Mark Cuban's dumb new media business model
Mark Glasser over at PBS's MediaShift blog has been writing about Mark Cuban's media project:
Sharesleuth.com , to provide “independent Web-based reporting aimed at exposing securities fraud and corporate chicanery.” Cuban hired St. Louis Post-Dispatch investigative business reporter Christopher Carey to be editor of Sharesleuth.
The revenue model is that Mr Cuban will short the stock of a company that is covered by Sharesleuth and use the proceeds to fund the site. A report by Sharesleuth on Xenthanol, a company founded to produce alcohol from wood waste hit paydirt:
On the day that the Xethanol report was published on Sharesleuth, its stock went down 14% to $5.95 — and that’s way down from the price of $12.65 when Cuban shorted 10,000 shares of Xethanol stock back in May. Yesterday, the stock was at $5.09.
Yes, we do need to find a business model to pay for journalism but this is not it. Journalism cannot be seen to be profiting from specific types of stories. This is completely unethical. Journalism should profit only from the quality and the timeliness of a broad range of news stories, and other reports.
This type of issue is not confined to Mr Cuban's adventures in media. To a lesser extent, it will become an issue at news organizations that pay journalists on the basis of how many pageviews their stories receive. This type of compensation encourages sensationalism and it discourages journalists from working on important stories that benefit society.
I only know of one major news organization that pays some of its writers on the number of pageviews but this model is increasingly used in small media companies such as Gawker Media.
UPDATE: I just realised that Mark Cuban is out in the stratosphere, he doesn't have anyone to tell him "it's a really bad idea, it really is." That is not a good place to be. Look out...