Arrington's TechCrunch Moves Even Startle Trade Mag Editors

By Alexis C. Madrigal

I'm not going to pick sides on the TechCrunch saga that's bouncing around the Internet right now, but I do think it's more important than it appears on the surface. In essence, TechCrunch's founder Mike Arrington wants to run an investment fund that would put money into the companies that his website covers. Prominent journalists like David Carr and Kara Swisher argue that this is an unbelievable conflict of interest. The drama continues, but Arrington is going to run the fund and TechCrunch will continue, probably without him.


Here's what's interesting about this situation to me: the set of solutions to common information problems that we call journalism is coming unglued as different types of publications become possible on the Internet

The generally accepted sense of journalistic ethics says you shouldn't have financial conflicts of interest and that this is not negotiable at the individual level. Journalism ethics reside in publications and more broadly within the idea of the fourth estate. 

But the specific ethical principles of journalism were only true for certain types of publications, largely newspapers and magazines aka the mainstream media (MSM). Now, we've got a whole bunch of new types of publications with readerships rivaling the MSM but that are something different altogether.

Many websites are functioning largely as trade magazines that occasionally commit acts of journalism. TechCrunch, and Mashable to an even greater extent, are more like the new American Thresherman and Farm Power or Stone World or Successful Farming than they are the new New York Times. But it's hard to know when they're acting like the Times and when they are acting like Plumbing and Mechanical Magazine

Even the news that they break would generally come out via a press release in due time. People care about what they write, and they beat other people to the information, but the scoops are fundamentally benign. (This company got some money, that company has a new app, another may do something that alters the competitive landscape.) Trade magazines have been doing this kind of thing for as long as there have been trade and magazines. 

What TechCrunch figured out is that tech industry news could could really work as a mass-market sized play. When millions of freelancers act as one-person companies, business-to-business publications acquire a new, much larger audience.  In other words, many, many people consider themselves part of the tech industry. All that user-centered innovation that people like MIT's Eric Von Hipple talk about? This is one sign of it. When people cobble together tech tools to build other tech tools, they need to know about all the new ones in glorious detail.

John Bethune has been watching the trade publication industry for 27 years and now runs B2BMemes.com. He said that it would be very "unusual" for a trade magazine writer to be investing in the companies that they cover. He noted that the American Society of Business Publication Editors states clearly in its code of ethics that such activity are off-limits. "Editors and staffers should not invest in, or hold stock of, any company that they will cover or be likely to cover," the code says.

That's not to say that there are not conflicts for business-to-business publication journalists. They have to deal with ethical issues constantly as advertising sales' teams try to bring in business. 

Ethics tends to devolve to the sole journalist more than residing at the publication level, Bethune said. "With the trade press, you've got conflicts built in and the life of the trade journalist is learning to live with those conflicts and do the best that each one can to do as ethical a job as they individually feel they can," Bethune said. "In the trade press more than news journalism, ethics is more of an individual issue than a company issue. "  

I talked to a couple of trade magazine editors to see how the Arrington move struck them. Maureen Alley, who edits Residential Design and Build magazine, was the first trade magazine editor I spoke with. Alley felt that there was a pretty clear ethics foul in what Arrington was up to. "The way journalism is now is that you have people who don't know anything about journalism ethics writing journalism-type things," Alley said. "No matter what type of reporting you're doing, you still need those ethics. Michael Arrington obviously doesn't see the value in these ethics."

When I asked Alley if she thought she could start a design and build business while running her company, she said no. "I don't think that could fly," she said. "It's not fair to the other businesses."

John Austen of the UK's Locks and Security Monthly, though, didn't think that there was such a clear ethical line. He thought someone could have one business in an industry while running a publication about that industry, "provid[ed] they keep them separate and don't use the one as a bandwagon to promote the other." Austen himself "ran a publication and also looked after the PR interests for a number of companies in that field."

Austen emphasized that trade magazines can't forget where their money ultimately comes from. "We're always trying to strike a balance between content/reader interest and knowing those [advertisers] that keep us going," Austen said. "We are in the real world."
This story has gained incredible traction because it is The New AOL (TM) and TechCrunch versus The New York Times.

My point here is that this story has gained incredible traction because it is The New AOL (TM) and TechCrunch versus The New York Times. But this is a forever problem when it comes to information. Bias in journalism has been the default assumption forever. David Carr-style journalism ethics was an important invention developed to fight pervasive bias. It didn't just happen. It partially solved the trustworthiness problem, at least temporarily. 

Trade magazines have had to deal with these conflicts for a long time too in very intense ways. When the trade magazine association decides something is out of bounds, it's worth considering how big the change that Arrington wants to make to the journalism ethics toolbox. 

TechCrunch's MG Siegler wrote on his personal blog, "The market will decide. All this back-and-forth is meaningless," but that strikes me as precisely incorrect. The market for information is predicated on the trustworthiness of that information. The back-and-forth is what creates the perception of that trust or lack thereof. 

The New York Times doesn't operate with its current sense of ethics or purpose solely because they are a company full of great guys, but because they think it's a competitive advantage to be seen as fair and objective and trustworthy. The problem is that operating the way they do is expensive and slow. 

TechCrunch's team is proposing that their own version of journalism, in which some pieces of the ethical machine have been tightened up (e.g. more transparency) while others have been loosened (e.g. investing in companies you cover is OK), is just as good as the Times' version. It certainly is cheaper and faster, but it gains those advantages by devolving responsibility to the individual, not the publication. It's every woman for herself. And we know how well that has worked out for the trade publications.

"As the industry has declined over the last 20 years, the pressure from sales to do whatever you can do bring in those advertisements, most of the guidelines have fallen by the wayside," Bethune told me. 

Arrington may be able to walk the ethical tightrope, but if he erodes journalism's institutional ethics, he may do a lot more damage than promoting or ignoring a few tech startups would.

This article available online at:

http://www.theatlantic.com/technology/archive/2011/09/arringtons-techcrunch-moves-even-startle-trade-mag-editors/244604/