Felix Salmon notes the impact of this weekend’s New York Times exposé of Walmart’s business practices in Mexico — it killed $12 billion in market cap — and “raises the obvious question”:
Shouldn’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. What’s more, good journalism is increasingly being done by people who unabashedly have skin in the game.
Felix is right to note that “church-lady types would I’m sure faint with horror” (plenty of non-church-lady types, too). But note that there’s already something a bit like this in existence: Footnoted, which we wrote about in 2010. Footnoted’s Michelle Leder and crew generate a few stories a week by poring over quarterly filings and other publicly filed documents from corporations — looking for the little details that might escape a quick glance (hence “footnoted”).
Those are all free. But FootnotedPro — which costs $10,000 a year and is aimed at “professional investors” — is “designed to focus on actionable information or ideas” and gives subscribers early, inside access to stuff that can move markets. And the site’s FAQ says they’re exploring models that would sell the ability to talk with FootnotedPro “analysts” or custom research.
Even setting aside the journalism ethics questions — and they’re big, giant questions! — there’s a lively debate in the comments of Felix’s posts about whether what he’s talking about would be, you know, illegal (see comments by dsquared and MattL for starters). And, for a very extreme vision of this basic idea, note this comment left by Nic Fulton, who spent almost seven years at Reuters:
I used to run Reuters Labs, and some of our more controversial ideas, that we couldn’t touch for obvious reasons, involved concepts like auctioning un-broken news stories to the highest bidder. Just imaging if Wal-mart could have paid NYTimes to NOT report…
Finally, here’s a Storify of Tim Carmody, Emily Bell, Mathew Ingram, C.W. Anderson, and others going back and forth over the ethics questions on Twitter: