When it comes to disclosing potential conflicts of interest, New York Times shouldn’t throw stones at Arrington

The meta-media debate for the last few weeks has been about the conflict of interest inherent in Michael Arrington’s proposal to run a new venture capital fund while writing about some of the same startups in which he invests.

The coverage would lead you to believe that such conflicts are an issue of emerging media, of bloggers who eschew the “Chinese wall” separating editorial and business and say things like “Transparency is the new objectivity.”

But as Arrington noted Monday, The New York Times has only to look at itself if it wants to examine a news site that covers companies in which it has a financial stake. The New York Times Co. has holdings in several technology, advertising and media companies, as well as a venture capital fund that invests in tech startups. Yet when Times journalists write about those companies, they often don’t disclose those relationships.

“The New York Times is holier than thou,” Arrington said Monday, “but they’re doing exactly what they say I shouldn’t be doing.”

He was referring to the Times Co.’s investment in the venture capital firm True Ventures, which has invested at least $3.5 million in GigaOM. GigaOM competes with TechCrunch to cover tech startups, and the founder of GigaOM has been a partner in the venture capital firm since about August 2008, around the time that the Times Co. invested in the firm. None of the Times stories about Arrington’s new CrunchFund noted that relationship; Times representatives told me the connection wasn’t relevant.

Journalist and source, beholden to the same company

These stories were not the exception. I found plenty of examples of Times journalists writing about companies in which the parent company has a stake. These stories go back several years, well before Arrington said he wanted to bake cookies and then review how they taste.

A few of those stories describe investments by True Ventures without noting its connection to the Times Co. The stories were published after the Times Co. took a stake in the company, which occurred at least by Aug. 30, 2008, according to the Internet Archive’s cache of the Times. Co.’s Web page listing its business units. (I asked the Times Co. when the company first bought into True Ventures; I haven’t gotten an answer. To learn the dates of the Times Co.’s other investments, I relied on published reports on the Times website, as well as other news sites.)

Other Times stories cover companies with direct financial ties to the Times Co.:

In that case, the Times appended this note to the story:

After the column was published, editors learned that The New York Times Company owns a stake of less than 5 percent in Brightcove. Though the existence of the investment would not have affected the decision to publish the interview, it is the policy of The Times to include such information.

Perhaps as often as the cases above, I found that the Times has disclosed its relationships.

Every story on About.com that I saw noted that the company is a subsidiary. Most stories about the New York tech incubator Betaworks say that the Times Co. has invested in it. Same with the one story I saw about a startup called Adkeeper. Others are hit-or-miss; some stories about the companies in the bulleted list above occasionally did carry disclosures.

My search was far from comprehensive. I looked only for mentions of the companies the Times Co. has invested in. I don’t know how often the Times has written about competitors of those companies without noting that it has skin in the game.

An aim to disclose, in some cases

When I told Phil Corbett, the Times’ associate managing editor for standards, about how many stories I found without disclosures, he said he wasn’t surprised that it doesn’t happen every time. But he also said he didn’t think it was necessary to disclose relationships on passing references.

“I think you may be setting an unrealistic bar here,” he told me via email, considering that the Times Co. has a “small investment” in True Ventures, which in turn invests in a number of companies. “Expecting some kind of reader disclosure any time one of those companies is mentioned seems unwieldy, unrealistic and probably unnecessary.”

In general, he said, a reporter writing “specifically and in detail” about a company with which the Times Co. has a “significant financial connection” should know about the connection and discuss it with an editor. In most cases, he said, the relationship should be disclosed.

“But do we require all our reporters to keep detailed track of all the scores or hundreds of companies that The Times Company has a business relationship with?” he wrote in an email. “I’m not sure how feasible that would be, or how desirable.”

Perhaps not every business relationship, but the Times Co. lists its business units, acquisitions and investments online.

Corbett told me that the Times doesn’t have a written policy on how to handle these issues, unlike its extensive ethical guidelines that, among other things, instruct reporters not to invest in companies or industries they cover, or even a dominant company in an area they cover. He said it’s “just basic journalistic good sense.”

“The real safeguard we have at The Times against this sort of conflict,” Corbett said, “is that our journalists write the stories, and our business executives make the investments. We don’t have the same people doing both, and the folks who make the investments don’t ever try to influence the journalists who determine the news coverage.”

Corbett and Times Co. Vice President for Corporate Communications Eileen Murphy emphasized the separation of business and editorial operations as the ultimate answer to questions over conflict. If you don’t know about an investment, you can’t be influenced by it. But while individual reporters might be unaware, the institution is not ignorant of these relationships, and many readers aren’t either.

I wouldn’t blame you for dismissing all this as finger-wagging from the ivory tower, if the Times hadn’t first shaken its finger at Arrington.

Conflict of interest central to Times’ coverage of Arrington

The Times published several stories and blog posts (not including aggregated items on Dealbook) about Arrington’s decision to create CrunchFund and the ensuing fallout. The potential for conflict of interest was noted high in the first story:

The $20 million CrunchFund is the latest example of Mr. Arrington’s casting aside one of traditional journalism’s cardinal rules — that reporters should avoid conflicts of interest by maintaining distance from the people, organizations and issues they cover — and raises questions about whether industry bloggers are journalists.

Reporter Claire Cain Miller noted that there were a few examples of other “niche blogs,” such as GigaOM, that allowed its writers to invest in companies. However, they are prohibited from investing in companies they cover.

Damon Darlin, Miller’s editor, said Miller knew about True Ventures’ investment in GigaOM – she wrote about it in 2008 – but not the Times Co.’s stake in True Ventures. Darlin said in an email he knew about the Times Co.’s involvement in the venture capital firm, but it didn’t cross his mind when they were working on the TechCrunch story. “It is a totally different situation than the one involving AOL and TechCrunch.”

When media columnist David Carr weighed in, he wrote that “the idea of a news site that covers every aspect of nascent tech companies sharing a brand name and founder with a venture capital firm financing these same companies seems almost comically over the line.”

Carr made a passing reference to Om Malik as one of the venture capitalists “who both publish and trade on information.”

“I didn’t know that our corporate side shared an interest in a venture fund with Om Malik and had I known, I would have pointed that out,” Carr told me by email. “That fact would not have changed my opinion that naming a venture fund after a news site that covers new ventures was ill-advised.”

At GigaOM, every mention merits disclosure

A key difference between the arrangement Arrington wanted and the one at GigaOM is that Malik doesn’t cover companies that True Ventures has invested in. Nor do his writers, if they can avoid it, according to Nicole Solis, GigaOM’s managing editor

If it’s necessary to cover or mention one of those companies, “we disclose GigaOM’s relationship with True and Om’s relationship with True,” she told me by email.

“Our policy is that any mention gets a disclosure,” she continued. “For example, if we talk about Blogger and mention that WordPress is a competitor, our policy is that we disclose True’s relationship with WordPress.”

That should sound familiar to the Times. In 2008, it published a story about bloggers who had been shut out from their blogs on Blogger, which is owned by Google, after they had criticized then-presidential candidate Barack Obama.

The post began, “Did Google use its network of online services to silence critics of Barack Obama?” The Times story said that some of the bloggers had switched to WordPress, which it simply described as a “rival blogging service.” No mention is made of the Times Co.’s investment in Automattic five months earlier.

This year, when examining how blogs were suffering as young people gravitate to Twitter, the Times noted that Blogger had seen a drop in U.S. unique visitors from the year before. The story said that WordPress and Tumblr seemed to have avoided a similar drop, perhaps because, according to the Automattic CEO, WordPress is aimed at what the reporter called “serious bloggers, not the younger novices who are defecting to social networking.” The story noted that Google owns Blogger, but didn’t mention the Times Co.’s piece of Automattic.

Such comparisons may well be fair. But a skeptical reader could wonder why the company in the Times Co.’s portfolio came off better than the one that Google owns. A skeptic like Carr, for instance, who noted a couple of instances in which companies were covered favorably in TechCrunch after Arrington had invested in the companies.

“We know these things because Mr. Arrington was mostly transparent about the conflicts,” Carr wrote. “But how many articles about equally interesting competitors did not get written? It is worth wondering.”

It is. I could go across the hall at Poynter to get a comment from a journalism ethicist on how to prevent skeptical readers from wondering what stories aren’t written or drawing their own conclusions about why some companies seem to be mentioned frequently on TechCrunch or nytimes.com.

But it turns out I can just refer to a Times story – the one in which Miller wrote about Malik becoming a venture capitalist while running his blog.

University of Missouri journalism professor Lee Wilkins said in that story that conflict of interest is a tough area because “it’s the only place in philosophy and ethics where we say that perception matters as much as what has actually occurred.”

Wilkins noted that just because Malik wouldn’t write about True Ventures investments, his writers still would be aware of those investments. “The situation,” Miller concluded, “raises a deeper, much-debated issue: must bloggers abide by journalistic ethics?”

Indeed, that has been much-debated. Perhaps the debate should be about whether Times reporters face these same challenges in writing about companies whose checks come from the same pot as theirs.

I agree that holding cash in one hand and a pen in the other poses more of a challenge. But the basic challenge, the potential for conflict, and the shadow on one’s credibility do not go away when the person with the pen is a journalist rather than a blogger.

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  • http://twitter.com/eekygeeky Carl Brooks

    The difference between reporters and bloggers are tradecraft and professional responsibility.  

    Editorial has absolutely no business knowing about the parent company’s financial dealings and has a professional obligation to not look into that. 

  • http://twitter.com/eekygeeky Carl Brooks

    The Chinese Wall(firewall between editorial and business-ALL business sides of the company) is such a long standing tradition and so firmly entrenched I believe it is being overlooked. All responsible media firms operate this way, yes, even one in the high tech and trades industries.

    Arrington doesn’t understand about that wall of complete and total isolation between editorial and biz and so he doesn’t believe it exists; the Times is startled to discover the appearance of impropriety because its forgotten it’s there, in some measure. 

    Its far, far harder to credit Arrington’s thinly-veiled propagandizing as “editorial independence” than it is to believe Times writers didn’t know about the corporations’s business dealings.

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  • http://caddellinsightgroup.com jmcaddell

    I think there is very little difference between a reporter and a blogger, and while at the Times there may be a”wall” between editorial and business, as you write, the editorial side knows, or should know, where the company has invested its money. This, in itself, creates an ethical dilemma.

    Also, if this article were written about the WSJ as opposed to the Times, would so many leap to their defense? Is it not obvious that the business side of Murdoch’s papers influences editorial?

    At the Times, the influence may be subtler, but it’s there nonetheless.

    regards, John

  • http://www.facebook.com/profile.php?id=562582722 Lou Covey

    I tend to agree.  There was no concern about AOL putting money into the CrunchFund but about Arrington running the fund while simultaneously being the EiC of TechCrunch.  The New York Times has an investment division, an advertising division, an IT division and and editorial division.  The EiC of the NYT does not run the investment division, he runs the editorial division.  To be analogous, the NYT editorial head would have to be running the investment division as well.  Ethically, Arrington should have stepped down, voluntarily and removed himself entirely from TechCrunch AND THEN establish CrunchFund after his replacement is chosen.

  • http://www.facebook.com/profile.php?id=504633504 Dan Mitchell

    From what I can tell in scanning this very long article, you make no mention whatsoever of a crucial (and rather obvious) difference between the Arrington situation and the NYT Company’s investments — a difference that shoots down your whole thesis. 

    The NYT *company* having investments in firms covered by the paper is nothing like Arrington — who was the *editor* of TechCrunch — having investments in the firms covered by that publication. Arrington was the *editor*, who had power over what was (and wasn’t) covered, and how it was covered. Whether or not he regularly exercised that power is beside the point — he had it, and he did exercise it at least some of the time.

    If you had some examples of *editors* at the Times having investments in companies covered by the paper, that would make for a fair comparison. But of course, there are no instances of that because it would run afoul of the most basic of journalistic ethics rules. Which was what the whole Arrington story was about in the first place. 

    Similarly to the NYT’s investments, TechCrunch’s investors have stakes in companies covered by TechCrunch, but none of those investors, other than Arrington, until lately, have an *editorial* position at TechCrunch, so nobody thinks there’s anything wrong with it, so long as they keep out of editorial decisions. And if the business people at the NYT started inserting themselves into editorial decisions, that would also be akin to what happened at TechCrunch. But that doesn’t happen either. 

    (Maybe I’m missing something here, but I wonder why Arrington didn’t simply declare himself publisher of TechCrunch and pledge to remove himself from all editorial decision making (and actually stick to that). Several people have stated that he dipped in and out of the newsgathering process anyway, and other editors were more hands-on day to day. If he had done that before all this latest scrutiny, I bet there wouldn’t have been nearly as much criticism, if any at all. I know I wouldn’t have had a problem with it.)

  • http://www.postlinearity.com gregorylent

    “journalistic objectivity” is a pc creation story for a corrupt industry … that emperor has been naked for decades 

  • http://www.postlinearity.com gregorylent

    “journalistic objectivity” is a pc creation story for a corrupt industry … that emperor has been naked for decades 

  • http://www.facebook.com/profile.php?id=757909316 Michael Donohoe

    To be fair to the Times (a former employer of mine), the business and newsrooms are intentionally separate so one does not influence the other. I honestly believe that in cases where reporters wrote about companies the Times invested in they were probably unaware of the fact.

  • http://www.poynter.org Poynter

    @google-f0ec768e9b9355128e98ab5f057800fe:disqus , I don’t know. Remember, though, that I looked at the Times because the conflict was a key part of its coverage of CrunchFund.

    Steve Myers

  • http://www.poynter.org Poynter

    Worth discussing. I wondered if it’s necessary to mention the business involvement in every game story or just stories about the business side of the Sox. It was a bit tangential here, so I didn’t ponder it enough to reach a conclusion.

    Steve Myers

  • http://www.poynter.org Poynter

    @google-82eafbc119f165bc7a13424bdc585c54:disqus, true. I focused on the situation that is analogous — or not, if you agree with the Times — to Arrington investing in companies while covering them for TechCrunch. The Pogue situation is a personal conflict, not an institutional one, and personal conflicts are already covered in the Times’ extensive ethics policy.

    Steve Myers

  • http://twitter.com/yatesc C. M. Yates & Ko.

    The NYT should have to disclose that it owns a portion of the Boston Red Sox in every article that mentions them.

    The standard is to mention potential conflicts of interest _every time they come up_. It’s a standard for a reason.

  • John Pearce

    Here’s an idea: do Techcrunch and Huffpost disclose their vested interests in every article that bears on something AOL owns?

    Please give your investigation at least as much space as you gave to the Times. 

  • Joel Renaud

    You didn’t even mention David Pogue and his questionable practices in your article.

  • Anonymous

    I can’t believe i am saying this, but David Carr should apologize. His article was basically without merit. It has been one thing after another in his article that have been proven as inconsistant or inaccurate, he should just take down the article. It is amazing how little research he did before making such a sharp critique.