Old World Ethics Collide with New Media Profits

The flap over media watchdog Brill’s Content getting into bed with the people they cover spotlights the latest collision between Old World ethics and new media profits and points out one area where the old has it all over the new. How these conflicts are handled holds important financial implications for Internet investors and ebusinesses.

On Feb. 1, Brill Media Holdings announced a deal with CBS, NBC, Primedia, Ingram Book Group and magazine subscription company EBSCO to form a site called for the online sale of books, magazine subscriptions, magazine article archives and the archives of scholarly publications.

Steven T. Brill, chairman of Brill Media Holdings, said the two businesses would remain separate and that sales would not influence content. But journalism experts including the dean of the Columbia School of Journalism, Tom Goldstein, were quick to warn of the ethical hazards when product sales are mixed with what is supposed to be independent editorial content.

The same questions have arisen of other profit models that mix editorial and commerce. Editorial content at online drugstore sites has been questioned as biased to product sales; search engines that charge for the privilege of appearing first in search results are seen as less than honest (and are not doing as well financially as the Yahoo!s and Excites that do the job honestly, fairly and with the user’s interest first in mind). Even the gray lady of American journalism, The New York Times, has been extensively and publicly criticized for the conflict of interest inherent in its offer to sell books via, an in-your-face offer stuck right in the middle of every book review.

I was a panelist a couple of years ago at a conference on new media ethics at which the audience soundly jeered The New York Times’ unsuccessful attempts to defend this practice. If you design a system in which a financial incentive exists to skew editorial content in favor of sales (good reviews sell more books than bad reviews), the conflict and loss of credibility exist whether or not the publication and its writers yield to temptation or not.

These issues keep coming up because of the growing inadequacy of advertising-supported models. More than half of all page views go unsold and click-through rates are dropping toward zero, having free-fallen through half a percent some months ago. The lack of a workable micro-payment system also contributes substantially to problems charging for premium content. In light of this and the resulting financial pressures for greater returns from venture capital investors and public company shareholders, the temptation to mix commerce and content has become irresistible. However, this act is nothing less than product adulteration — akin to watering down fine wine — which will eventually destroy a brand and the investment made in it.

While journalists and publishers are loathe to address brand management or see their content as a “product,” the ability to look at news and articles in the same light as a bar of soap or tube of toothpaste can help illustrate the importance of both the appearance and reality of editorial production which is independent of commercial influence. If an article is a product, then the quality of information becomes the consumer’s primary criterion for judging it. But judging the quality of information is trickier than measuring, say, the crash resistance of an automobile.

For content, perception is key. And no matter how independent editorial is from advertising or product sales, if the customer perceives a conflict of interest, then the product is seen as adulterated. There are all too many places — in old media and the new — where the adulteration is reality and the focus of the content goes to the highest bidder. But whether actu

al or only perceived, the adulteration decreases the value proposition. And when the value decreases, the company that produced the product can’t charge as much for it.

Ironically, desperate attempts to cater to commercial interests eventually erode the bottom line they were supposed to lift. Venture capitalists and investors need to realize that some of the Old World ethics have withstood the test of time because they serve the interests of both businesses and the consumers to whom they cater. And in realizing this, investors should not push companies into short-term profit strategies that conceal long-term disasters.

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