rss feedShort selling, new way to back journalism?
These past few days continue to be a bit busy for me – and there’s nothing wrong with that. I just haven’t had as much time to devote to new posts.
Thoughts still circulate in my head and I will set time aside for new items. This idea, though, caught my attention as I was glancing at Web sites:
The short-selling of stocks – especially of companies that inflate their status or profile – to fund investigative journalism?
The outfit, iBusiness Reporting, believes it’s a path for financial support and digging deeper into companies that, well, might stretch what they do.
LAObserved had a post about the iBusiness Reporting venture – launched by former Los Angeles Times journalist William Lobdell and, get this, Barry Minkow, a former con artist and ex felon.
On the outfit’s Web site, Lobdell explains the background of launching this venture:
I am proud to find a way, especially in this post-print journalism era, to do in-depth reporting again. It’s admittedly unorthodox: a journalist and a former con man team up to open an online news operation that’s funded by short selling. But you know what? It might be just crazy enough to work.
I don’t know much about this outfit – but when a creative, different way to support journalism surfaces these days, I take note.
I’ve heard of tens of thousands of mainstream journalists who have lost their jobs in recent years because advertising has collapsed.
The industry might not return to what it once was – which leaves an information gap. And people who trained to collect it the best they can and provide it as fairly as possible are left out in the woods.
Yes, I understand that mainstream journalism has its flaws. So does blogging and broadcast news.
But mainstream journalists have done some pretty fascinating work.
As a former journalist, I am biased in this dog fight.
But I believe there is a need for impartial information, collected firsthand through interviews, observations or digging, to help people of different backgrounds learn more about the world.
Case in point: How many months worth of savings does an average household need to stave off the blistering impact of a severe economic downturn?
That can depend on each recession – and all are unique – and how many months a recovery can take.
And, as we know now, hiring often lags behind the official end of a recession.
But consumer affairs journalists typically ask financial advisers and publish the answer.
Yes, these days, financial advisers might post their answers on their own blogs or company Web sites. But the more information that circulates, the better off we’ll all be.
I recently heard a woman talk about human biology and kept stressing that an important word related to the body was missing from a booklet.
What she didn’t realize, though, was that the booklet had a different printed word, which actually encompassed the important one she wanted to see.
She just kept stressing that the word she wanted to see was absent. Mind you, she went through the high school system in the United States.
I suppose the iBusiness Reporting model goes to show that recessions truly can destroy industries, churn those who remain in them and those who have left, as well as produce new business ideas.
What made this business venture different, obviously, is that I think many people overlook that profits can be had by hedging against company stock growth.
Certainly, no one ever wants a company’s stock to fall.
But it happens. The market can move in mysterious ways – at least to outsiders.
The caveat, of course, is that iBusiness Reporting holds the keys to deeming a business as “fraudulent” – which I think corporate attorneys will fight on all fronts because of brand quality and reputation.
The short-selling model differs from what many former traditional journalists have done to gain financing of worthwhile ventures: Going to foundations and asking for public donations or subscriptions.
The question remains whether the short selling of stocks can actually extend to widespread support of those who want to practice the craft of journalism in a well-funded, indepth way.
There is probably enough money from this practice to go around supporting some outlets.
But, of course, if companies actually become sensitive to this practice and stop inflating their business practices, then, the model of earning money from plummeted stocks slowly becomes moot.
Which means journalistic outfits that relied on short selling will need to look elsewhere for support.
That being said, credit should be extended to the founders of iBusiness Reporting for coming up with a model that many former and current journalists have not considered.
This is from the outfit’s frequently-asked-question section:
We only go after fraud that we can prove. If we engaged in a witch hunt, we would go out of business. We need our credibility to survive in the long term. If that’s lost, our business model fails. The market and the Internet are very good at sniffing out BS. We need to deliver facts (and back them up). Otherwise, we’re done.
I’ve heard of short selling to support the activities of other organizations. But I never thought to extend it to the craft and the First Amendment.
It is noteworthy, of course, to point out that the business model for this specific outlet involved a con artist and ex con.
This shows that people worldwide – no matter what their backgrounds – have the ability to think critically and try new plans.
Speaking of which, for me, this does fit the definition of innovation.
There are days when I wonder whether journalists – of any stripe – should go to business schools to study survival for an industry that is shrinking.
I’ve heard of nonprofit managers earning their MBA degrees from places such as the Haas School of Business at the University of California at Berkeley.
Then I wonder whether people who enroll in these programs can become enamored with the trappings and culture of mainstream business – which offer perks not enjoyed by the majority of residents in a country.
