, The News Business, is published on The Drum each Thursday. Follow Ian on Twitter @iburrell