At first sight, there may not seem much connection between AOL’s recent dismissal of Michael Arrington, founder of TechCrunch, and a spectacular scam at the Wall Street Journal, which this week brought down its European publisher Andrew Langhoff.
Don’t be deceived. There is every connection. Not in detail, but in principle. Both executives were fired because they had prostituted editorial integrity.
It’s fairly evident that neither deliberately set out to do so. Rather, they were attempting to apply imaginative (and increasingly desperate) commercial solutions to a problem endemic in the news information business. Namely, the pernicious effect of the internet – the ‘free news’ junkies’ hourly fix – on traditional advertising revenue.
Arrington had to go because his cavalier attitude to conflict of interest put him on a collision course with Arianna Huffington, editor-in-chief at AOL – who was rightly concerned about the impact of his heretical gospel on the rest of AOL’s news assets (chiefly the Huffington Post).
Although TechCrunch, which AOL acquired for $30m last year, is a respected news source, as a free blog it was badly underfunded by the low-yield advertising which was the only traditional alternative to subscription revenue. Arrington’s solution was to set up CrunchFund, a venture capitalist fund specialising in new technology companies. Which aspiring tech company would not trade exclusive stories with TechCrunch in the hope of coming into contact with untold Wall Street riches? Investors, on the other hand, soon came to recognise TechCrunch for what it was: an invaluable source of investment-grade information.
The problem was what happened next. Should TechCrunch journalists, to all outward appearances acting without fear or favour, be obliged to soft-pedal any clients who signed up to Arrington’s fund? The new funding paradigm soon became a very old-fashioned conflict of interest.
The WSJ/Langhoff affair also breached journalistic ethics, but in a rather different way. Officially, Langhoff was fired because he had signed a deal with Dutch consulting firm Executive Learning Partnership which resulted in a series of special reports considered in breach of the WSJ’s ‘unimpeachable’ standards of editorial integrity. In fact, this was only the half of it, according to The Guardian. Apart from trading too much prominence and name-checking, Langhoff also seems to have struck an interesting side-deal with ELP’s sponsorship money (ie, advertising revenue). ELP was to channel money (including, at a later stage, some of the WSJ’s own money) into buying a large number of heavily discounted copies of the European edition of – the WSJ. This action is not illegal nor, strictly speaking, does it break the Audit Bureau of Circulations’ rules (Why not? we should ask indignantly). But it is designed to deceive. Inflated ABC figures give advertisers the impression that the WSJ is a stronger media vehicle than it actually is, which helps to harden rates.
While denying some of The Guardian’s more “malign interpretations”, News Corp – which owns the WSJ through Dow Jones – has nevertheless conceded that Langhoff had to go because he had allowed WSJ to enter into “a broad business agreement” which could “give the impression that news coverage can be influenced by commercial relationships.”
If respected operators like WSJ and TechCrunch are getting up to such tricks, where does the rot stop? The answer may not be very comforting for the integrity of news values in general.