A New Revenue Source for Journalism?

(Photo: Jon S)

Felix Salmon recently proposed an interesting new profit source for newspapers like The New York Times. Citing the Times‘s recent expose on Walmart and the resulting drop in the company’s share price, Salmon wonders why the company doesn’t charge companies for early access to big stories: 

[S]houldn’t the NYT, which can always use a bit of extra revenue, take advantage of the fact that its stories can move markets so much? Not directly: I’m not suggesting that the New York Times Company should start buying out-of-the-money put options on Mexican corporates in advance of its own stories. But how much would hedge funds pay to be able to see the NYT’s big investigative stories during the trading day prior to the appearance of the story? It’s entirely normal, and perfectly ethical, for news organizations, including Reuters, to give faster access to the best-paying customers.

Salmon argues that reporters and editors wouldn’t have any connection to corporate clients — “All that’s needed is that when a big story is entering the final stages of layout and fact-checking, a version is sent under strict embargo to a client or clients who have paid for that access.”

Meanwhile, the startup Assignmint hopes to be a matching service between editors and freelance writers that eliminates risk and transaction costs.

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  1. Mike says:

    It’s questionable enough that the SEC would investigate. And in the course of the investigation, the NYT would be forced to either reveal sources or withhold information. Withholding information in an investigation can be a criminal offense, and revealing sources is a journalistic death sentence.

    Even with lots of money on the table, I don’t see this as being a viable business choice because it sticks senior management with the choices of destroying their reputation or going to jail.

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  2. Clancy says:

    Okay, but if they do this, I’m starting a company that buys the permier access, and then publishes it directly on scoopthetimes.com. Thus making ME the first to break the story.

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  3. LD says:

    Think of the incentive to invent or at least sensationalize a story just to be able to charge hedge funds more often. This is a bad idea.

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0
  4. Steve says:

    I think some are missing the point – If they just publish earlier behind and expensive firewall, the information is public — just expensive. So it wouldn’t be insider trading. Public information is not the same as free information.

    You wouldn’t really have that big of an advantage by paying for it, though, because you’d quickly get a bunch of stories about the story. “The New York Times is reporting that…”

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  5. Eric M. Jones. says:

    It is not as if there is some objective reality, you know….

    If the time decides to concentrate on some bad thing in any particular company, this will move the markets. Everyone and every company has SOME dirty linen.

    The sharing of potentially market-moving information before release is corrupt on its face. Of course, it’s probably done all the time.

    Psssst…Did you hear the news about XYZ Corp…?

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  6. Larry says:

    Forget insider trading. Imagine the pressure to make up/slant lucrative stories when traders are paying you directly. There is already an incentive to go easy on advertisers, bend to the political will of the owners (and other corrupting influences), but this would bring the incentive for corruption to a whole new level.

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  7. Gkm says:

    Oh how naive these babes in arms be. Complicity between financial media and the power money is as old as dirt. This may just add some actual transparency to the relationship – so it won’t happen.

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  8. Brian Leach says:

    Phone Conversation:
    Is this the vice president of external affairs at Megacorp? This is Fred in marketing at the New York Times. I see that you are not a subscriber to our pre-publish service. We offer two plans: Option A cost $1,000.00 per month, and your subscription starts two weeks after we receive your PO. Option B costs $500,000 up front and your subscription starts immediately. Now most of our customers go for option A, but I STRONGLY suggest you get the immediate subscription. I think you will be a hero at your next board meeting if you do.

    You will go for Option B? Thanks, we look forward to doing business with you. By the way, have I told you about our corporate officer’s plan? In case you are interested, we also offer competitor plans.

    I am amazed that anyone would take this seriously.

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