|Sat Apr 6 2013 18:03:01|
From Riches to Rags: Amazon's Bezos Invests in Business Insider
By: David Steiner
Amazon's Jeff Bezos has invested $5 million in Business Insider. I've always been an unabashed fan of Jeff Bezos. He spurned short-term profits in favor of the long-term growth of Amazon and stuck to his guns when Wall Street analysts were unconvinced that Amazon should be spending so heavily on infrastructure. Even fellow CEOs, like eBay's Meg Whitman, scoffed at the business model, but time has proven Bezos correct. To me, he has always been a man who has a clear vision of where he wants Amazon to be, and, torpedoes be damned, he was going to navigate it there.
That's why its disappointing that Bezos would invest in a news site that covers the very same industry in which Amazon is one of the main players. Actually, let me step back a bit - Business Insider is more of a Nooz site. For those of you who have ever bought a bag of frozen Loobster, thinking it was real Lobster, you know that it's not the real thing, but an incredibly cheap imitation.
Let's not read too much into the fact that BI's founder and former Merrill Lynch analyst Henry Blodget has had a relationship with Amazon.com spanning 14 years, before Blodget was unceremoniously booted from Wall Street for dishonest activities: publicly pumping stocks (including Amazon), while privately advising his clients to dump them.
This is either a wonderfully forgiving country, or one with a very short memory. Michael Milken was the "Junk Bond King," indicted for securities fraud before becoming a great philanthropist. President Nixon was a crook before dying a great statesman. Where else could one shuck the past and reinvent themselves all over again? God Bless America.
So, what bugs me most about this investment? It's not that Blodget's site has questionable content, or has a history of mixing advertising and editorial. It's not even the steady dismantling of the "Chinese Wall" that separates journalism and advertising - although maybe journalistic ethics have no place when it comes to Nooz.
I think what bothers me the most is how we have settled when it comes to who we choose to inform us. When did it become ok to mash news and agenda together? Have Fox News and MSNBC beaten us over the head so resolutely that we just can't discern the difference anymore? Clearly it pulls an audience - Business Insider draws 28 million visitors monthly, yet according to Forbes, operated last year at a $3 million loss.
Businessweek points out that Bezos' investment in BI "is perfectly aligned with his overall philosophy about changes in the media business. He believes the intermediary layers or "gatekeepers" of traditional media are being threatened by tectonic shifts in the economics of content creation and distribution, and Amazon is investing heavily to accelerate the transition and profit from it."
In his letter to shareholders last year, Bezos wrote "even well-meaning gatekeepers slow innovation." But I'd argue that gatekeepers, otherwise known as journalists, are trained to determine what qualifies as news and dig into the deeper story. Journalists have a set of ethics in place they must follow to, among other things, avoid conflicts of interests - real or perceived.
It's true that traditional newspapers have fallen on hard times, due in part to their failure to become early adopters of electronic media and inability to monetize their content. Their loss was Huffington Post's and BI's gain, and admittedly, they are great at what they do – drawing traffic. I'd like to think that, had he lived in this age, Edward R. Murrow (on his blog, of course) might be decrying this trend, rather than becoming a part of it.
Corporations don't make investments without expecting a return on their capital. BI has said that they will add disclosures to their Amazon articles in the future. Let's hope they add that same disclosure to articles about eBay, Overstock Google, Visa, and all of the other ecommerce, paid search, payments and financing companies that Amazon competes with - as well as companies in entertainment, music, publishing, grocery - the list of industries Amazon is entering goes on and on.
I've been slapped back into reality. Congratulations to Business Insider for hooking a big fish - one that recognizes that the lines of traditional journalism no longer really exist, and can use that to his advantage. Shame on me for applying my standards to Jeff Bezos. But mostly, shame on all of us for not demanding better from our news sources.