Felix Salmon

Ben McGrath’s long-awaited New Yorker profile of Nick Denton is out, and it has (unsourced) numbers:

Given the thin margins of online publishing, Denton’s cultural impact greatly exceeds his revenues, which are somewhere on the order of fifteen to twenty million dollars a year. His ownership stake in the company is around sixty to seventy per cent, and every so often he attempts to consolidate by buying back shares that he has given to current and former employees. The rate he offered earlier this year would have put the company’s value at only thirty million dollars, or a fraction of what most analysts have estimated. (“Owning Gawker stock is like having an undiversified portfolio,” one shareholder said, explaining the potential appeal of such a lowball offer.)

All of these numbers are lower than I would have expected. The Gawker Media Network gets 447 million pageviews per month, of which 320 million are in the U.S. Even if you assume that Denton has no ability to sell ads outside the U.S., then that means Denton is bringing in about $5 per thousand pageviews, on average, with two ads per page. And these aren’t boring old banner ads, either: Gawker Media has long done innovative things with site sponsorships, like the Intel buy at Gizmodo today.

That number, in turn, helps to put another part of the story in some perspective:

At the outset, he had assumed that, in order to be viable, each individual site would need to achieve a million monthly page views; that threshold, he believes, is now twenty million.

At $5 per thousand pageviews, a site getting 20 million pageviews per month would have revenue of $100,000 a month, or $1.2 million per year. What we’re seeing here is Denton’s evolution towards moguldom: at the outset, he would have been utterly delighted with a blog making seven-figure annual revenues. Today, by contrast, that’s the absolute minimum he’ll accept.

Part of the reason is that payrolls per blog have been expanding substantially: where Gawker started with a single staffer making $2,000 a month, Denton’s blogs now tend to have a good dozen or more people on their editorial masthead. McGrath doesn’t give any numbers for Gawker’s payroll, but it’s surely very high at this point.

Which maybe explains why Denton’s stake in Gawker Media is lower than I would have expected — if you have that many staffers, even giving them a tiny bit of equity tends to add up over time. That said, it’s worth remembering that founding editor Pete Rojas left Gizmodo to start Engadget precisely because Denton would not give him any equity in the company.

It’s worth pondering who owns the 30 percent-40 percent of Gawker Media that Denton doesn’t own. The bulk of it, I suspect, belongs to the three colleagues named on the Gawker Media masthead: sales director Chris Batty, ad-sales chief Gabriela Giacoman, and general in-charge-of-everything person Gaby Darbyshire. Beyond that, CTO Tom Plunkett surely has equity, as does Scott Kidder. I’m sure that Curbed’s Lockhart Steele is sitting on some as well, dating back to his tenure as editorial director in the days when Gawker Media’s monthly pageviews totaled less than 2 million, and then there’s Steele’s predecessor, Choire Sicha, as well, and possibly some of their successors in that stressful position.

In any case, I’m sure that Gawker Media is very closely held, which means that at least some of Gawker’s shareholders must own between 5 percent and 10 percent of the company. Even at Denton’s lowball $30 million valuation, his company is now big enough that it has created millionaire employees. (One thing missing from the McGrath profile is the way in which Denton was very good at hiring a small number of top-quality professionals early on; they don’t get much publicity, but they deserve a huge amount of the credit for Gawker Media’s success.)

I certainly wouldn’t advise that those employees sell. For one thing, standard valuations in the blog space tend to be around 6X revenues, which would make Gawker Media worth $100 million or so. But the really big money for minority shareholders comes if Denton ever allows in a minority strategic investor. Right now, in the tiny secondary market for Gawker shares, Denton is the only buyer. But if a deep-pocketed strategic investor comes along, that investor will happily buy up other shareholders’ stakes at valuations well north of $100 million.

Meanwhile, shareholders are at least getting some kind of dividend on their Gawker Media shares. So unless they’re really desperate for the cash, I doubt that Denton’s getting many takers at his $30 million valuation. Even if that means he’s offering a seven-figure sum to some of his shareholder-employees.

The WSJ splashes the results of a major investigation on its front page today — so major, indeed, that it has its own ominous “On The Inside” logo. Clearly, a lot of work went into this:

At least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee, according to a Wall Street Journal analysis of more than 3,000 disclosure forms covering trading activity by Capitol Hill staffers for 2008 and 2009.

I’m glad that the WSJ is keeping Congress accountable, here — but I’m much less impressed by the way in which the newspaper is over-egging its findings.

The WSJ story is shot through with the implication that there’s a big scandal here, but I don’t see it. Instead, I see a lot of subtle rhetorical tricks, like the way in which the paper leads with a single profitable trade by a single staffer.

The fact is that if you took two years of trading data from 1,700 upper-middle-class American households, you’d certainly find a handful of profitable trades in there. And there’s no indication in the WSJ story that what they found was anything more than you’d expect from chance alone.

For instance, the WSJ says that just 72 of those 1,700 Congressional staffers “traded shares of companies that their bosses help oversee”. That’s about 4%. And the WSJ doesn’t say how many other stocks those 72 staffers traded — there’s no indication that any of them traded disproportionately in stocks that might be considered to lie in an ethical grey area. My feeling is that if you took 1,700 upper-middle-class American households and assigned them randomly to various Congressional representatives, you’d find 72 of them trading companies those representatives oversee.

There’s also no indication of how those 72 staffers fared in their trading activities overall — did they even beat the market? What’s more, after examining trading records spanning the biggest stock-market decline in living memory, the WSJ has found exactly zero suspicious trades on the short side. Even the trades in Fannie and Freddie were long-only day-trades made by the husband of a staffer for Nancy Pelosi.

The story talks about a going-nowhere piece of legislation which would prevent members and employees of Congress from trading securities based on nonpublic information they obtain. It’s a good piece of legislation, and its passage would strengthen civil society. But as far as I can see, there’s nothing in this story which implies that the bill needs to be passed in order to solve a clear and present problem.

If there were Congressional staffers who were making lots of money by taking advantage of nonpublic information, then the case for the bill would be even stronger. The WSJ went digging in an attempt to make that case. But ultimately what they came up with, I think, was pretty thin stuff. Which is good news: it’s not like anybody wants Congressional staffers to be doing such things. But let’s not try to gin up a scandal where none exists.

Bloomberg CEO Dan Doctoroff wants to become a fully-fledged media mogul, not just in the hermetic space of financial terminals, but in consumer-facing media too. He tells Keith Kelly that the more inescapable Bloomberg’s media properties are, the better the terminals will do:

Said Doctoroff, “We want to gain a greater audience for Bloomberg News, which translates into greater influence, which translates into more market-moving news, which enables us to sell more terminals.”

Ryan Chittum is not convinced:

Hard to see how you’re going to use news to sell more $20,000 a year terminals if you’re dumping more of the same news on your Web sites for free.

I’m with Doctoroff on this one. The more ubiquitous Bloomberg’s news, the more terminals it will sell. The bigger and the better-known you are, the more quickly you’ll get your calls returned and the more exclusive access to newsmakers you will receive. In turn, that improves the quality of your news product, and the willingness of financial professionals to pay $20,000 a year for it.

Those professionals really don’t care if the news is on a Bloomberg website or not; as far as the market is concerned, the information is public as soon as it hits the terminal in any case. The competition for Bloomberg terminals is other terminals, not the web. And insofar as the web provides any competition at all, it’s the web as a whole which does so, not that tiny little corner of the web which is published by Bloomberg. The web is simply too big: no matter how much beefed-up Bloomberg content is “dumped” onto it, that’s never going to suddenly make it a much more attractive alternative to a purpose-built news and information terminal designed very specifically for financial professionals.

Instead, the web will give Bloomberg valuable visibility among the kind of people who will never use a terminal of any description, including large swathes of Washington as well as important people in the non-profit area, or the education sector, or any number of other important yet non-financial industries. And the more that they see and respect the brand, the more likely they are to become valuable sources for exactly the stories that traders with terminals want to see.

The point is that Bloomberg can profit from an asymmetry: if a Capitol Hill staffer reads B Gov a lot, she’ll be more likely to talk to the Bloomberg commodities reporter calling from New York or Sao Paulo. Which is why Doctoroff’s strategy makes sense, and Chittum’s skepticism is misplaced.

If you want to hone your financial-media reading skills — if you want to be an active, critical reader of the financial press — then here’s an exercise for you: find an important study of some kind which has been reported in many different places. Read the study, and then read the different stories reporting on it. Then, ask yourself about the degree to which the reports accurately sum up the contents of the study. The result is what I like to call a report report report, and it’s a great way of keeping readers alert.

There’s a great example right now: the Canadian conference board’s report on the effects of a takeover of Potash Corp. It’s been widely covered, and a look at that coverage is if anything even more illuminating than the report itself.

The first thing that jumps out at you is that no one actually bothers to link to the report. (Very honorable exception: The Canadian Press.) The NYT does provide a link where it talks about “the Conference Board of Canada”, but hilariously the link leads to a page of NYT stories about the Conference Board of the US. It’s not that the link is exactly hard to find: it’s splashed across the top of the board’s home page. But for some reason the place where readers can find the report on the internet is not considered important information by anybody covering it.

But how’s the journalism itself? I think the Canadians have acquitted themselves best on this front. The Canadian Press report, out of Regina, does I think the best job of summarizing the study, as well as being the only place with a link to the study itself. Here’s how it begins:

A successful takeover of Saskatoon-based PotashCorp could slash the province’s revenues by at least $2 billion over the next decade while having little or no net effect on employment, according to a report commissioned by the province.

Rob Gillies of the AP in Toronto also produces a good straight-down-the-line summary:

BHP Billiton’s potential hostile takeover of Potash Corp. would have few negative effects on the province of Saskatchewan but could reduce the government’s revenues by at least $2 billion over the next 10 years, a Saskatchewan government-commissioned report released Monday said.

But the minute that you start looking at the foreign press, things start getting messy. The WSJ throws three reporters at the story, and manages to produce a lede which is simply wrong:

BHP Billiton Ltd.’s bid for Potash Corp. of Saskatchewan Inc. could be beneficial to the province, especially in the long term, while a potential offer for the fertilizer giant from a state-owned Chinese company would pose a bigger threat to the local economy, according to a report commissioned by the provincial government.

Well, the “bigger threat” bit is right — but the thing about bigger threats is that they tend to be compared to smaller threats. While the WSJ makes it sound like the BHP bid isn’t a threat at all, and in fact “could be beneficial to the province, especially in the long term”.

I have no idea where the WSJ finds that conclusion in the report: I certainly can’t find it. The word “beneficial” appears nowhere in the report, which explicitly comes with an end point of 2020, ten years away. Over the course of those ten years, the report finds that a takeover by BHP would reduce tax revenues by $2 billion; beyond those ten years, it can’t really say. It’s possible that BHP investment in something called the Jansen Lake project will pay off for the government in terms of new economic activity — but that won’t happen until 2026 at the earliest. That’s very long term. And there’s nothing at all in the report, that I can see, that stresses any long-term benefits of a BHP takeover over a non-takeover option. All of these bars point downwards:

I don’t know about you, but my reading of this chart says that tax revenues will decline over the short, medium, and long term if BHP buys Potash Corp. (That’s the blue bars.) And they could decline even further if BHP becomes desperate for revenue and starts running Potash at full production. (That’s the red bars.) BHP promises it wouldn’t do that, but as the Globe and Mail points out, promises from big foreign miners are often broken.

Yet somehow the WSJ concludes, in the words of its picture caption, that “a report found that BHP’s bid for the company could be beneficial for Saskatchewan”. Very odd. Yes, there are silver linings — a BHP takeover would prevent an even worse Chinese takeover, for instance, and being open to foreign takeover bids “would ensure that Saskatchewan’s turn in the spotlight encourages the sustained investment in the province that is vital to Saskatchewan’s long-term economic prosperity”. But there’s little if anything which says that the takeover itself would help the province.

I think that the problem here is that the financial press is looking at this as a deal story, and from that perspective the report makes a deal slightly more likely than it was before the report was released. Ergo, the report must be positive!

The Reuters story makes this connection very explicit, saying that the report favors a BHP deal over a Chinese deal, and highlighting the effect of the report’s release on the Potash share price. Meanwhile, Marketwatch comes up with the dreadful headline “BHP’s bid for Potash has ‘few negatives’: study”. That headline clearly implies that it’s quoting the report on the “few negatives” front, but that phrase never appears in the report, and I have no idea where it came from.

It’s instructive to compare these finance-based stories with the much more downbeat NYT story, which leads with the potential revenue losses for Saskatchewan, and which I think does a better job of conveying the report’s substance.

Of course, very few people have the time or inclination to read the original study, let alone all the stories reporting on it. But once you start reading these things critically, red flags start appearing. The WSJ lede about the study’s upbeat conclusions, for instance, conspicuously fails to be backed up by any quotes from the report or even any paraphrase of what the long-term benefits of a takeover might be. That’s a giveaway, really. Journalists hate leaving opinions unsupported, and when you see an opinion unsupported like that, it’s often a sign that it’s unsupportable.

Which raises the question of what it’s doing in the paper at all. But that’s a bigger story, which has something to do, I think, with the constant pressure on journalists to “add value” in the form of analysis and conclusions. Sometimes, you won’t be surprised to hear, they’re not very good at that.

Jay Rosen asks for an English translation of my calculation regarding the profit that Carlos Slim made on his NYT investment. It does get a bit complicated, but I’ll do my best.

In January 2009, the NYT borrowed $250 million from Carlos Slim. The idea was that he would be repaid in two ways. First, he would get interest on the loan. And second, he would get the right to buy lots of NYT stock at $6.3572 per share in 2015.

Now, the NYT is paying Slim back, three years early. But Slim isn’t just getting that $250 million back. He’s also getting three other things:

1. All the interest payments that the NYT has to make for three years.
2. The right to buy that NYT stock — he doesn’t lose the right just because the loan’s been repaid.
3. An extra payment on top which the NYT agreed to pay if it repaid the loan early.

How much does that all add up to?

Well, the interest payments were set at 14.053% per year. 11.03% of that was in cash, with the other 3% in kind. Let’s assume that the NYT makes the final year’s interest payment fully in cash, but took advantage of the payment-in-kind option for the first two years. So the NYT paid 11.03% of $250 million two years running. That’s $55,150,000. And then in the third year it’s paying 14.03% of $250 million. That’s another $35,075,000.

Next we have the right to buy NYT stock at $6.3572 per share. That’s a valuable option — and in fact you can put a number on the value of that option quite easily, by using something known as an option calculator. You can quibble about the exact value of the option, but the option calculator gives you a good ballpark figure. And in this case, the option calculator spits out a value of $57,176,400 for the right to buy 15.9 million shares of NYT at $6.3572 per share in January 2015. This right is in the form of what’s known as “detachable warrants”, which means that Slim could go out and sell those options on the open market tomorrow if he wanted. It’s not just paper value he has here: it’s real value.

Finally, the NYT agreed that if it repaid the loan early, it would pay the money back at a rate of 105 cents on the dollar. So for every dollar that the NYT borrowed from Slim, it has to pay back $1.05 as a final principal repayment.

How much did the NYT borrow from Slim, altogether? Well, there was $250 million up front. And then, we’re assuming, in each of the first two years, the NYT borrowed another 3% of that sum, or $7.5 million a year. That’s $15 million over two years, on top of the original loan, for a total borrowing of $265 million. In order to pay that money back early, the NYT then needs to make a principal repayment of 1.05 times $265 million — that’s $278,250,000.

Add it all up, and the total amount of value flowing back to Carlos Slim from the NYT over the course of three years comes to $425,651,400. Subtract his initial $250 million investment, and you’re left with $175,651,400 in profit.

(Why did I originally say $150 million rather than $175 million? Mainly because of that options calculation. Options on volatile stocks are more valuable than options on less-volatile stocks, and I didn’t have a number for the volatility of NYT stock, so I used the number for the stock market as a whole. But now I do have a number for the volatility of NYT stock, which turns out to be much more volatile than the stock market as a whole. And so the value of Slim’s warrants is higher than I originally calculated.)

Of course, all of this assumes that the NYT is going to be able to find its $35 million coupon payment, on top of its $278 million principal payment, in January. That’s $313 million in cash which the company needs to raise somewhere. It doesn’t have that kind of money just lying around, so it’ll have to borrow it from somebody. Who’s the new lender? That’s very unclear.

The New York Times is going to pay back the $250 million loan from Carlos Slim three years ahead of schedule. It’s very expensive debt, so it makes sense that it should be the first debt to be paid down. But this also turns out to have been a great deal for the Mexican billionaire, if you look at the terms of the deal.

For one thing, he’s getting a 14.053% coupon for three years. That’s $105,397,500 right there. And then on top of that, the call option which allows the NYT to repay the bonds three years early is exercisable at 105 cents on the dollar. So Slim’s principal repayment is going to be $262.50 million, not $250 million. There’s another $12.5 million for Slim.

Finally, Slim gets warrants for 15.9 million shares at a strike price of $6.3572. Plugging the relevant numbers into a basic options calculator, I get an option value of $2.179 per share. (I don’t have easily-available volatility numbers for NYT shares, so I’m using the 22.5% level of the VIX, a share price of $7.85, and an option expiry date of January 2015, or 4.25 years from now.)*

So add on another $34,646,100 for the value of the options, and you get a total return on Slim’s $250 million investment of $152,543,600 over three years.

In fact, that number is something of a lower bound. The NYT had an option to pay 3 percent of the coupon in kind, rather than in cash; if it did that, then Slim would have ended up with even more bonds, which are now going to be paid off at 105 cents on the dollar.

And that doesn’t even include the strategic value of becoming the single-largest non-family shareholder of the New York Times Company.

All of which only serves to underline the dire straits in which the NYT found itself at the beginning of 2009. If the company had been able to spend $150 million on the newspaper, rather than on Carlos Slim, then it probably wouldn’t today be sprinting towards implementing its financially-dubious paywall. The NYT is now making new investments, most visibly in Andrew Ross Sorkin’s Dealbook franchise. But the paywall won’t help Dealbook one bit. Maybe Sorkin should borrow some money from Carlos Slim to buy off the NYT’s executives and keep Dealbook free.

*Update: Thanks to Mark, in the comments, who says that current implied volatility for NYT stock is just over 50. Which would put the value of Slim’s options at $3.596 apiece, or $57,176,400 in total. Which means that Slim’s total return on his investment reaches $175 million, not $150 million.

The Michael Idov profile of Nick Denton is interesting, if you’re interested in Nick Denton. I’m more interested in Gawker Media than in Denton personally, so for me the best part comes at the end:

If you look at the beta versions of Gawker and Gizmodo’s upcoming redesigns (set to go live early next year), you’ll be struck by how conventional they look: big headlines, big pictures, a clearly defined lead story occupying a generous video-ready rectangle at the center of the screen. Most of the network’s greatest hits center on pictures and video, not text—and so it follows that Denton’s vision of a blog has also been gravitating from the diary metaphor to the TV metaphor, where his various properties will represent various “channels.”…

All who know him personally concur that it’s practically impossible to imagine Denton idly watching someone else run Gawker. He doesn’t need the money: apart from his Spring Street dream pad, his lifestyle is relatively modest. For his part, Denton insists, Gawker is “embryonic. This is at most a midsize media group that might, in twenty years, be something a bit more.”

You can count me in with the “all who know him”: I don’t think that Nick is going to give up control of Gawker Media. (Which is why I didn’t take his bet.) But remember his previous musing about how blogs are like cable-TV channels: if Gawker Media is going to be “something a bit more” than its current incarnation as a “midsize media group”, I think that Idov is probably very close to what Denton’s thinking.

Those of us who love the printed word might not be very happy about it, but the fact is that pictures and video have an immediacy and popularity that text will never be able to match. Denton is fully aware of this and knows that any big future growth is going to come through a huge increase in the amount of photo and video content on his sites.

Look at the editorial budgets for photography-driven magazines, compared to text-driven blogs. And then look at the editorial budgets for any kind of television station or cable channel, compared to even the most profligate magazine. Gawker Media throws off lots of cash right now, as a relatively lean operation. Idov says, somewhat unfairly, that “Gawker Media content is produced by caffeine-blitzed youngsters at a frantic churn, spurred on by page-view bonuses, barely supported by a base salary, and often fired (and rehired) on a second’s notice”; in fact that’s much less true now than it was in the past and it certainly doesn’t describe someone like John Cook.

But right now, Gawker’s editorial staffers get those big photo or video scoops only sporadically and unpredictably, while the company’s in-house photo and video capacities are still pretty thin. None of the group’s sites can reliably put a strong video post atop their new front page on a daily basis, let alone support such a post with many other videos which are also fresh that day.

The good news is that none of Gawker’s web-based competitors can do that either, although TMZ.com is getting close. And Denton, having handily won the blogosphere, is now going on the record as looking past the likes of HuffPo and nytimes.com: next up, in terms of competitors, are the big — and hugely profitable — cable-TV channels.

A web-based competitor could be hugely disruptive to the cable channels’ business model, which is based on preventing the public from viewing their content unless you pay big bucks every month to a hated cable company. The cable channels also have to shell out for hours and hours of extremely expensive video content every day.

If Denton somehow managed to find a way to produce just a few minutes of great video content for each of his blogs every day, that could mark the beginning of a game-changing move out of the world where the New York Times is a huge and awesome institution and into the world where it’s a media minnow.

So far, no one has cracked the question of how to succeed by producing video-based content which is designed for web consumption rather than for TV. There have been a few promising hopefuls, but they all fizzled out, even as video has become an ever-growing part of our online diet. It’s pretty clear that if Gawker is going to successfully navigate the transition from writing blog posts to producing video, its budget is going to have to grow a lot. And that’s why I think that Denton might be thinking about bringing in some strategic investors: people with video-production expertise, a real nose for what works online and lots of money.

Would they take control of the company? No. But they would be buying some measure of insurance against Denton succeeding in the video world and upending their current business model.

From Denton’s point of view, such a move would carry risks, to be sure. It would probably make his business cashflow negative, for starters. And he would be entering a battlefield littered with many corpses, rather than his preferred uncharted territory. So if he doesn’t find the perfect partner, he’ll probably be happy to move slowly and organically into the world of video-based content: adding a few staffers here and there across his network of sites, as his cashflow allows it and as he finds the right people to hire. But I’m sure he worries about a day when he looks ruefully upon annual revenues in the hundreds of millions of dollars somewhere like TMZ.com and wonders whether, with a bit more ambition, he could have created something like that himself.

Idov is right that Denton is “having too much fun not to stay with” Gawker Media. But the big question now is about the relaunch of the websites, which will literally sideline their reverse-chronological DNA when they go live next year. My suspicion is that far from being the end point of an incredibly long and over-iterated redesign process, the relaunch is actually going to be only the beginning of a determined move into a new world of photo- and video-based online journalism. That move might well be expensive, at least by Gawker standards. But I doubt Denton’s going to let that stop him.

Update: “Online needs to turn itself into TV, said Gawker Media head Nick Denton” today. Also, intriguingly: “a Facebook edition could be Gawker’s future, where stories are personalized and the reading experience is more intimate.”

Lewis D’Vorkin has got off to a rocky start as the guy in charge of editorial at both Forbes magazine and its website: the controversy over the magazine’s execrable cover story by Dinesh D’Souza continues to reverberate. Now, to make matters worse, D’Vorkin seems to be hell-bent on stirring up a Scienceblogs-style uproar over the website’s blogging platform. (Which is basically D’Vorkin’s True/Slant, rebranded.) Michael Learmonth reports:

There’s a business side to Mr. DVorkin’s big idea, and that’s what’s taken him on sales calls to Detroit along with chief revenue officer Kevin Gentzel. The pitch is this: We’ll sell you a blog, and your content will live alongside that of Forbes’ journalists and bloggers. This isn’t the “sponsored post” of yore; rather, it is giving advocacy groups or corporations such as Ford or Pfizer the same voice and same distribution tools as Forbes staffers, not to mention the Forbes brand.

“In this case the marketer or advertiser is part of the Forbes environment, the news environment,” Mr. DVorkin said…

“For the last however many decades of traditional media, you’re a reader so your stuff can only go here,” Mr. DVorkin said, starting to get animated. “You’re an advertiser so stuff can only go here. And our stuff? It goes right here. But there’s a flow of content that’s contextual. Anything can appear in any place as long as it’s contextual — that’s the web and we are bringing that sensibility to the magazine.”

When Scienceblogs tried something along these lines with Pepsi, Newsweek summed things up by saying that “it’s pretty clear that a line was crossed with the Pepsi blog and that the line should never be approached again”. But what D’Vorkin seems to be selling here seems actually to be several steps over the Pepsi/Scienceblogs line.

If you put advertisers on the same distribution platform as your editors and writers, and if you say that there are no lines separating what’s editorial content and what’s advertising, then at that point you don’t need Dinesh D’Souza to destroy your editorial integrity: you’ve managed to do it all by yourself.

In a way, this all makes a certain amount of sense. Forbes editors are by necessity a craven bunch: the magazine side has to do whatever Steve Forbes (who’s the publisher, as well as the editor in chief) tells them to do, no matter how bonkers or wingnut it might be. Meanwhile, the web site has long been an abject lesson in creating enormous quantities of worthless material, largely in the form of SEO-optimized slideshows and the like, on the grounds that the only number that matters is the number of pageviews and ad impressions. The advertisers pretty much run the show already, so why not just give them the keys to the publishing platform and tell them to have at it.

I suspect, though, that Forbes’s bloggers — who hated the D’Souza article — might fight back on this one, just as the denizens of Scienceblogs did. Forbes itself might not have much in the way of editorial integrity, but that doesn’t mean its bloggers don’t have some pride left in them. And if D’Vorkin wants the new Forbes to be built around his stable of bloggers, he might soon learn that they’re much more vocal on such matters than the kind of Forbes staffers who know they have to simply shut up whenever Steve Forbes has another bright idea.

(HT: Roush)

The UK’s FSA has conducted an investigation into the way that big M&A transactions can get leaked before they are formally announced. Its conclusion might shock you, so make sure you’re sitting down for this:

Our enquiries revealed that media reports containing leaks were often closely preceded by telephone conversations between insiders occupying senior roles on a corporate transaction, and the journalists who published those media reports. Due to their position as insiders, these senior individuals held detailed knowledge of the transaction. The calls between the insiders and journalists lasted up to 20 minutes in length and in some cases took place with journalists the afternoon or evening before the leak was first published.

The FSA is unhappy about this: “leaks ahead of announcements pose a threat to market integrity”, they write. But never fear, they’ve worked out how firms should deal with this problem:

Regulated firms should have a robust and detailed media policy…

Internal policies should require all initial media enquiries received by a regulated firm’s staff to be immediately directed to the firm’s media relations team…

Internal policies should also require that once an initial media enquiry has been passed to a regulated firm’s media relations team, the media relations personnel should review the enquiry to decide if it potentially relates to inside information…

If the enquiry potentially relates to inside information, [and] if it is necessary to involve non-media relations personnel, the media relations team must only grant authorisation to other staff members to communicate with the media… where the conversation between the other staff member and the journalist is held on a recorded telephone line.

There, that should do the trick. I’m sure that from here on in, there will be no more M&A leaks in UK newspapers. I only wonder why the SEC hasn’t figured this out yet.

(HT: PTL)

I’m generally plugged-in enough to various news streams that if there’s a big story one day, I’ll notice it before it gets splashed across the front pages of the newspapers the following morning. So I was surprised to see today’s WSJ, with its huge headline running across the top of the front page: “SEC Blasted on Goldman“. The story itself is a long one, and is the work of no fewer than four reporters, with a fifth writing an associated blog entry.

The story is about David Kotz, the SEC’s inspector general, who appeared in front of the Senate Banking Committee yesterday. Kotz was the author of a 159-page report into the SEC’s handling of the Allen Stanford Ponzi scheme, which was released on the same day that the SEC filed its explosive charges against Goldman Sachs. Unsurprisingly, the Goldman charges dominated the business-news cycle, and the Stanford report, which was highly critical of the agency, was, in the words of Reuters, “largely unnoticed”.

So when Senators asked Kotz about the timing of the Goldman lawsuit, his answer can hardly have come as much of a surprise. “It would strain credulity to think it was coincidental,” he said, adding: “I can’t give you a conclusion right now, but it was suspicious.”

Yet somehow, atop this non-commital non-news, the WSJ has managed to construct a damning indictment of the SEC and its entire case against Goldman. Ashby Jones even went so far as to say that Kotz “basically hinted that there may have been more politics than law factoring into the commission’s decision to sue Goldman Sachs”.

Er, no, he didn’t. Kotz might not have like the timing of the Goldman suit. But he said nothing about the substance of it, and he did not hint that the decision to sue Goldman was a political one. It makes sense that once the SEC decided to sue Goldman, it then decided to do so on the day that Kotz’s report was released, in order to deflect attention from the report. That’s what Kotz was implying yesterday. It does not make sense that the SEC decided to sue Goldman just so that it could have something with which to deflect attention from Kotz’s Stanford report. That’s what the WSJ is implying — and what it says that Kotz is implying.

After all, the dark arts of burying bad news hardly constitute a front-page-worthy news story with four different reporters. And I don’t in any case think that Kotz’s answers yesterday really justify an “SEC Blasted” headline, no matter where it’s placed.

But maybe the WSJ is just going back to its roots in terms of reflexively defending big banks whenever they’re attacked by the government. Back in 1933, the Pecora Commission interrogated Charles Mitchell, the chairman of National City Bank, revealing that he had paid himself astonishing sums, and furthermore had avoided paying taxes on any of it. Here’s how Michael Perino describes the reaction of the press, in his new book about Pecora:

If Pecora’s goal was to create outrage, he succeeded magnificently. The only thing dividing most newspapers was which part of the testimony was more outrageous. The Washington Post went with the bonuses (the paper ran the line “Huge Pay Told” over Mitchell’s picture). For the New York Times, it was the taxes — “Mitchell Avoided Income Tax in 1929 by ‘$2,800,000 loss,’” its headline read… The Wall Street Journal’s coverage was, perhaps not surprisingly, notably different. It thought the most significant aspect of Mitchell’s testimony was his huge purchases of City Bank stock during the crash. The Journal gave only cursory treatment to the bonuses and, as for taxes, merely buried near the end of the article that there had been “temporary transactions in connection with taxation.”

Within days, Mitchell had resigned from National City. But it seems the WSJ has no regrets about spinning stories about big banks in very favorable ways.

Every six months or so, The Audit, CJR’s financial-journalism blog, holds a breakfast to update interested parties on how the blog is doing. Each breakfast has an invited speaker, and so it was that I found myself at 7:45 this morning in a very posh Upper East Side club, being offered an array of ties to choose from before being allowed upstairs to take my seat between Nicholas Lemann and Victor Navasky.

The main thrust of my speech, which rapidly became a spirited and high-level discussion, was that journalistic entities — newspapers, magazines, websites, and, yes, Columbia J-school itself — have to start putting much more emphasis on reading, as opposed to writing.

The reason, fundamentally, is that journalism is becoming much more conversational. It started with the rise of the blogs, and if blogs are now slowly dying out, that’s only because the conversation has overtaken them. It’s moved to Twitter, and Facebook, and many mainstream websites, too: the web is social now. You no longer need a blog to be part of the conversation; you don’t even need a Tumblr. Everybody is a publisher now, and all these new networks have helped to create a new vibrancy in public discourse.

This thesis was a good one to bring to an Audit breakfast, I think, because it runs directly counter to the ideas of the Audit’s Dean Starkman, who has written a long piece about what he calls the “hamster wheel” of contemporary journalism. (It’s ultimately going to become part of a book he’s writing on financial journalism and the financial crisis.)

Where Dean sees vast amounts of “completely unimportant” dross, I see journalists simply engaging more with their readers, which is a good thing. Here’s Dean, turning the snark dial to 11:

Put it this way, given limited resources, not all readers would think to assign seven (!) staffers to live blog the opening ceremonies of the Winter Olympics, as The Wall Street Journal did in February:

The preceremony starts, with instructions to the audience. As always in Canada, all explanations are in English and French.

But again, that’s just me. Perhaps there was nothing else to look into that night—in the whole world.

But these were WSJ reporters in Canada to cover the Olympics. There’s only one Olympic event going on during the opening ceremony, and such ceremonies always have lots of reporters at them. The only difference now is that the reporters are transparent about being there, and are trying to provide at least a little bit of value for their readers at the same time. Does Dean really think that if they weren’t live-blogging the ceremonies, they would instead be shouting into their cellphones over the noise, trying to track down some securities fraudster?

Dean has a very old-fashioned view of what journalism is and should be: “the corest of core” values, he says, at any news organization, are investigations. Now I have nothing against good investigative journalism, but it’s hardly a defining feature of most journalism, and in fact Dean’s attitude is extremely elitist, germane only for a handful of big daily newspapers. Most copy in all newspapers, and all copy in most newspapers, is simple stuff, and always has been. People read it because it’s relevant to them, because they can talk about it, and because they might as well read the stories after they’ve bought the paper for the supermarket coupons.

Dean, for instance, doesn’t think this is real journalism:

For the first time in many years, the Howard County Sheriff Department is planning not to purchase any new patrol cars, saving the county $185,000.

I disagree. I think people in Howard County care about this kind of thing — they talk about this kind of thing. If you were walking down the street and saw cinema screens being built, you’d stop to take a look. The New Haven Register allows you to do that from your home computer? Great!

Meanwhile, what does Dean think is being lost?

Do you fly to Chicago to talk to that guy about that thing? Do you read that bankruptcy examiner’s report? Or do you do three things that are easier?

What if you don’t need to fly to Chicago to talk to that guy about that thing, because he’s already put up a detailed explanation of what he thinks online? And if Dean means the bankruptcy examiner’s report I think he means, I’d point him here. Really good journalism is being written about such things every day — it’s just that a lot of it isn’t coming from old-school media outlets. Vanity Fair’s Bethany McLean was also at the breakfast, and she confirmed that the blogosphere is a goldmine for people like her who want to understand the crisis, both in hindsight and as a way of working out what people were thinking and saying contemporaneously.

And of course there are new sources of pure investigative journalism online, too.

What’s more, even in those halcyon days when investigative reporters could spend years on an investigation, the number of readers that investigation reached was tiny: you needed to fortuitously be a reader of the right newspaper on the right day when it appeared, and you needed to be interested in the subject. Today, investigations are much more likely to reach a broad and influential audience, because they are easily available, in perpetuity, no matter where you are in the world.

But Dean doesn’t see it, because he’s concentrating only on old-fashioned media. He complains (without linking) that “the news business has lost an estimated 15,000 journalists since 2000″ — but I don’t think that’s true at all. Mike Mandel is excellent on this, and in fact is a prime example of what’s going on: he might no longer be working for an old-school publication like Businessweek, but he’s still very much a journalist, and is even employing journalists as well:

Overall the number of employed journalists, based on the Current Population Survey, has increased by 19% over the past three year. Meanwhile, the number of employed college graduates has risen by only 3%, and overall employment, as measured by the CPS, has dropped by almost 5%…

Yahoo, for example, hired Jane Sasseen, BW’s very good Washington Bureau chief, to help beef up politics coverage. That job likely shows up in the industry “internet publishing and broadcasting and web search portals”, which has grown by 22% over the past three years. Or take my business, Visible Economy LLC. We’ve hired three young journalists, but it’s tough to say whether these jobs would show up in educational services or in journalism.

Financial journalists know better than most how tight the journalism job market really is: in my field, demand for good journalists vastly exceeds supply*. I get asked on a weekly basis if I can recommend someone for this or that job. And normally the answer is that no, I can’t: pretty much everybody’s taken already. The result is that journalists are getting poached on a regular basis, and salaries are rising impressively: we live in a world where Dennis Kneale has reportedly been pulling down $500,000 a year.

The fact is that a huge universe of great material is being published every day, by old media and new media alike. And increasingly, tools like Twitter are doing a good job of helping the public find the really good stuff. It might be a smaller percentage of the whole than we’re used to, and there might even be less of it on an absolute basis than there was in the past. But there’s much more great journalism available to the average member of the population than there ever used to be. In the olden days, if you didn’t get the NYT or the WaPo, you didn’t read their journalism.* Nowadays, when they publish something great, you read it. Just like when Gawker publishes something great. Or Yahoo blogs. Or some guy in Australia with a blogspot account who can move a stock 20% overnight by sheer force of argument alone.

Still, the biggest thing that’s missing in the journalistic establishment is people who are good at finding all that great material, and collating it, curating it, adding value to it, linking to it, presenting it to their readers. It’s a function which has historically been pushed into a blog ghetto, and which newspapers and old media generally have been pretty bad at. And of course old media doesn’t understand blogs in the first place, let alone have the confidence or the ability to incorporate such thinking into everything they do.

Think about it this way: reading is to writing as listening is to talking — and someone who talks without listening is both a boor and a bore. If you can’t read, I don’t want you in my newsroom. Because you aren’t taking part in the conversation which is all around you.

When journalists apply for jobs today, they’re usually given some kind of writing test. Certainly the people hiring them will look at their clips. Everybody cares about how good a writer you are. So long as you write well, it seems, that’s all that matters.

But if I were hiring, the first thing I’d look at would be the prospective employee’s Twitter feed. What are they linking to? What are they reading? If they’re linking to great stuff from a disparate range of sources, if they’re following smart people on Twitter, if they’re engaged in the conversation — that’s hugely valuable. More valuable, in fact, than being able to put together an artfully-constructed lede.

One of the best new media properties to come along in recent years is the Atlantic Wire. It’s run on a shoestring budget, and staffed by young, smart, hardworking kids with fantastic reading skills. Many of them can write, too — but they write short and punchy. Which is something else Old Media needs to learn how to do: it’s always much more fun reading a Gawker pickup of a Washington Post story than reading the original piece.

The biggest shortage in journalism right now isn’t good writers, or even enlightened proprietors willing to fund investigations. It’s critical readers – journalists who can see when they’re being snowed, who can read between the lines, who can pick up information from across the blogosphere and the twittersphere and be able to judge it on its own merits rather than simply trusting the publisher.

We need much more critical reading, and we also, desperately, need much more linking from Old Media to outside sources. Links aren’t something cute to relegate to a blog ghetto — they’re an intrinsic part of what journalism has to be in the 21st Century. And most journalists are very, very, bad at linking.

Linking and reading, of course, are close cousins: you can’t do the former unless you do the latter.

But once we achieve a world where reading and linking are taught and valued as much as writing, then suddenly the prospects for journalism start looking bright again. The best material will get found and disseminated broadly, through links, and that in turn will encourage publishers to invest in producing such material. Look, again, at Gawker Media, which gets the majority of its traffic through original reporting, much of it of extremely high quality. (And, I’d add, which pays good six-figure salaries to its top bloggers.)

We’ll have much less pointless redundancy, the idiotic syndrome whereby hundreds of journalists from loads of different publications all descend on the same press conference or event, and all file virtually-identical copy. That’s commodity news, and it’s low-hanging fruit in terms of journalistic effort which can and should be eliminated.

And we’ll have much more valuable insight, as experts become disintermediated and journalists start linking to them rather than quoting them. It’s much less work for the journalist, and it’s more valuable and transparent for the reader.

The Audit, and especially its lead writer Ryan Chittum, is a great exemplar of what good critical reading can be, and of how to take part in the debate and the conversation. They’re a harbinger of what everybody will be doing, sooner or later.

But it’s going to take a while to get there: when I expressed these thoughts at the breakfast, I got pushback from the likes of Jonathan Dahl, the editor in chief of Smart Money. He has a substantial staff dedicated to Smart Money’s website, and every day his Google Alert shows him all of the great inbound links that the website is generating. These are people who don’t just like the material so much that they read it: they like it enough to link to it, too. It’s a great validation of the work that Smart Money is doing.

Yet Dahl, for all that he’s grateful for the links, actually dislikes what he’s seeing. He reckons that all those bloggers are just parasitical on his staff’s original reporting and work, and reckons that he has the tough and thankless task of producing the original material, with everybody else outsourcing that work to him without paying him.

Lemann, too, said something similar, comparing the online journalistic ecosystem to a lemon meringue pie with a whisper-thin layer of lemon at the bottom and lots of frothy meringue layered on top. (The lemon, of course, is “reporting”, while the meringue is “commentary”.)

That kind of view says to me that most senior journalists still don’t appreciate the real value being added by the blogosphere — and nor do they appreciate just how much original reporting is done by blogs and other online outlets these days. You can’t become popular just by linking and aggregating, any more: you need good original content.

Still, Lemann’s moving in the right direction: he appreciates that Columbia’s J-school graduates often have to do a lot of critical reading and curating the minute they leave university, and therefore is looking at ways of teaching that. He and I are both optimistic that Emily Bell will be able to help on that front. I’d just love it if things could speed up a bit. Because right now a lot of old-school publications are getting left far behind. And that’s not helping their financial prospects one bit.

*Update: To clarify, the journalism jobs market in general isn’t tight. Look at Demand Media, and the way in which they seem to have no problem hiring people to write for a pittance. But the financial-journalism jobs market is very tight. And in the olden days, NYT and WaPo journalism appeared across the country, in many regional newspapers, thanks to their respective newswires. So you could find NYT journalism without buying the NYT, you just needed to buy a paper which carried NYT stories.

Lucas Conley’s piece on Ugg for the WSJ’s magazine is a perfect example of why the WSJ shouldn’t have a glossy, fashion-friendly magazine.

Conley does a reasonably good job of covering the way in which Deckers Outdoor Corporation, the American company which owns the Ugg trademark, has become a highly-aggressive trademark troll, and in the process has helped to decimate a small but longstanding Australian industry. But having found that story, he buries it, and ends up capitulating to all the evil impulses of the fashion industry.

If you read closely, you’ll find Conley explaining how, despite the fact that “uggs have been a cottage industry in Australia for decades”, Deckers became extremely aggressive when it comes to those small local companies, slapping them with cease-and-desist orders and in general trying as hard as they could to use trademark law to shut down anybody who might be considered a competitor. It won in the US against Koolaburra, a US firm importing sheepskin boots and selling them under the name “ug”, although it lost in Australia against Uggs-n-Rugs, a 32-year-old sheepskin outfitter. But the big picture is clear:

While Deckers may have lost the Australian trademark battle, the company is winning the war. Today, Deckers owns “ugg” trademarks in over 100 countries, protecting them with high-tech anti-counterfeiting tools and a sophisticated network of lawyers, customs officials, corporate coalitions and private investigators. “Counterfeiting is one of the plagues of a popular brand,” says Leah Evert-Burks, Deckers’ inhouse counsel and director of brand protection. “There are some anti-counterfeiting measures I can’t even talk about. It’s amazing what you go through when you get involved in this world.”

By Deckers’ count, last year the company terminated over 20,000 eBay auctions, shut down over 2,500 websites, and accounted for some 60,000 pairs of counterfeit boots seized by customs officials. While Evert-Burks emphasizes that the vast majority were blatant criminal operations out of China (which often glue inexpensive cow suede to the exterior of the boot in place of twinfaced sheepskin), Stewart says he still receives complaints from Australian vendors who have been lumped in with counterfeiters.

Like a global mute button, the threat of legal action has stifled the Australian ugg industry’s efforts to market internationally. The McDougalls claim to have lost 90 percent of their international business since 2004. Their daughter gave up entirely after Deckers shut down her eBay business. “Almost anyone who sells anything with the word ug, ugg or ugh is infringing on their trademark,” Bronwyn says. “There’s no argument.”

At the same time, however, Conley, or his editors, go to great lengths to be as friendly as possible to Deckers. For instance, he doesn’t actually come out and say that uggs have been a cottage industry in Australia for decades: he feels the need to call them “generic uggs” instead, as though they were somehow copying the Deckers Uggs long before the Deckers Uggs even existed.

What’s more, throughout the article, the Deckers product is referred to in all caps, as an UGG. No self-respecting newspaper style guide would ever allow such a thing, but glossy fashion magazines never had any self-respect in the first place, and it’s clear which side of the line the WSJ magazine falls.

Worst of all, however, is the sidebar, which compares Deckers’ boot to the competition:

The UGG Australia Classic boots come in short (midcalf) and tall versions. Any variation on these heights are not genuine UGG boots.

A genuine UGG has the registered trademark symbol ® next to its logo on the label…

Some fakes use synthetic “fleece”.

My emphasis, but you get the point, which almost tips into self-parody here:

Deckers’ UGG boots are made in China, so if the label says “Made in Australia,” it is not an UGG.

The point is that there are lots of Ugg boots. The most popular Uggs are made by a US company in China. That company owns a bunch of trademarks, which somehow means that the WSJ can talk with a straight face about “genuine UGG boots”, while saying that all other Ugg boots are fakes. But the fact is that an Australian Ugg boot, made by a company which long predates the Ugg trademark, is by any sensible definition just as genuine, if not more so, than the boots that the WSJ is falling over itself teaching us to recognize and distinguish.

Yet somehow Conley feels impelled to inform us that if a boot is made in Australia — the home of the Ugg boot — then “it is not an UGG”.

To give an example of how ridiculous this all is, imagine that an American company — maybe even Deckers, you never know — decided to buy up a small knife-making company in Thiers, France. And say that after doing so, it started to register the name Laguiole, and the famous bee symbol, in jurisdictions around the world.

Deckers then decides to outsource production of Laguiole knives to China, while at the same time slapping anybody else trying to sell Laguiole knives with a cease-and-desist order. It starts impounding any Laguiole knives which are imported into the US, and shuts down any market in Laguiole knives on eBay or in other marketplaces.

Laguiole knives have been made by thousands of French craftsmen for over 150 years, but suddenly there would only be one “genuine Laguiole® knife”, and all the others would, overnight, be branded “counterfeits” or “fakes”; their sales would collapse, while Deckers would essentially hijack all of the brand value which has been painstakingly built up over the generations. And heaven forfend that anybody else try to make Laguiole knives in China — those would get seized at customs, and branded as “blatant criminal operations” by Deckers’ in-house counsel.

If that were to happen, one would hope that the WSJ would try to expose the evil trademark troll, instead of running gushing articles about how the company was serving up “stunning results in the midst of a global recession”. It certainly wouldn’t — one hopes — tell its readers how to make sure they were buying a genuine Laguiole® knife rather than an expensive French “fake”.

Conley mentions in passing, in his piece, that after Deckers lost the lawsuit in Australia, it failed to pay certain legal costs of the winning side, as required under Australian law. If he ever asked Deckers counsel about this, there’s no sign of it in the story. Instead, he concludes with a paean to a highly-successful company:

Although UGG is not the haute couture brand it was years ago—the darling of fashion spreads, the envy of A-list gift bags—its sales are bigger than ever. That “alpha consumer,” the mother picking up her kids at private school in the Range Rover? While she may no longer roll up in a pair of the latest UGG boots, her counterparts at the neighboring public school are pulling away in Explorers full of UGG-boot-wearing adolescents. UGG Australia has become a mainstream brand, always in stock—found in several stores in any mall—and begrudgingly approved of even by its critics for its comfort and utility. It’s an appropriate irony; the humble boot of the masses has come full circle—albeit with a trademark this time. And that’s fashion, according to Simonton. “Things come back,” he says, “but they’re never quite the same.”

Well, “irony” is one way of putting it: the humble boot of the masses is still a humble boot of the masses, but now it’s wrapped up in aggressively-enforced trademarks, ensuring that all the profits from that humble boot accrue to a single multi-billion-dollar multinational corporation. But yes, “that’s fashion”. And you can be sure that a glossy fashion-focused magazine is never going to cut against the grain of the fashion industry when it comes to issues surrounding trademark law and intellectual property.

Which is why it’s crazy that the WSJ tries to cover the fashion industry from within the covers of a glossy fashion-focused magazine. The conflicts are far too big — and, as this story shows, the winner in those conflicts is always going to be the big fashion multinational, rather than the magazine’s readers.

Update: It turns out there already is a Laguiole trademark troll! Thanks to vb2b, in the comments, for the link.

I’m as much of a fan of insidery media navel-gazing as anybody, but Cary Spivak and the AJR have gone way too far with their 3,200-word thumbsucker on the ethics of funding investigative journalism with the proceeds from short-selling.

For one thing, the whole subject is something of a non-issue, given the two examples that Spivak has managed to find. The first is Mark Cuban’s Sharesleuth, which was launched in 2006; in the four years since then, Cuban has shorted the grand total of three companies that Sharesleuth has written about. The second site is iBusiness Reporting, which launched in February and seems to have lasted about three months; it hasn’t updated its site since May 14.

What’s more, Spivak manages to avoid any serious examination either of short selling or of the ethics of using it to fund journalists. Instead, he characterizes short sellers as “a group viewed with disdain by some as the market’s bottom feeders”, and simply rolls out a couple of self-proclaimed ethics experts to grace us with their conclusions. Including this chap:

“It isn’t journalism,” says Edward Wasserman, Knight Professor of Journalism Ethics at Washington and Lee University in Lexington, Virginia. “Their claim to be taken seriously as journalists, if they’re making that claim, is ridiculous.”…

Wasserman isn’t sure how to characterize the sites, though he is adamant that they are not journalism entities. “It’s for private gain, not public illumination,” he says. “It gauges success by the results it’s able to gain on behalf of its client…. This is not about understanding. This is about exposing and profiting.”

So, Wasserman is a journalistic purist. Except, he isn’t: you might remember him as the person who defended the idea that Ben Stein could and should write for the New York Times while being funded by evil and sleazy bait-and-switch merchants who steal your money.

Personally, I’m all in favor of experimenting with new journalistic business models, including non-profits like ProPublica. But the fact is that the overwhelming majority of journalism is done for profit and for private gain. If seeking to make money off journalism disqualifies it as journalism, then journalism barely exists. And it’s the aspiration to profitability that Wasserman has to object to here, given that it’s extremely unlikely that either of the sites he’s criticizing has ever made a penny.

Investigative journalism has always been about exposing and profiting — it’s just that the profit has historically come from newsstand sales or increased ad revenue rather than from short sellers. And I don’t understand at all Wasserman’s implication that the act of exposing someone is somehow in conflict with the goals of public illumination and understanding. One would think the opposite is true: the greater the illumination, the more effective the exposé.

If there’s any argument at all about the ethics of the Sharesleuth model, it’s that the economic model incentivizes the journalists to be one-sided and unfair. But Spivak’s only hint that such things might be going on comes when he quotes a lawsuit brought against iBusiness Reporting by Medifast, one of the companies the site has criticized. He never even attempts to judge whether the suit has any basis or justification whatsoever, and he doesn’t even note that hitting short-sellers with lawsuits is pretty much standard operating procedure for any of their targets.

The fact is that shorts, much more than longs, have every incentive to be absolutely certain of their thesis before putting on their trade — especially if it’s based on fraud at a company. Even companies convicted of fraud can see their share price rise, especially when that company’s shorts get squeezed. With a long position, you can hang about and wait as long as you like for the stock to rise, or just watch it follow the action of the stock market as a whole. Shorts have no such luxury, and as a result tend to be especially diligent when doing their investigations.

Meanwhile, the journalism world is full of publications which profit from extolling companies’ virtues and watching their share prices rise — the dot-com boom spawned dozens of them, with names like Red Herring and Business 2.0. Most of them have disappeared by now, but Fast Company, for one, still exists. When it comes to business reporting, the puff jobs regularly planted in glossy magazines by well-paid and highly professional corporate PR executives are much more dangerous than a couple of marginal websites concentrating on the short side.

The main problem with short-funded investigative journalism is that there’s no evidence that the business model actually works in practice. And other journalists who have tried to set up on their own with the aim of selling their work to short sellers have also given up on that idea and moved on to more time-tested ways of making money: Michelle Leder, for instance, sold Footnoted to Morningstar, while Herb Greenberg left his research shop GreenbergMeritz to join CNBC.

Still, the fact is that someone like Sam Antar, for all his past history and possible conflicts, produces much more interesting, more insightful, more useful, and more transparent journalism than Ben Stein could ever dream of.

So let’s have less lazy journalism based on some kind of inchoate idea that short-selling is by its nature less savory or more manipulative than the long side. And let’s have more interesting experiments in how to monetize the work of journalists. The idea of funding journalism from the proceeds of short-selling doesn’t seem to have worked very well. But it was worth a try.

On Friday, Dan Loeb released his second-quarter investor letter, which was immediately published by Dealbreaker. It’s a very political document, kicking off with a full page of quotations from various presidents (and, for some reason, Chinese general Liu Yazhou). It’s easy to see why Andrew Ross Sorkin uses it as the jumping-off point for his column today, headlined “Why Wall St Is Deserting Obama.” And as ever, the column is reposted at Sorkin’s Dealbook blog.

Now Sorkin and Dealbook are the exemplars, at the NYT, when it comes to the journalistic virtue of putting primary documents online. Their Scribd account has over 100,000 subscribers and has had over 2 million visits; it’s much more active than the parallel documents.nytimes.com format used by much of the rest of the paper.

But anybody reading Sorkin’s column today simply has to take him at his word when he says that Loeb’s letter “sounded as if he were preparing to join Glenn Beck in Washington over the weekend.”

If I wanted, I could paint I different picture of the letter. I could point out that there are no fewer than three quotes from Barack Obama on its first page, talking about the importance of helping others and spreading wealth across the whole American population. I could note that Loeb is just as harsh on capitalists as he is on the government.

Many people see the collapse of the sub-prime markets, along with the failure and subsequent rescue of many banks, as failures of capitalism rather than a result of a vile stew of inept management, unaccountable boards of directors, and overmatched regulators not just asleep, but comatose, at the proverbial switch.

And he also sees new government rules being helpful on this front:

Many of the boards we have come across are populated by individuals who rely on the stipends they receive from numerous corporate boards and thus appear motivated primarily to ensure continuing board fees, first-class air travel and accommodations, and a steady diet of free corned beef sandwiches until they reach their mandatory retirement age. We are therefore encouraged by the recently finalized proxy rules, which will ease the nomination and election of directors by shareholders.

He’s even pulling with the government when it comes to cracking down on sleazy for-profit colleges:

Our perspective on the government’s increased willingness to use its regulatory muscle enhanced our short positions in the for-profit education space. Indeed, this summer certain government actions taken regarding these companies served to accelerate the unfolding of our thesis on these names.

So, who has the more accurate view of Loeb’s letter, me or Sorkin? The answer is Sorkin: I’ve been quoting very selectively. But in one crucial respect I’m being much more open and transparent about the letter than he is: I’m linking to it. He’s not.

There’s no legal or journalistic reason why Sorkin shouldn’t link prominently to the letter. When I spoke to Richard Samson, the NYT’s top lawyer on such matters, he was clear that although there are copyright reasons why the NYT might not post the letter itself, there’s absolutely nothing to stop the paper from linking to where the letter is posted elsewhere. And in general, Sorkin’s Dealbook blog is pretty good when it comes to external links.

I see a few possible reasons why Sorkin might not link to the letter, none of them good.

First, he might be moving Dealbook away from the blog concept (and it was always more of an email newsletter than a blog to begin with) to something much more self-contained. Dealbook has been hiring aggressively, and is clearly setting itself up in opposition to, and in competition with, other online sources of financial news. Maybe that makes Sorkin more hesitant to link out than he was in the past.

Alternatively, maybe Sorkin is happy to link out in theory, but he has problems linking specifically to the relatively juvenile and tabloid Dealbreaker. I don’t think that’s true: Dealbook does link to Deabreaker on a semi-regular basis.

There’s a couple of other possibilities, too, which are more worrying. Perhaps Sorkin got the letter directly from Loeb himself, on the condition that he not publish it, and he felt that linking to it would violate the spirit of that agreement. Or maybe there was no formal agreement at all, but Sorkin just felt that linking to the letter would annoy Loeb, and therefore decided not to do so in order to help maintain his relations with a source.

Or maybe it was just an oversight, further evidence that linking to primary sources simply isn’t very important at the NYT.

My hope, as Dealbook beefs up, is that it’s going to become more, rather than less, bloggish — that it’s going to spend as much effort on aggregating and curating news and information from around the web as it is on breaking that news itself. Indeed, one would expect Dealbook to have linked to Loeb’s letter before Sorkin’s column appeared.

Of course, the coming NYT paywall is going to make such bloggishness difficult, but difficult need not mean impossible. Let’s hope Sorkin hasn’t given up on many of the possibilities of the online medium before he’s even really got going.

Shahien Nasiripour has some excellent detailed notes from the Treasury blogger meeting. And he doesn’t hesitate to call out the senior official when doing so is warranted:

The official pointed to the futures market where traders are betting that home prices will remain stable through the fall of 2014.

But there have been just 40 trades all year through Wednesday, said Mary Haffenberg, a spokesperson for the CME Group, which runs the S&P/Case-Shiller Home Price Index Futures market, the market the administration uses as its benchmark.

Meanwhile, Matt Yglesias wishes that the meeting had been on the record:

DC officialdom ought to realize that its obsession with off the recordy-ness has some serious downsides. Treasury did two meetings this week, one that was with professional blogger types and one that was more with professional economists who also blog, and most of the attendees seem to have come away quite impressed. If that’s the case, wouldn’t people able to listen to a recording of the full session likely also be impressed?

My feeling is that the answer to that question is “not necessarily”. Having a meeting with a Treasury official is interesting and worthwhile, although I admit that my mind did wander in parts, when the conversation got too political. Listening to a recording of someone else having a meeting with a Treasury official? You need to be a real wonk to do that, and although you might come away impressed, most people doing it are likely to be on the lookout for some kind of news.

Nasiripour is reporting, for instance, that at this meeting a senior Treasury official “said that home prices will likely decline in the near future” and “argued that taxpayers should continue to prop up small banks due to their exposure to toxic assets”. I don’t recall either statement, but I was neither taking detailed notes nor recording the conversation. It would be great if we could simply go to the tape and report exactly what was said and who said it. But then the news cycle would glom onto the “X said Y” story, in a world where administration officials can get fired if they say the wrong thing.

Putting the whole conversation on background makes it almost impossible to turn the briefing itself into a news event, and that in turn allows officials to speak without worry that their words will end up being used against them in the kind of fevered political-media frenzy which regularly appears out of nowhere and nothing in Washington.

What’s more, Treasury officials in general, and the Secretary of the Treasury in particular, really can and do move markets when they start talking about things like the dollar. There is a lot of value to open conversation, but it’s pretty much impossible to have an open conversation, in public, on the record, with a sitting finance minister of any country, especially when sensitive topics like the dollar or capital adequacy standards are on the agenda.

That’s all in theory; in practice it’s even worse, at least with this Treasury. During the Great Moderation, Paul O’Neill would happily chat away to reporters, on the record; he would occasionally find himself in hot water for doing so, but he was never very important. Politico and HuffPo didn’t exist in those days, but even if they had existed, they wouldn’t have covered Treasury. As a result what O’Neill said never really mattered that much. Plus, he liked engaging in wonky Socratic dialogue with FT reporters.

When Barack Obama picked Geithner over Summers for the Treasury job, he knew he was getting a buttoned-down technocrat rather than a natural debater and schmoozer. And Geithner learned his lesson early on: first in the nomination process, when he caused a storm on the subject of whether China was manipulating its currency; and then with his hugely-anticipated speech on the financial stability plan, which contained no real detail or concrete proposals, and which looked dreadful on TV, and which sent markets tumbling. Since then, Treasury has simply understood that it has to be very careful about exactly when, where, and how it says things in public.

I’m a reporter; I naturally want as many things to be on the record as possible, and ideally to be able to link to them directly online. I also think that it’s important for news organizations to be much more transparent than they are at present about the degree to which they’re meeting and talking to the most senior administration officials — Obama, Geithner, Bernanke, Biden, Clinton, Gates. We don’t need to necessarily know what these people are saying in those conversations, but it would be a step in the right direction if news organizations simply revealed that the meetings were taking place.