The Bloomberg Terminal and Decreasing Marginal Costs of Data

23 Mar

Matt Turck offers a great take on the competitive marketplace for business data. Bloomberg has been the gold-standard for financial data and, obviously, deserves all the praise that is heaped upon it. As many people speak of the decreasing marginal costs of data and information, Bloomberg is still a thriving business with 315,000 subscribers and will likely continue to be one for the foreseeable future. As Turck notes, the network effects are indeed one of Bloomberg’s greatest strengths.

Legions of financial analysts are trained to use the terminal and until something comes along that improves efficiency and ease of us, Bloomberg’s preeminence as the leading financial data resource will continue. What’s more, financial companies are unlikely to cancel their subscriptions until a proven product is available. As Turck posits, extracting the signal from the noise is probably the most possible technological advancement that could cause some headaches for Bloomberg.

Of course, these companies are still confounding the reality of dealing with big data and how to properly translate their analytical assessments into positive returns. Meanwhile, Bloomberg’s infrastructure is already positioned to adapt to those changing trends. The future of data is indeed an exciting one.

matt turck

In the eye of some entrepreneurs and venture capitalists, the Bloomberg terminal is a bit of an anomaly, perhaps even an anachronism.  In the era of free information on the Internet and open source Big Data tools, here’s a business that makes billions every year charging its users to access data that it generally obtains from third parties, as well as the tools to analyze it.  You’ll hear the occasional jab at its interface as reminiscent of the 1980s.  And at a time of accelerating “unbundling” across many industries, including financial services, the Bloomberg terminal is the ultimate “bundling” play: one product, one price, which means that that the average user uses only a small percentage of the terminal’s 30,000+ functions.  Yet, 320,000 people around the world pay about $20,000 a year to use it.

If you think that this sounds like a perfect opportunity for disruption or “unbundling” at…

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