NYT has a fascinating story about the future plans of Bloomberg LP to become a news monster.
The story also details the start of Bloomberg, but the story misses one fact. It misses the real secret to Bloomberg's early success. NYT claims it was Bloomberg's ability to provide instant messaging on its terminals. That came later, and could have been duplictaed. Bloomberg was successful becasue of a monopoloy quote it could provide that no one else could.
In the 1980's, Michael Bloomberg was able to get his terminals on traders desks, especially bonds traders desks, for one reason and one reason only. Bloomberg had the right to supply the "inside quote." Without that edge there were major players willing to spend big bucks to knock him off. But they couldn't get access to the inside quote. I know because I was advising one of the big banks, Security Pacific (Now part of Bank of America), that was trying to blow Bloomberg out of the water.
So what is the inside quote? It's the quote that primary dealers (those that trade with the Fed) show amongst themselves, when trading Treasury securities with the Fed. Back in the 80's, the Federal Reserve didn't announce in advance changes in their Fed Funds policy. You would get a sense for what the Fed was doing by watching what trades the Fed was putting on. This trading was done through the primary dealers and was reflected in the primary dealers inside quote on Treasury securities. When the Fed entered the market you could tell by seeing the changes on the inside quote as the primary dealers adjusted their quotes to the Fed trades. Before Bloomberg, the only people that saw the inside quote were the primary dealers themselves.
Back then, if you were a bond trader that inside quote was a goldmine source of immediate information as to what the Fed was doing, if you could get at it. Michael Bloomberg (Former Salomon Brothers partner) was given the monopoly right to provide the inside quote on his terminals. Thus, every bond trader needed the Bloomberg terminal. Without it you were trading blind. That's how Bloomberg's business really started. For whatever reason, the primary dealers (which include Goldman Sachs and the usual other suspects) and the Fed gave exclusive access to that quote to Bloomberg.
That's what made Michael Bloomberg and Bloomberg LP. It made Michael Bloomberg the multi-billionaire he is today and that provided him with the funds to finance his run that made him Mayor of New York City.
Without the inside quote, he would have been blown out of the water. There was very big money willing to spend whatever was necessary to provide any other information he was providing, with much better looking and functional terminals.