Dear Henry,

I’m not annoyed by you! How could I be, when you call me the “king of financial bloggers” no fewer than four times in one piece? I think you’ve created a powerful, innovative, and disruptive franchise in The Business Insider, which employs some very smart people and publishes some great journalism — even if sometimes it’s neither checked nor correct. I’m entirely happy that you’re out there hiring people even as most publications are doing the opposite, and I wish you and your investors the very best of fortune.

My blog entry yesterday was not about you qua entrepeneur; I just thought that if you were going to get into the business of publishing earnings estimates for technology companies — exactly the business you were banned from by the SEC — then it might be worth mentioning the ban as you did so.

In fact, the blog entry wasn’t really about you at all, as you might have surmised from the picture at the top and the lead paragraph, which were all about Michael Whitney. Maybe you could answer my questions where Bloomberg’s Judith Czelusniak didn’t: do you think it was OK for Bloomberg to hire Whitney and not disclose his past? If not, would it have been OK for Bloomberg to hire Whitney if they had disclosed his past?

I suspect that the differences between us are not particularly great, and that we believe that while such episodes aren’t necessarily disqualifying when it comes to hiring journalists, they should definitely be treated transparently. At the margin, the necessity of disclosing such things might well lead media organizations to pick an experienced out-of-work journalist instead: that clearly doesn’t apply in your case, where you’re the hirer rather than the prospective employee.

You say that you’ve disclosed everything in great detail in the past — this is true, and in fact I linked to one such disclosure. I feel that the disclosure should be a permanent thing, easily available to new readers, especially when you start revisiting ground extremely similar to that which you trod as a securities analyst. It’s not a major difference.

I think we’d have a much more substantive disagreement if you defended Bloomberg’s failure to disclose Whitney’s past, or Thom Calandra’s failure to disclose his own past when selling his new newsletter; I look forward to reading your views on them. But as it is, I think you might be overreacting to my piece slightly.

Best,

Felix Salmon, KFB

The indispensable Abnormal Returns has a smart post up on aggregation:

Aggregators, investment or otherwise, are not the cause of the downfall of traditional news gatherers like newspapers. They are simply a sign that people are hungry for information and analysis presented in an efficient manner. For better or worse, that instinct to seek out order in an increasingly complex world is here to stay.

Of course, the news media has been trying to present information and analysis in an efficient manner for centuries: there’s nothing new there. The difference today is that the internet has brought thousands of different news sources just one click away, and so there’s demand for a new layer of editing. Newspapers have always needed editing to put the focus on the most important news, but different readers want different kinds of news and no one editor can be all things to all people.

On the internet there are thousands of people sifting news through their own particular filters, and some of them, like Abnormal Returns, prove to be extremely popular. That’s partly because they’re simply very good editors, and partly because they’re not artificially constrained in the way that newspaper editors are: they can link to anything they like, not just the product of one news shop; and they can ignore important-but-boring stories in favor of the ones that people actually want to read.

It’s almost impossible for newspaper editors and publishers to compete with that — which is exactly the reason why they should instead be embracing it. Either you can encourage people to read your news, or you can discourage them. Everybody needs some degree of help navigating the vast ocean of news and commentary which is produced every day, and no sensible publisher will come to the conclusion that cracking down on invaluable navigators is a good idea. Instead, they should be encouraging them as much as possible. As the late Sy Syms might have said, an educated news consumer is any publisher’s best customer.

So, that happened. Guess I was wrong about this. But if you’re never wrong, you’re never interesting, nicht wahr?

One of the best ways for a TV show to drive DVD sales is to stream old episodes online. It worked wonders for Monty Python, and after looking at the numbers, Chadwick Matlin concludes that it probably helped stem a natural decline in DVD sales for Arrested Development, too. Plus, since Arrested Development was on Hulu, there was a decent amount of ad revenue there as well.

So, naturally, Fox decided to pull Arrested Development from Hulu. Why? Fox won’t say. But my guess is that it’s all part of Rupert Murdoch’s new information-wants-to-be-paid evangelism. He’s looking all over the internet to see where he’s giving away valuable content, and then bringing down the hammer.

Does Murdoch know that he’s serving up full RSS feeds for his WSJ blogs? That’s the right thing to do, of course. But given the way he’s clearly thinking these days, I wouldn’t be at all surprised to see him trying to restrict their broad dissemination, too.

Remember the desperate lawsuit launched by Adaptive Marketing, Ben Stein’s sleazy paymasters, trying to uncover the identity of a critical blogger? The good news is that it’s been dropped:

Plaintiff Adaptive Marketing LLC (”Adaptive”) gives notice that this action appears to have become moot and, accordingly, it is hereby withdrawing this action as to all parties without costs to any party. The clerk may mark this matter “withdrawn.”

The better news is that Adaptive seem to be disappearing down a crazy rabbit hole:

Adaptive believes that it has discovered the name and address of the person in question, thereby mooting this action… The name and address discovered by Adaptive are as follows:

Franklin Seegers
1266 Morse Street, N.E.
Apt. #306
Washington, D.C. 20002

Franklin Seegers, as a minute’s Googling will reveal, is an inmate of Butner Federal Correctional Complex in North Carolina, having been given a 40-year sentence in 2006 for his role in a violent drug gang known as Murder Inc. I don’t know who “flâneur de fraude” is, but I’m quite sure that it’s not Seegers. Still, I hope that Adaptive spend lots of time and money trying to serve a lawsuit on Seegers claiming defamation. This could be very funny indeed.

I met up with Joe Hagan this morning, in the wake of the appearance of his big New York story on Zero hedge. The vitriol aimed at him from the Zero Hedgies is something to behold, both in the comments on nymag.com and on ZH itself. For instance, these three consecutive comments:

Let’s get some of his work particulars, as well as information about his father. And does he have kids?
Hagan: you’re just another meal in the food chain, and you might find ZH readers are a hungry lot.

welcome to fight club joe.

Joe forgot we are the ones that educate his kids, care for his parents, fix his car and deliever his pizza. hehe

There’s genuinely nothing in the article which could remotely justify that level of hatred, except maybe for the fact that Hagan outed ZH as Dan Ivandjiiski. (Something the NY Post had done back on September 2.)

That said, however, it’s undeniable that ZH has a huge following: Quantcast puts pageviews at over 5 million a month, and uniques at over 330,000. (The ratio between the two is very high indeed by website standards, showing how sticky and addictive the site is for its loyal readers.)

Who are these people who flock to zerohedge.com and lap up everything they’re served? They clearly love the chart-filled posts about intraday movements in the stock market, which is one clue. I think what we’re dealing with here is, essentially, retail day-traders, as profiled by Hagan back in February. (Hagan told me that even back then, before ZH really took off, the day-traders he was writing about were constantly reading the site.)

You need to be a little bit delusional to be an individual day-trader, paying substantial sums for information, technology, and trading spreads every day and yet somehow reckoning that by zooming in and out of highly-levered ETFs you can not so much beat as utterly obliterate broader market returns. All day-traders think they’re above-average; they have to, otherwise they wouldn’t have the hubris necessary to do it in the first place.

The idea really took hold in the popular imagination sometime during the first dot-com boom: stay at home, hook in to the markets, and make more by trading your own account than you ever would working for the Man. Call it the ultimate triumph of Capital over Labor.

It’s not hard to guess why these people might be angry: they’re losing substantial amounts of their own money in the market, and they’re casting about for someone to blame. The insanely profitable Goldman Sachs, for one, is always a good target. And indeed it might well be the case that Goldman’s traders probably are picking off a lot of these individual day-traders, and making quite a lot of money off them in aggregate.

Remember too that day-traders tend to be quite rich (or they wouldn’t have money to play with) and convinced that they know something most people don’t (or they wouldn’t have their self-perceived edge in the market). At that point it becomes quite easy to see how they would be attracted to a conspiracy theorist like ZH, who writes dense and often hard-to-decipher posts about the arcana of how the market works. The masses read Dan Brown for fun; the day-traders read Zero Hedge for profit.

None of this really explains the unbridled anger aimed at Hagan, but for the fact that when you’re casting around for someone to blame, and a major media outlet paints your idol as some kind of sleazy kook, you’re liable to take extreme umbrage — especially when you can hide safely in complete anonymity. The Zero Hedgies, in other words, are the 4chan of the financial blogsphere, which is maybe one of the more depressing aspects of the degree to which the financial blogosphere has matured.

Buried in Joe Hagan’s 5,500-word profile of Zero Hedge is the news (at least to me) that it’s the latest home of Equity Private, a/k/a Finem Respice. She started posting at Zero Hedge under the pseudonym “Marla Singer” in May, and even brought her radio show over there (she moonlights as a DJ). Now, however, she has been subsumed into the Borg:

“Tyler Durden isn’t one person,” she said, but up to 40 different people allowed to post under that name. “We are all Tyler Durden,” Singer claimed.

I don’t see the point, frankly. I’ve been following EP for a pretty long time now, and if I knew which ZH posts were hers, I’d place much more weight in them. That’s what I meant when I said that ZH should be disaggregated. But at least now I understand why it seemed as though she hadn’t posted since July 12 — she just moved over to ZH.

Why is online advertising so cheap compared to the cost of reaching 1,000 people in any other medium? Anybody whose answer involves oversupply or excess inventory should read Jim Spanfeller:

The only medium in recent history that has had true advertising scarcity is network television, and, with this year’s upfront, one might suggest that even this is no longer true. In every other case there has been either unlimited inventory available (magazines and newspapers) or limits that have rarely, if ever, been reached (radio, cable and spot TV).

Jim’s right that web publishers, in selling off “remnant” inventory at hugely discounted rates, are shooting themselves in the foot. All they’re doing is making it easy for media buyers to get bargains, and devaluing the very idea of online advertising. Indeed, in another sharp insight, he writes:

Some buyers will point to activation levels (clicks, signups or outright sales) as indicators of the relative worth of specific inventory. This is completely understandable as a guideline. But giving it too much weight is problematic. For example, we now know that 16% of web users generate 80% of clicks and that this 16% represents the lower income and education segments of the total user base. Do we really want to be held accountable as an industry by metrics generated by the lowest common denominator and a minority of users to boot? I can’t think of too many successful models using these types of metrics.

These metrics drive the conversation and the core objectives of online advertising away from demand creation (which is basically the definition of advertising) to demand fulfillment or, put another way, direct response. There is nothing wrong with direct response; every other medium has it, and the industry drives huge value for both marketers and media. But direct response is not advertising—it is something different.

In other words, if you’re looking at your clickthrough rate, you’re not participating in the web equivalent of an advertisement, you’re participating in the web equivalent of junk mail. If publishers don’t want to be in the junk-mail business, they should be very wary about going down the clickthrough path.

The irony of Spanfeller’s column is that he’s the outgoing president and CEO of Forbes.com, which was one of the first journalistic websites to aggressively maximize its pageviews at the expense of the user experience. Auto-refresh, slideshows, cutting stories up into multiple pages — all of these tricks make reading content online that much less pleasant, and thereby cheapen the value provided to advertisers. There’s a reason that Vogue doesn’t put ads in the middle of its fashion stories — it’s presenting the best possible editorial product it can to the reader, and advertisers are happy to pay a premium for that. Online, there are very few equivalents, because of the tyranny of the CPM.

I’d love to see a world where the price of online advertising was a function how many unique visitors saw that ad unit, rather than how many times it was served. That’s much more how the print world works. Instead, we’re stuck in a junk-mail paradigm which benefits no one.

I first heard the name Daniel Ivandjiiski associated with Zero Hedge in March of this year, before the blog really took off. I do believe that he’s just one of many contributors who use the pseudonym “Tyler Durden”, but he’s the only one I’ve ever heard identified, and I think he’s been there for quite a while. He has reportedly said that he’s just a contributor, not a founder, but I’m not sure that distinction really means very much.

Does it matter that Ivandjiiski was barred from the securities industry for insider trading? In most cases, no, but in some cases, yes.

In any case, it’s now time that “Tyler Durden” disaggregate himself, so that it’s more transparent which blog entries were written by the same person. I used to pay more attention to Zero Hedge than I do now, because I found a few posts which I considered to be so wild that I felt I could no longer trust much of what I read there. If it were clearer which “Tyler Durden” wrote those particular posts, I’d pay much more attention to the other “Tyler Durden” posts. And that’s good for everyone.

I never find status-update posts (”I’ll be away from this blog for a while”) particularly helpful, so I tend not to indulge in them myself. But at least I have some non-negligible number of readers who return to the blog on a regular basis and might conceivably wonder what happened to me. If I was a blogger with the grand total of one blog entry since May, why would I put up a post saying I was back? Conversely, if I was a blogger who had posted just two blog entries since June, why would I put up a post saying I was going away?

Of course, the great thing about blogs is that you can say whatever you like, no matter how banal. But at the same time, the great thing about RSS is that you don’t need those regular readers in order to get read: your subscribers will read you if and when you post something, and they’re quite likely to be the readers with their own blogs, who will link to you and get the news out that way. I have dozens if not hundreds of infrequently-updated blogs in my RSS reader, and I generally prefer them to the frequently-updated blogs: when something appears in them, there’s a good chance it’s pretty noteworthy. Unless, of course, it’s just a status update.