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Felix Salmon has answered every oxpecker’s dream with his provocative suggestion, spurred by The New York Times’ expose of bribery at Wal-Mart’s Mexico operations, that the newspaper consider selling its scoops to hedge funds. The story broke over the weekend, when no one could make money from it, though the drop in Wal-Mart’s stock price on Monday showed that investors valued the information. His suggestion is intriguing, in the same way that it’s intriguing to watch an economist explain to a homeless man that he won’t give him spare change because it’s an inefficient use of his capital.
“It’s entirely normal, and perfectly ethical, for news organizations, including Reuters, to give faster access to the best-paying customers,” Salmon wrote Tuesday. “What’s more, good journalism is increasingly being done by people who unabashedly have skin in the game.”
I see no ethical issues with this. At all. And that’s not because Salmon just sent me $5 via PayPal to give this some attention and juice his traffic figures.
But GigaOM’s Mathew Ingram does, writing that Salmon’s idea “seems wrong somehow.” He elaborates:
One of the things that bothers me about this idea is that I think there is still some kind of public-service or public-policy value in journalism, and especially the news — I don’t think it is just another commodity that should be designed to make as much money as possible. And if the New York Times were to take stories that are arguably of social significance and provide them to hedge funds in advance, I think that would make it a very different type of entity than it is now. What if it was a story about a dangerous drug or national security?
I thought Salmon commenter “acebros” described the ethical issue pretty well:
The Times would then have conflicted interests: a story might be, or might be seen to have been, undertaken for the primary purpose of manipulating the market. Really, The Times’ only competitive advantage is its credibility — not worth jeopardizing for a few measly billions.
Salmon argued in his follow-up post that reporters already aim to write market-moving stories. (Though it seems that there’s a difference between the appreciation of your editor and knowing that your company is relying on your exclusive to keep billionaire investors happy.)
As it turns out, the reason Salmon will not be hired at the Times to manage this strategy is that it would seem to violate insider-trading laws:
One thing that both the ethical and the legal approaches have in common … is the concept of “public information”: both of them object to my idea because the NYT is in the business of putting out public information, and giving hedge funds advance access to that information — before the rest of the public gets a look — would in some way be fundamentally unfair.
As far as I can tell, Salmon and Ingram have been talking about this on Twitter for two days straight. I left my carbon calculator at home, but I believe the environmental impact of them pecking away on their laptops is approaching that of a flight from Toronto to New York so they could discuss this in person.
Finally, Josh Benton chronicled some of the lively discussion between the two and others.