We’ve been hearing from an increasing number of customers and prospects that they are not only trying to reduce their budget, but specifically trying to reduce their Bloomberg costs or replace Bloomberg altogether and I’m curious as to what’s really going on behind this.
Bloomberg has the premier platform today. It’s known for the deepest quality of data, having the best sales force, being the hardest to use, but also being the hardest to give up. The terminal has cachet. User’s have told us they feel as if their firm thinks less of them if they don’t have a Bloomberg terminal and it’s their link into their IM network. And yet for many of the users in our target market – we’re talking fundamental equity research guys – they only use a fraction of the functionality and in many cases they only use Bloomberg news.
The Bloomberg business model is very simple and consistent with a premier brand. One product, one non-negotiable fee of $1500-$1800 per month and for major accounts services are provided at no additional cost provided the total terminal fees are high enough. And they sell 2 year contracts and won’t cancel them even if the users have left. Makes good business sense.
So what’s a firm to do that has reduced the number of users and wants to dramatically reduce platform costs? What we are seeing is that as firm’s contracts with major high-end (i.e. expensive) vendors are rolling off they are looking at ways to swap the platforms and services out for less expensive ones. This risk/phenomenon is well captured in the Silicon Alley Insider’s The Bloomberg Terminal Stands On The Precipice.
And what it means for FirstRain is we are in an astounding number of conversations now, either alone or with one of our partners, with customers who are looking to replace Bloomberg. Because of the simplicity, and yet rigidity, of the Bloomberg model they are looking to replace it with a less expensive solution, especially when the users are only using it for news, and we help our partners provide a very rich news platform by mining the web for alternative research.
That said, we are careful to be respectful of everyone and not get between two large players because in the end what we offer is different and complimentary to all the platforms today – it’s a sales balancing act!