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. Cameron says:

    Wouldn’t that be stock manipulation? I suspect the SEC would not look kindly on it.

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  2. ppw says:

    In terms of journalism professionalism, this is not a good idea regardless of “ethical issue” (which is poorly defined). I don’t think other information and think-tank commercial company cannot do it. Journalists collecting information for the sake of speaking to the public instead of an exclusive customer. render unto Caesar what is Caesar’s and unto God what is God’s

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  3. RPM says:

    Just this sort of thing put R. Foster Winans of the Wall Street Journal in prison back in the 80s. Hard to believe, but true, that a journalist leaking the contents of a story in advance can send him to the big house.


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  4. Nosybear says:

    Talk about stacking the deck against the little guy…. I don’t doubt this kind of thing would be perfectly legal but the ethics are a bit distasteful. You essentially create two classes of investor, those with early access and those without. It may be completely legal but it is completely wrong – you essentially make journalists into the research arms of the funds.

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  5. carlosmx37 says:

    precisely this kind of news are the material for very exclusive “newsletters”,that cost so much.

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  6. scribbler says:

    The NYT would be cutting its own throat if it did as Mr. Salmon suggests. Once the news gets out, it’s out. Other media quickly follow up on ‘exclusives’ so that it is no longer an ‘exclusive’. So the moment, Mr. Salmon’s ‘exclusive’ appears, exclusivity will have been lost and rivals tipped off. In fact, when media outlets discover what their rials are are up to, they hurry to rush out their own versions of the story with the aim of getting them to readers and viewers first. In journalism, these are known as spoilers. Mr.Salmon appears to know little or nothing about journalism or marketing.

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  7. gkm says:

    I wanted to follow up with the following examples of how complicity is endemic in the markets. Remember when Meredith Whitney made the famously wrong call on Muni bonds? Stop and think for a moment how she is compensated. She is compensated for selling her advice to clients. Why would she go on TV to publicize her advice for free if there was no value in it for her and would hurt the position of her clients? Well, of course she PRE-SOLD the advice and the clients were already positioned to take advantage when others who heard this puked up their muni bonds. Afterwards, people are saying ‘poor Meredith and her bad call’ when in fact it did everything it was intended to do. This includes providing content for CNBS et al.

    How about the University of Michigan confidence information for another. You can purchase a subscription to the info and trade on it beforehand. It provides more content for the financial news networks in the ‘Big Reveal’ and somewhere Goldman Sucks is trading against those who don’t know enough to get out of their way.

    Do you honestly think Felix Salmon could come up with a model that the most finely tuned exploitative industry in the world hasn’t already thought of? If you can think of it, and it’s actually a good idea, then someone with a lot more smarts and billions more in wealth has already thought of it. So good luck.

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