Tag Archives: News event


How the growing GM recall is being covered


General Motors Co. announced yet another recall, adding to the totals this year as new Chief Executive Mary Barra works to stem the bad press from the company’s handling of problems. The move comes before Barra testifies in front of Congress this week, giving lawmakers even more ammunition in questioning her.

Jeff Bennett had this story in the Wall Street Journal:

General Motors Co. recalled another 1.6 million vehicles Friday, expanding an earlier ignition-switch recall and disclosing other problems with newer cars and recently launched pickup trucks and sport utilities.

GM has now recalled about 4.8 million vehicles world-wide since early February, when it announced the first recall of 2005-2007 Chevrolet Cobalts and several related small cars to fix an ignition-switch defect linked to 13 deaths.

GM’s latest recalls came just days before the auto maker’s chief executive, Mary Barra, is set to be grilled by lawmakers over the company’s handling of safety defects. House and Senate subcommittees have hearings scheduled Tuesday and Wednesday for their investigations into why GM waited nearly a decade after its engineers discovered the ignition-switch defect to order repairs for vehicles on the road. Lawmakers say they also want to know why the federal agency that regulates auto safety didn’t act more quickly on the problem.

The New York Times story by Christopher Jensen pointed out that the number of vehicles being recalled in such a short period is derailing the good will that marked the beginning of the year for GM:

Having so many recalls, particularly in such a short period of time, is a problem for General Motors, which is still trying rebuild its reputation and is more vulnerable than an automaker like Toyota, said Kevin Lane Keller, a professor of marketing at Dartmouth’s Tuck School of Business.

“One of the advantages of having a strong brand is that it helps you weather a crisis more easily,” he said.

G.M. has recalled about 2.5 million of its small cars, including 2.2 million in the United States. The automaker has acknowledged that it knew about the defective ignition switches for more than a decade but did not recall the vehicles. That has prompted governmental investigations, including a congressional inquiry that will start on Tuesday with Ms. Barra scheduled to testify.

On Friday, the automaker also said it was aware of a 13th death related to the faulty ignition switches. It said the crash involved a 2007 Cobalt and occurred in Quebec, Canada.

G.M. recalled about 758,000 vehicles in the United States in 2013, ninth among automakers, according to the National Highway Traffic Safety Administration. Toyota was first, with about 5.3 million vehicles, followed by Chrysler with 4.7 million and Honda with almost 2.8 million.

Writing for Automotive News, Mike Colias and Nick Bunkley reported earlier this week that some of GM’s problems were caused by not giving a new part number to a redesigned switch, something one of their sources called a “cardinal sin”:

Stung by rising warranty costs, General Motors decided in the mid-1990s to pull design work for ignition and turn-signal switches from suppliers and put its own employees in charge. One of the first projects for the in-house team was the ignition switch for the Saturn Ion and Chevrolet Cobalt.

“We wanted to have control over the design,” Ray DeGiorgio, the lead design engineer for the Ion and Cobalt ignition switch, said in an April 2013 deposition obtained by Automotive News. “So we brought them in-house.”

That part has now been linked to at least 34 crashes and 12 deaths over the past decade. It’s also at the center of a deepening mystery in the wake of GM’s recall of 1.6 million 2003-07 vehicles fitted with the defective ignition switch:

Why did GM authorize a redesign of the part in 2006, eight years before the recall? And why was the change made so discreetly — without a new part number — that employees investigating complaints of Ions and Cobalts stalling didn’t know about it until late last year?

These questions, among many that will be posed by lawmakers and federal safety regulators looking into GM’s handling of the recall, have confounded some former GM engineers, who say the company’s reports to regulators describe a sequence of events that was fundamentally at odds with standard operating procedure.

Not assigning the new part number would have been highly unusual, according to three people who worked as high-level GM engineers at the time. None of the engineers was involved in the handling of the ignition switch; all asked that their names not be used because of the sensitivity of the matter.

“Changing the fit, form or function of a part without making a part number change is a cardinal sin,” said one of the engineers. “It would have been an extraordinary violation of internal processes.”

That raises some difficult questions for Barra as she gets ready to speak to Congress. Ben Klayman and Richard Cowan had this in a story for Reuters:

GM built a system to deliberately keep senior executives out of the recall process. Instead, two small groups of employees in the vast GM bureaucracy were tasked with making recall decisions, a system GM says was meant to bring objective decisions.

It means that lawmakers may also focus on asking who is responsible for a system that failed so badly that there weren’t red flags raised for those higher up the food chain.

“In this day and age, to think that stuff like this can be kept quiet or forgotten is ridiculous,” independent auto analyst and author Maryann Keller said. “The right question to ask is who knew, when did they know and why was this not brought forth to be dealt with. Did they hope that it was just going to go away?”

The company has recalled 1.6 million cars for a problem first noted in 2001, spurring the congressional enquiries as well as investigations by federal safety regulators, who will also testify, the Justice Department, and GM itself.

GM has said Barra and other top executives did not learn of the defective switches until January 31, explaining that smaller groups of lower-level company executives are responsible for leading a recall. Some executives who might use this argument include former CEO Rick Wagoner and his immediate successor Fritz Henderson, who have not discussed the matter publicly.

The more people dig into the internal processes behind the recalls, the worse it seems. Not alerting top executives makes it harder to gain traction for spending money to fix problems. It also shows a lack of oversight, which is alarming, particularly when you think about how many of these vehicles are produced. The questions continue to mount and how Barra handles them will be a true test of her ability.


Talking Biz News Today — March 28, 2014


Today’s top stories in business journalism:


GM expands ignition switch recall to 2.6 million cars, by Paul Lienert
NHTSA says finds no ‘defect trend’ in Tesla Model S sedans, by Sagarika Jaisinghani

The New York Times

Potential crackdown on Russia risks also punishing Western oil companies, by Clifford Krauss
White House unveils plans to cut methane emissions, by Coral Davenport

The Wall Street Journal

BlackBerry still losing money, doubling down on hardware, by Will Connors
How autism can help you land a job, by Shirley S. Wang


McDonald’s fights back with free coffee, by Parija Kavilanz


Send in the drones: Facebook’s plans to beam internet to the world, by Mike Isaac

Today in business journalism

2007: Defamation lawsuit against Las Vegas biz editor dismissed
2008: E-mails disclosed between reporters and Boeing employee


March 28: Dave Kansas of American Public Media Group

March 28: Katy Smith of Columbus Business First

March 28: Suzanne Woolley of Bloomberg Businessweek


Amazon plans free streaming video


Watch out Netflix. Amazon is moving in, putting more pressure on the streaming movie and television service.

Greg Bensinger had this scoop for the Wall Street Journal:

Amazon.com Inc. plans a free, advertising-supported streaming television and music-video service, a departure from its strategy of offering video only to members of its $99-a-year Prime service, according to people familiar with the matter.

The new service, which could launch in the coming months, likely will feature original series and may include licensed programming, these people said. As part of the project, Amazon has held talks with the creators of “Betas,” a series about a Silicon Valley startup that Amazon produced last year for Prime, these people said.

Amazon also plans to offer free music videos with advertising to people visiting its retail website, two of the people said. A search for Bruce Springsteen CDs, for example, might yield an option to watch the “Born in the U.S.A.” video.

An Amazon spokeswoman had no immediate comment.

The new project is part of a broader push by Amazon to transform itself from a retailer into a multimedia power. The company dominates e-commerce, but it has seen rivals like Google Inc.’s YouTube and Netflix Inc. leap ahead in streaming music and video.

Many have speculated that Amazon’s April 2 press conference will be a debut for a device to stream content. Writing for CNet, David Carnoy had this quick report:

For months, Amazon has been rumored to have a video set-top box in the works to rival the Google Chromecast, Roku, and Apple TV. Well, we may finally get to see it on April 2, as the company has sent out a press invite for an event in New York, where it will discuss “an update to our video business.”

At many of Amazon’s larger press events, CEO Jeff Bezos delivers the presentation, but in this case it appears that Peter Larsen, a vice president in Amazon’s Kindle division, will do the honors.

At this point, it’s unclear what exactly the new device is, though rumors suggest that it will be shaped like a dongle — similar to Google’s Chromecast and Roku’s new Streaming Stick – and be very affordable, with a possible discount for Amazon Prime members.

But Thursday also brought other news for consumers. The New York Times reported in a story by Nick Wingfield that Microsoft was finally going to allow its Office suite on iPads:

One of the most lucrative software franchises in history, Microsoft Office, has finally come to the most influential computing device of the last few years, the iPad.

Microsoft’s new chief executive, Satya Nadella, announced the product at a news conference in San Francisco on Thursday.

At the conference, Mr. Nadella said Microsoft intends to make sure its Office software can work on all major computing devices, including those made by its competitors.

“What motivates us is the reality of our customers,” he said.

Microsoft’s decision to bring Office to the Apple device comes after years of wavering by the company as it mulled over the product’s implications for its own efforts to make a tablet computer. To many people, the move is a refreshing sign of a new Microsoft, one slowly unshackling itself from an era when all of its major decisions were made in deference to Windows, Microsoft’s operating system.

But to skeptics, Office for the iPad is arriving dangerously late.

That’s because the delay has given people who use iPads, especially business professionals, years to get used to using the tablet without Office, a suite of programs that includes Word, Excel and PowerPoint. Start-ups like Evernote, Quip, Smartsheet and Haiku Deck, along with Apple’s own iWork suite of applications, have filled the void left by Microsoft with productivity applications that work on tablets and other devices.

For both of these companies, it’s a story of being left out and playing catch-up in offering various services in high demand for customers. The move by Amazon to an ad-supported model may also be attractive for marketers looking to engage customers, particularly those giving up TV for on-demand content.

Jordan Crook wrote for TechCrunch that Amazon’s plans will be made clear on April 2, but that it has a good chance of capturing the market:

But in a world where everyone is hooked on binge-viewing and on-demand content, Amazon has a good opportunity to push people toward its own video content.

As it stands now, Amazon Instant video is included with your Prime package as a last ditch effort to get you to sign into the Amazon Video app on your Roku or Apple TV, instead of the much more prominent and popular apps like Netflix, HBO Go, and Hulu.

With it’s own Box, Amazon could offer all the same channels as its competitors and give more prominent placement to its own original and licensed content. Or, if they don’t want to tell any of these new devices, they could exclude other content sources and just focus on Amazon Instant Video offerings.

It’s an interesting move for a retailer to move into content. But what’s clear is that consumers are the big winners in both the Microsoft and Amazon moves. More available content will likely drive down prices, while having access to business tools on mobile devices will only make people more productive where they want to be.


Talking Biz News Today — March 27, 2014


The New York Times

Microsoft’s Office suite finally coming to iPad, maybe too late, by Nick Wingfield
Tweets about music to get a Billboard chart, by Ben Sisario


Obamacare’s 6-million target hit as exchange visits surge, by Alex Wayne
Fraternity chief feared for son as hazings spurred JPMorgan snub, by John Hechinger and David Glovin

The Wall Street Journal

CEO pay rising but not for all, by Theo Francis and Joann S. Lublin
Texas judge to hear ‘emergency motion’ on GM recall April 4, by Jeff Bennett

The Associated Press

IMF to help Ukraine with up to $18 billion bailout, by Peter Leonard


One in eight deaths worldwide is linked to air pollution, by Christina Larson


Is this the end of college athletic scholarships? by Claire Zillman

And in local news:

The Daily Tar Heel 

Developers halt plans for Carrboro CVS, by Trent Hollandsworth

Today in business journalism

Seeking Alpha takes steps to prevent paid stock promotion

Why China needs Bloomberg more than Bloomberg needs China

Fast Company is finalist for Magazine of the Year

Washington Post hires O’Brien to write about economics

WSJ named most influential biz news outlet; Sorkin named most influential biz journalist 

This date in business journalism history

2007: InfoWorld will no longer publish

2010: BusinessWeek tribute to former McGraw-Hill CEO: Misspelling his name


Fed rejects Citi capital plan


Wednesday wasn’t the best for Citigroup or its shareholders. The Federal Reserve Board again said the bank wasn’t ready to deal with financially stressful situations and rejected plans for stock buybacks.

Writing for Reuters, Emily Stephenson and David Henry had this story:

The Federal Reserve said Citigroup Inc’s ability to plan to cope with stressful scenarios is still not sufficient, and it nixed the bank’s plans to return more capital to shareholders, dealing a blow to a bank still fixing itself after the financial crisis.

The decision marks the second time in three years that the bank has failed to win the Fed’s approval for plan to return money to shareholders, known as the “capital plan.” The bank’s ability to return money to shareholders through buying back shares is critical for its meeting a key target for profitability.

Shares of Citi fell 4.5 percent to $47.90 in after-hours trading on Wednesday.

Winning regulatory approval for the bank’s capital plan is crucial for the credibility of Citigroup Chief Executive Michael Corbat, who was charged with improving the bank’s relationship with regulators when he took over as CEO in October 2012.

On Wednesday, the Fed said that Citigroup has improved its risk management practices in recent years, but the bank cannot determine well enough how its revenue and income would be hurt under stressful scenarios around the world. The bank’s internal examination process does not sufficiently consider how global crises could influence its broad number of businesses, the Fed added.

But despite being the headline on all the stories, Citigroup wasn’t alone in their rejection, according to The Wall Street Journal story by Stephanie Armour and Ryan Tracy:

The five institutions that didn’t get approval—Citigroup, Zions Bancorp, and the U.S. units of HSBC Holdings PLC, Royal Bank of Scotland Group PLC and Banco Santander —must submit revised capital plans and must suspend any increased dividend payments unless they get the Fed’s approval in writing. The foreign banks that didn’t pass muster with the Fed are restricted from paying increased dividends to their parent firm. The five banks that failed to get their plans approved can continue to pay dividends at last year’s level.

The Fed approved the shareholder-reward plans for Bank of America Corp. and Goldman Sachs Group Inc. only after the two banks adjusted their requests. Both of the banks initially fell below minimum capital levels in the Fed’s ‘severely adverse’ stress testing scenario and resubmitted their plans last week.

The Fed’s annual “stress” tests are designed to ensure that large banks can handle a deep slump like the 2008 financial crisis and continue lending without needing a government rescue. A first round of tests last week concluded that 29 of the banks had adequate capital buffers to withstand a severe drop in housing prices and surging unemployment.

Michael Corkery wrote for The New York Times that overall health of U.S. banking operations is improving, but this is a blow for Citi:

Over all, the results of the annual test showed that most of the banking system has healed substantially since the financial crisis. The Fed used the annual test to review the capital plans of 30 large banks under a series of stressful scenarios.

Citigroup’s failure is a setback for a bank that has aggressively tried to shed risks and cut costs after receiving a taxpayer rescue five years ago. The Fed also rejected the bank’s plans in 2012. Shares of the bank fell as much as 5 percent in after-hours trading.

In its report, the Fed said there were “sufficient concerns regarding the overall reliability of Citigroup’s capital planning process.”    The central bank said that while Citigroup had made progress in the areas of “risk-management and control practices” its capital planning process “reflected a number of deficiencies.”

Citigroup, the Fed said, had failed to make “sufficient improvement” in certain areas that supervisors had previously identified as “requiring attention.”

Specifically, the Fed questioned the sprawling bank’s “ability to project revenue and losses under a stressful scenario for material parts of the firm’s global operations, and its ability to project revenue and losses under a stressful scenario.”

One of the big winners today, according to Bloomberg’s Michael J. Moore and Elizabeth Dexheimer, was Bank of America:

Bank of America, ranked second by assets, raised its quarterly payout to 5 cents from 1 cent after the Fed’s decision and authorized a new $4 billion stock buyback. The increase is a victory for Bank of America Chief Executive Officer Brian T. Moynihan, who has pressed to raise the payout from the token level that prevailed since the financial crisis.

The Fed blocked plans in 2011 for an increase by the Charlotte, North Carolina-based company, which didn’t ask for anything the following year and won permission for a $5 billion stock buyback last year.

JPMorgan Chase & Co., which won approval last year while still having to resubmit to address qualitative weaknesses, had its capital plan ratified as it maintained a Tier 1 common ratio of 5.5 percent, a half-point above the minimum. The quarterly dividend will rise to 40 cents a share from 38 cents, and the company authorized a $6.5 billion stock buyback, according to statement from the New York-based lender, ranked first by assets.

The ratio at Wells Fargo & Co., the biggest U.S. home lender, was 6.1 percent, while Morgan Stanley’s was 5.9 percent.

After the 2008 financial crisis, regulators began looking at the health of the nation’s largest lenders in an attempt to reassure the public they could survive another stressful situation. It’s likely been a slight drag on bank stocks, however, as the government is able to accept or reject companies’ plans for using capital. It looks like it’s back to the planning stages for Citigroup, leaving the bank behind peers.


Talking Biz News Today — March 26, 2014


The Associated Press

Facebook buying virtual-reality company for $2B, by Barbara Ortutay and Ryan Nakashima


Dish’s Ergen said to approach DirecTV CEO White about merger, by Alex Sherman


Citi and four other banks stumble in Fed stress tests, by Stephen Gandel

The New York Times

Literary city, bookstore desert, by Julie Bosman

The Wall Street Journal

Siemens boss reaffirms ties with Russia despite Crimea, by Olga Razumovskaya and William Boston


King’s IPO begins its mega-hit dependency saga, by Joshua Brustein

News & Observer

College athletes can unionize, federal agency says, by Michael Tarm

Today in business journalism

NYTimes CEO takes swipe at Bloomberg
Tales from the early days of a business newspaper
Richardson: “Uncomfortable” with spiking stories
Ben Richardson speaks and wants Bloomberg to respond
Candy Crush maker prices IPO

This date in business journalism history

2009: NYTimes files suit against Fed, Treasury
2012: Forbes relaunches lifestyle magazine

Business journalism birthdays

March 26: Edward Baig of USA Today

Candy Crush

Candy Crush maker prices IPO


King Digital Entertainment sold shares to the public in the middle of its stated price range, indicating that investors willing to invest, just not the soaring amounts that other tech companies have garnered recently.

The New York Times had this story by Michael J. de la Merced and Mark Scott which points out that now King must convince investors it’s more than just a one-game wonder:

Perhaps virtual candy is not as enticing as once thought.

King Digital Entertainment, the maker of the hit puzzle game Candy Crush Saga, priced its offering at $22.50 a share on Tuesday, according to a person briefed on the matter. That was the midpoint of an expected price range. Still, that values the company at just over $7 billion in one of the biggest initial public offerings so far this year.

Now King must convince its new investors that it can come up with new hits to replace its aging cash cow, avoiding the missteps of other game makers that failed to duplicate previous successes.

Its much-anticipated arrival on the public markets signals the continued hot streak of the I.P.O. market, as companies hope to seize on buoyant stock markets and eager stock buyers. Issuers have raised $31.2 billion in proceeds to date, up nearly 70 percent from the same time last year, according to data from Renaissance Capital.

Much of potential buyers’ attention has revolved around fast-growing digital companies like Twitter, whose initial stock sale raised $1.8 billion.

Drawing almost as much scrutiny is King, an 11-year-old multinational company that has posted huge growth thanks to its one monster hit, Candy Crush. A version of a classic “match-three” game in which players line up three or more same-color candies, the title became a global cultural phenomenon.

Nearly 100 million users play Candy Crush every day, drawn, in part, by a seemingly endless supply of new levels and features. Its success has overshadowed King’s other titles, including Farm Heroes Saga and Pet Rescue Saga.

Bloomberg’s Leslie Picker and Cliff Edwards reported that investors may have been scared after other IPOs with similar business models:

King’s discount may reflect lessons investors learned following Zynga’s debut. The maker of “FarmVille” went public in December 2011, dropped 5 percent in its debut and slumped almost 80 percent in the subsequent year. Zynga’s revenue, like King’s, was concentrated in one major source at the time of its IPO: more than 90 percent of its sales came from Facebook Inc. Shares continued to slide as Zynga’s users started defecting to “Candy Crush.”

Unlike Zynga, which hasn’t posted an annual profit since it went public, King’s after-tax profit margins were 30 percent last year, its prospectus shows.

King’s shares will start trading tomorrow, listed on the New York Stock Exchange under the symbol KING. JPMorgan Chase & Co., Credit Suisse Group AG and Bank of America Corp. managed the offering.

But as Matt Jarzemsky points out in his story for the Wall Street Journal, the company’s $7 billion valuation is hardly indicative of a company without prospects:

The standard term that people use to describe this kind of [business] is hit-driven,” said Rett Wallace, chief executive of private-company research and data provider Triton Research LLC.

“For all of the claims that Zynga made—and King makes the claim too—that they have a scalable, repeatable process, it just turns out that the alchemy of figuring out a thing that billions of people are going to use all the time is really hard,” Mr. Wallace said.

However, King is seeking a relatively modest valuation versus some of its peers, some analysts say. Sterne Agee & Leach Inc. analyst Arvind Bhatia estimates the company’s revenue will grow to $2.49 billion this year. At the IPO price, it would be trading at 3 times his sales estimate. Zynga trades at 5.5 times analysts’ average 2014 sales forecast.

On a price-to-earnings basis, King would also be valued at a discount to established videogame companies like Activision Blizzard Inc. ATVI +0.48% and Electronic Arts Inc.,EA +1.00% according to Mr. Bhatia.

“They’re being honest with investors regarding their slowing growth rate, which I think is helpful,” said Rob Romero, portfolio manager at Connective Capital Management LLC, a Palo Alto hedge-fund firm with $120 million under management. He said in an interview before the pricing that he planned to try to buy shares in the deal.

“They need to be able to generate new games and successfully develop and market their new-game pipeline to replace the revenue that will inevitably be lost when Candy Crush begins to decline,” Mr. Romero said. “And they have such a pipeline.”

Matt Krantz of USA Today called the deal “pivotal” since it’s likely to forecast the direction of the IPO market:

It’s a pivotal deal for the IPO market, which is in a boom that is shaping up to be the biggest since the dot-com frenzy. Yet so far, young tech companies haven’t been a big factor in IPOs, but that could quickly change if deals like King work out. “The market is getting hotter for tech,” says Francis Gaskins, director of research for Equities.com.

The King IPO is more than just child’s play for investors. That’s clear in the:

• Resurgence in the role of tech. Young tech companies such as King are traditionally the soul of a robust IPO market. But the number of tech IPOs lagged behind health care, specifically biotech, all year. Just nine of the year’s 53 IPOs so far have been in tech, says Renaissance Capital. A vast majority, 29, have been health care.

• Return of young companies. Thanks to young companies such as King, the average age of companies with IPOs this year is 13 years, Renaissance says. That’s down from 16 in 2013 and 20 in 2012. The return of younger firms to the IPO market underscores the viability of IPOs to executives vs. other ways to cashing out, including selling out to competitors.

While King didn’t max out it’s price initially, it may prove to be a good investment for those buying at the offer. Because demand didn’t push the price too high, it may see a nice pop. Or, obviously, it could fall flat.


Talking Biz News Today — March 25, 2014


IRS: virtual currencies are property for tax purposes, by Patrick Temple-West

The Wall Street Journal
FDA staff recommends rejection of Novartis heart-failure drug, by Thomas M. Burton and Marta Falconi
Google deal with Luxottica will bring Glass to Ray-Ban, Oakley, by Rolfe Winkler
Why trade bonds when you can trade ads? by William Launder

The New York Times
Senators push for better auto safety reporting, by Matthew L. Wald
Obama to call for end to N.S.A.’s bulk data collection, by Charlie Savage

The Associated Press
Risky IPO seeks new way to trade star athletes, by Michael Liedtke

HTC One’s hard sell: This phone isn’t for everyone, by Joshua Brustein

And in local news:

News and Observer
Four Loko maker banned from manufacturing caffeinated booze in NC, by David Bracken

Today in business journalism
Search resumes for missing WSJ reporter
NerdWallet hires COO, VP of talent
Video mocks Bloomberg in China with another resignation
Harnessing online traffic

This date in business journalism history
2010: WSJ takes on the NYC market
CNNMoney.com adds portfolio function


web traffic

Harnessing online traffic


Marketers and journalists may have more in common than they think. Both groups are trying to best utilize web metrics to maximize their reach. Some are just doing it voluntarily, while others are having it forced on them.

Writing for the New York Times, David Carr penned a fascinating column about the move to pay journalists for clicks and other online metrics:

The availability of ready metrics on content is not only changing the way news organizations compensate their employees, but will have a significant effect on the news itself.


At the beginning of the month, TheStreet.com, a site that covers the stock market, announced it was expanding its platform to include new voices, and that contributors would be paid by the click. A contributor who receives 60,000 page views in a week, for example, would be paid $50. (A lot of mischief can occur when stock prices are being written about, but we’ll get back to that later.)

At the end of February, The Daily Caller, a conservative political site run by Tucker Carlson, said it would begin a hybrid arrangement in which staff writers were paid a base salary plus a traffic incentive. The Daily Caller’s publisher told The Washington Post that the new plan would lead to more traffic and higher overall compensation for writers.

Joel Johnson, the editorial director of Gawker Media, announced a program in February called “Recruits” that creates subsidiary sites for new contributors, attached to existing editorial sites like Gawker or Jezebel. The recruits receive a stipend of $1,500 a month, and pay back that amount at a rate of $5 for every 1,000 unique visitors they attract. They then get to keep anything above the amount of the stipend, up to $6,000.


It’s not just digital upstarts that are starting to manage reporters by the numbers. The Portland, Ore., newspaper The Oregonian, the much heralded home of many Pulitzer Prize-winning projects, is in the midst of a reorganization driven by the desire for more web traffic, according to internal documents obtained by Willamette Week, a weekly newspaper in Portland. A year after big layoffs and a reduction in home delivery to four times a week, The Oregonian, owned by Newhouse’s Advance Publications, is focusing on digital journalism — and the people who produce it — with a great deal of specificity.

On the other side of the spectrum are marketers, who are trying to determine true reach at a time when more than a third of Web traffic is fake, writes Suzanne Vranica for the Wall Street Journal:

Billions of dollars are flowing into online advertising. But marketers also are confronting an uncomfortable reality: rampant fraud.

About 36% of all Web traffic is considered fake, the product of computers hijacked by viruses and programmed to visit sites, according to estimates cited recently by the Interactive Advertising Bureau trade group.

So-called bot traffic cheats advertisers because marketers typically pay for ads whenever they are loaded in response to users visiting Web pages—regardless of whether the users are actual people.

The fraudsters erect sites with phony traffic and collect payments from advertisers through the middlemen who aggregate space across many sites and resell the space for most Web publishers. The identities of the fraudsters are murky, and they often operate from far-flung places such as Eastern Europe, security experts say.

The widespread fraud isn’t discouraging most marketers from increasing the portion of their ad budgets spent online. But it is prompting some to become more aggressive in monitoring how their money is spent. The Internet has become so central to consumers, that advertisers can’t afford to stay away.

Carr points out in his column that the potential for news sites to try and manipulate readers into clicking on their articles increases as it become tied to pay, something brands are already discovering.

And journalism’s status as a profession is up for grabs. A viral hit is no longer defined by the credentials of an individual or organization. The media ecosystem is increasingly a pro-am affair, where the wisdom — or prurient interest — of the crowd decides what is important and worthy of sharing.

Gawker Media now hosts Kinja, a platform where anybody can publish a blog post. The leader board on Kinja is a mix of people who write for a living, and people who wrote something about living that connected with other people.

It’s bracingly meritocratic, but there are hazards. Quizzes are everywhere right now because readers can’t resist clicking on them, but on an informational level, they are mostly empty calories. There are any number of gambits to induce clicks, from LOL cats to slide shows to bait-and-switch headlines.

But more than just traffic can be manipulated once you open up the gates, as Fortune recently pointed out. Authors promoting specific stocks posted to sites — including Forbes.com, Seeking Alpha, and Wall St. Cheat Sheet — without disclosing that they were paid to promote the companies they were writing about. The stocks were pumped and sometimes dumped without the reader being any the wiser.

As more sides of the business move to decisions based on metrics, it will likely create a situation where there is more equality, but also increases the chances that online clicks will be manipulated. The tech industry should determine if there’s a better way – metrics 2.0 – that will help both sides. It looks like the future of journalism may depend on it.


Talking Biz News Today — March 24, 2014


The Wall Street Journal

Apple in talks with Comcast about streaming-TV service, by Shalini Ramachandran, Daisuke Wakabayashi and Amol Sharma
A ‘crisis’ in online ads: One-third of traffic is bogus, by Suzanne Vranica


Nokia sees closure of Microsoft deal delayed to April, by Jussi Rosendahl

The New York Times

Selling a poison by the barrel: Liquid nicotine for e-cigarettes, by Matt Richtel


Candy Crush mania coming to Wall Street, by Ben Rooney


America needs a bunker to store its mountain of toxic TVs, by Robert McMillan

Today in business journalism

TheWrap.com sees large increase in readers
Seeking Alpha needs to change its anonymous policy
Apple and Comcast in talks

This date in business journalism history

2008: Bloomberg TV anchor leaves for Fox Business
2009: Group launches watchdog site for business journalism

Business journalism birthdays

March 24: Peter Johnson of Dallas Morning News