Michael Arrington's Conflicts of Interest? Not!

I have been carefully considering this post for a couple of weeks, ever since seeing a bleary eyed Michael Arrington at the Web 2.0 conference fending off criticism from journalists who suggested that he was conflicted due to his investments or involvement in a series of Web 2.0 companies.

The blogosphere and the comments section of CrunchNotes were awash with posts on this issue but I want to take an angle that I think has not been looked at. The headline is that as long as Arrington discloses his relationships (preferably on each post about that company) he is more than fine. He is more than fine compared to research analysts (more on that in a second) and generically he is above board on disclosure issues. Disclosure is what matters so that we the readers can form our own opinion. In fact, his position as an insider is beneficial to getting the real insider scoops and pre-annoucnements that we all want. I actually think that this is a blueprint for bloggers and is what we the readers want: as much information as possible in real time and full disclosure.

In his own words, Arrington correctly writes:

"TechCrunch is a new kind of publication. We don’t fit into a neat little box like traditional media, who refrain from financial conflicts of interest with their readers and feel that they are therefore above reproach. They aren’t, but they really, really feel that they are, and look down on blogs and other media as the unwashed masses. Yes, I’m grouping them unfairly, but the really good reporters will all soon be on their own anyway, so this will be completely true eventually.

TechCrunch is different. TechCrunch is all about insider information and conflicts of interest. The only way I get access to the information I do is because these entrepreneurs and venture capitalists are my friends. I genuinely like these people and want them to succeed, and they know it and therefore trust me more than they trust traditional press.

I am an active investor, board member and advisory board member with a number of startups. That isn’t going to change. I also write about startups. That isn’t going to change, either. Obviously people like what we write on TechCrunch or they wouldn’t come back. But no one should think TechCrunch is objective or conflict-free. We aren’t. We never have been. We never will be."

Techcrunch is not journalism (as if that is objective and conflict free:)). Techcrunch and other blogs like it is insider announcements, opinion and analysis. In fact, I would suggest that Michael Arrington and Techcrunch are closer in genre to Jupiter, Gartner and Oreilly than he is to the NYT or Sydney Herald. And, I would suggest that Arrington is more above board than any of those companies.

As anyone who has been in the enterprise software business will tell you, many of these research houses are implicitly pay to play. When you subscribe to their services and get their analysts' time then he knows enough about you to put you in the quadrant or report . There are more conflicts of interest at the market research houses than at TechCrunch and they are rarely disclosed. As David Jackson wrote in this post on Seeking Alpha (Full Disclosure: Benchmark is an investor):

"Market research in general is rife with undisclosed conflicts, and as a result small companies often view the cost of industry research as a marketing expense rather
than a business planning expense ...

Currently, industry analysts do not have to disclose potential conflicts of interest, and there's no Chinese Wall between the business unit that accepts payment from clients and the analysts who comment on companies' products and positioning. The potential for abuse is a problem even in an organization of ethical people.

That problem could at some time bite Jupiter and its shareholders. "

So, Kudos to Arrington for his disclosure policy and the more disclosure the better. Keep on bringing us the insider news. And the next time Asher Moses calls or rags on you, send him to the CEOs of the Jupiter and Gartner. As I have written in a previous post and back and forth with Michael Gartenberg, CEO of Jupiter, Bloggers will likely replace the analysts anyway so let us set the gold standard for disclosure as well.