Bloomberg Says Service, Not Internet Delivery, Is the Key to Survival

Great service, not the Internet, is what companies like Bloomberg LP will need to survive.

So says Michael Bloomberg, the founder and chief executive officer of the on-line financial news and analysis service.

"Customer service is the only thing that will matter in the next couple of years," he said last week at Miller Freeman's Financial Technology Expo in New York.

"The key to survival to companies like ours in the next 24 months is not coming up with a new delivery device, but customer service," Mr. Bloomberg said.

Nevertheless, he said, Bloomberg will probably begin delivering information over the public network.

The Internet is a good communications device, Mr. Bloomberg conceded. It and tighter corporate budgets have put pressure on Bloomberg to justify the price of its proprietary terminals, he said. (Users pay $1,640 a month for one, $1,225 each for more than one.)

In the 1980s, Mr. Bloomberg said, customers spent freely on several different terminals.

"Now we have to justify ourselves," he said. "We have to sell, add value, and ... hand-hold our customers."

Bloomberg, which has 4,500 employees and expects 1998 revenue to come to $1.6 billion, can still grow, its founder said.

One way to make money from the Internet, he said, is through subscription fees.

The most successful example, he said, is the Wall Street Journal interactive edition, which has more than 200,000 paid subscribers at $49 a year.

Companies like Bloomberg and its competitors, Bridge Information Systems and Reuters, could do something similar, he said.

A less promising approach, he said, is to sell advertising on a Web site.

"Prices are plummeting for Internet advertising because the click- through rate"-the measurement of how many people click on an ad for further information - "is virtually zero."

Though the Internet lets advertisers track and measure how users examine ads, he said, "the outlook for advertising revenue for all these Internet companies is not great."

As for electronic commerce on the Internet, "the danger is that someone else can come along and build something that your customers want," Mr. Bloomberg said.

At that point, he said, competition switches to comparisons of customer service, reliability, ease of use, and price.

The stock of Internet companies has risen to irrational levels, Mr. Bloomberg said.

"Look at the market cap of these companies," he said. The public is "so far ahead of reality that it is hard to see how the figures can catch up.

"Technology is not a substitute for our day-to-day lives," Mr. Bloomberg said, "and the Internet is not a substitute either."

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