Bloomberg News Pays Reporters More If Their Stories Move Markets
businessinsider.com
businessinsider.com
The risk—that reporters will make things up for short-term gains—can be addressed through a tighter-than-usual editorial process.
In the end, Bloomberg makes its money selling terminals. The organisation, as a whole, is strongly incentivised to police against crap. Perhaps too much so. This policy may serve to counterbalance that inbuilt conservatism.
I can't find it now, but someone made a site to score opinion piece writers and see how many were right. Few were, but they still had jobs. You give people too much credit.
Are they though? Where's the metric that measures credibility, or is that something that's left to human discretion? People will optimize for the metrics they're measured against, and it sounds like in this case they've chosen a metric that conflicts with the aims of a news organization.
The grandparent comment's argument about how Bloomberg is incentivised not to print crap by making it's money through terminals sounds almost convincing, I have to admit, but I see someone thinking "why not have the pie and eat it too".
How does this promote fair and factually accurate coverage over the politicized FUD bullshit we are constantly being fed by the media nowadays?
I don't feel that I know enough to make claims about how justified (or not) that is, just pointing out why a story dated "Dec. 11, 2013" might have been posted.
And in the intervening years, Bloomberg News won itself a Pulitzer [1].
[1] https://www.bloomberg.com/company/announcements/bloomberg-wi...
"Write articles that move markets"
to:
"Write articles that move markets in a way the SEC won't find out"
Also how good do you think it would be for Bloomberg (from a PR perspective) if their reporters are getting charged left and right for market manipulation?
Because in reality, the job of an editor is to avoid being fired for angering the corporate sponsors/owner, and anything about ethics, or upholding the standards of the publication, is merely coincidental.
The role of an editor is to implement the owner's plan for the publication, and that means their incentives are clearly aligned if that plan includes paying reporters more for stories that cause their audience to act.
Oh - and to make sure the pages were filled on time and budget and that the editorial staff were reasonably happy, and that we referred to companies in the singular.
I think the topic is how business interests from corporate sponsors are weighted against factual reporting.
Not saying magazines have much choices, but manufacturers disallowing any criticism speaks volumes about their products. We should strive for more transparency here.
Not that I would expect most tech articles to not be advertising these days. It has become a standard.
Are you really suggesting this shouldn't have been published? I rather know it for a fact.
I can also see a finance focused media outlet using that jargon internally to describe the underlying metrics (moving market's isn't really easily measurable directly anyway). To me, this doesn't seem like news. This seems like a bad jab at Bloomberg's credibility, which has been really important recently.
There's probably a discussion to be had about for-profit media and reach optimization. But that's been done many a times over the discussions of public/gov't/nfp news sources.
> Bloomberg reporters receive bonuses based indirectly on how much they shift markets with their reporting. This story undoubtedly did that.
Linking the story with market moves can be legitimate, they are a business news org and market is moved by major investigative stories.
"your article achieved so and so? don't mind that, we gave it a journalistic valid prize, here is your money bonus"
If you look at the example of Walmart they gave, the stock was already down 1.5% when the story broke, so it only fell 1.5% instead of 3%:
https://amp.businessinsider.com/images/52a755546da811c04aecd...
So this Hollywood interpretation needs to go.
Its only insider trading if you trade on material non-public information ABOUT SECURITIES (but if we're being honest, only equities and equities derivatives, corporate bonds are supposedly covered but no-one cares enough) where you have a fiduciary duty to not tell, such as by being employed with the company or in a nondisclosure agreement. You also create liability if you have a fiduciary duty not to tell, and you tell and that person or someone in that chain or persons trades.
If you:
- don't have a fiduciary duty not to tell, and you have material non-public information, you can trade or tell people who then trade.
- don't have a fiduciary duty not to tell, and you have baseless non-public information, you can trade or tell people who then trade. It doesn't matter if you KNOW that your baseless information is going to move the markets. To avoid liability from individuals - this is distinct from liability from the regulators - all you do is put a disclaimer at the bottom of your post. The PSLRA of 1995 streamlined this due to frivolous lawsuits.
- and last but not least, if you aren't trading securities then there is no prohibition of insider trading. there is no regulator that polices trading ahead of information in non-securities markets, there is no statute, there is no interest in Congress which assumes they could even make that constitutional at all, since there is no voluntary fiduciary duty role people could get themselves into.
One might question journalistic integrity and incentives, but there is some good that can come from this sort of reporting. It helps in price discovery. In the below link, someone does additional research and short sells companies he believes are fraudulently reporting numbers to great success.
Having insider information doesn't necessarily mean it's insider trading.
https://www.washingtonpost.com/business/gaining-by-betting-a...
It is totally legal to get information ahead of the market, especially if it's "public". It is not legal to trade if it's non-public information as it relates to securities. In this case, it's also legal to get information from a paid source (think a paid news source - WSJ), it's not legal if they are bribing.
In this case, the journalist is just selling the story to bloomberg who is then distributing the news (potentially) slightly ahead of it's public release (this is no different than a paid journal).
If you need to know how a court is likely to draw the line, talk to a lawyer. :) But in general, the fact that a journalist is involved doesn't really change anything. In general, you can trade on whatever information you may have; the exception is if you have some duty not to trade on it.
https://seekingalpha.com/article/2389665-is-it-wrong-to-take...
I don't believe that case was considered insider trading but I may be mistaken.
The giveaway in this case is that MedSec/Muddy Waters were not in any way insiders, they were simply smart enough to investigate a company and find out it was overvalued before anyone else did, and then pointed it out when they had their financial ducks in a row to benefit from it.
"To say that people are getting a big $5,000 bonus for some market-moving win is completely wrong."
Seeing situations like these has led me to an intellectual predicament.
In the past year or two I have seen a massive amount of propaganda and now I'm left with a question that I hope others can answer.
How can we have free trade when every trade is weaponized? How can we have a dissemination of information when any single group who wants power uses every post on the internet as a way to insert their own ideas? We make fun of anti vaxxers but then we see that a government used a vaccination program to find their enemies[1]. We make fun of the paranoid, but then a Snowden comes out and we discover that they werent actually paranoid. How does a society function when any given transaction, whether in physical goods and services or information, is used as a weapon against another group?
I dont see how we get out of this without reverting to a super tribalist set of societies that calls out everyone who is different from the default group. Whether that's based on ideology, race, geography, etc we are all losing out because we have reached a point where there is no trust between anyone anymore
[1]https://news.nationalgeographic.com/2015/02/150227-polio-pak...
The answer to your question is the same way trust has always been built (and lost) - micro transactions establishing credibility and mutual trade and dependence, not in paranoia and closing doors, which is sure to only antagonise things
They don't mention which reports. Anyone recall the spiked story?
Search results about Bloomberg and China are pretty crowded, given recent events.
(I'm sorry if the answer comes off as flippant, but really, there's nothing particularly odd or unsavoury here. Journalists are paid to break stories that get attention or are otherwise important, and this is a perfectly valid metric for "important". Why would it be illegal?)
They are incentivizing sensationalism. This doesn't seem like a good journalistic practice.
If you thought that journalists were entirely disinterested seekers of truth, then uh...I just don't know what to tell you, but you're going to be really disappointed when you find out the incentives your doctor, lawyer, and car mechanic have. :)
As engineers know very well, the qualitative properties of a system often change significantly when a parameter increases by an order of magnitude.
People look back with nostalgia on an era that never existed.
I don’t know if anyone has studied the longitudinal accuracy of journalists. The 19th century brought unique economies of scale to mass-market journalism (through industrialised printing and steam-powered rail transport). “Realizing that they could expand their audience by abandoning politically polarized content, thus making more money off of advertising, American newspapers began to abandon their partisan politics in favor of less political reporting starting around 1900“ [1]. Quality thus increased, and remained increased, until the Internet made niche journalism profitable again.
Journalism 150 years ago was crap. And a lot of journalism today is crap. It does not follow, however, that the intervening years were similarly dominated by dumbassery.
I basically agree with your overall point, but I think you may have that part backwards, actually. Advertising in general (and for newspapers, classified advertising in particular) represented an enormous torrent of money. The internet killed that. It's not that the internet has made narrow-niche journalism profitable again (it never stopped; there have always been niche magazines and newsletters), it's that the internet stopped newspapers being profitable at all, and now all we're left with is the narrow niches that never went away.
Are we worse off as a society now that all that money flows straight to Facebook and Google instead of the Village Voice and it's kin? Sure, maybe. But was journalism magically more ethical during that period? I see no evidence of such. And I don't think lying for a Pulitzer is any more noble than lying for some page views.
I think it has. Before industrial printing, printing a broadsheet was expensive. Before steam locomotion, quickly shipping it far was expensive. That limited the addressable market. Add in lower population densities and you have a narrowly-distributed product for which a high price must be charged.
Enter industrial printing and steam locomotion. Economies of scale emerge. Those operating with scale can outcompete narrow operations on price. Apolitical news becoming cheaper meant partisan rags had to fight harder to justify their price premium. In the end, scale won.
The Internet makes production and distribution cheaper. At the same time, it gut punched the majors by taking away their ad revenue. It’s the reverse of the above happening, and it’s newly enabling small, partisan publications to turn a profit. (They needed to appeal to a broader market, before, to pay for their fixed print and distribution costs.)
> It's not that the internet has made narrow-niche journalism profitable again
This is a red herring.
As opposed to all the other media outlets who aren't?
What other factors do you want the incentive to be on? Number of news per day? Amount of cat picture? Number of Like?
Libel laws need to be improved to hold shoddy reporters accountable for their work.