Disclosure is a touchy subject when it comes to blogging and digital journalism. Most of the time, the debate is centered on when disclosure is necessary. But what happens when disclosure isn't enough?

As I was going through my feed reader yesterday, I came across a post on Silicon Alley Insider (SAI) that serves as the perfect example of why a debate about journalistic ethics and standards online can't be limited to the topic of disclosure.

The post details how Gilt Groupe, a New York-based ecommerce company, is reportedly set to raise $40m in funding at a $400m valuation.

The co-founder of Gilt, Kevin Ryan, is a co-founder of SAI. The author of the post about Gilt's pending financing, Henry Blodget, is the other co-founder of SAI. But that's not a problem. Before you jump to conclusions about where this is going: Blodget included a disclosure statement at the bottom of his post.

So what's the big deal? Answer: the content of Blodget's post.

Here are several portions:

Our crack investigative reporting team has learned that Gilt Groupe, a New York-based private-sale ecommerce company, has signed a term sheet with General Atlantic and Matrix to raise about $40 million at about a $400 million valuation.

Gilt was founded two years ago.  It generated $25 million of revenue last year and should generate about $150 million of revenue this year.  It is also projecting revenue of more than $500 million next year.  So that explains why brand name VCs like Matrix and GA continue to throw money at it.

And here's another amazing Gilt detail: The US business isn't hemorraging cash!  In fact, it started generating cash three months ago.

(That's proud Gilt CEO Susan Lyne above.  We'd be smiling, too.)

It's also worth noting that Gilt is operating in a pretty sweet little corner of the ecommerce industry.  The company that inspired Gilt's founding, Vente Privee in France, will do $750 million in revenue this year.

So that's some good news, no?

A bit over the top, no? While I'd like to believe that Blodget wrote this post tongue in cheek, the fact that this post reads like a bad infomercial is hard to overlook considering that the co-founder of Gilt has a financial stake in SAI and an SAI post has described Gilt as "our corporate siblings".

Obviously, it doesn't take an IQ of 160 to figure that SAI's "crack investigative team" didn't learn anything: Blodget's co-founder told him what's taking place at Gilt. Projections that have Gilt going from $25m in revenue to $500m in revenue in two years seem rather aggressive, but that notwithstanding, the statement "that explains why brand name VCs like Matrix and GA continue to throw money at it" and the subheadline of "Let's hear it for a red-hot New York company in a red-hot corner of the ecommerce industry!" seem better suited for an advertorial than a legitimate blog post. And comments such as "we'd be smiling, too" and "so that's some good news, no?" put whatever final stake there is in the heart of this post's credibility.

For good measure, when asked by a commenter if he owned stock in Gilt, Blodget continued the love affair: "No, Michael, I don't. But I sure wish I did".

So is Gilt's financing news? Yup. Would SAI have a legitimate reason to cover it (with disclosure present)? Yup. Does disclosure make up for the fact that Blodget's post is advertorial masquerading as journalism? Nope.

Of course, judging by all the past promotion of Gilt that has taken place at SAI (here, here, here, here, here, here), it's clear that SAI and Henry Blodget are willing to sacrifice their credibility to help a business partner out. C'est la vie.

But for bloggers, journalists and pundits, this should serve as a reminder: disclosure doesn't make you an ethical journalist. A couple of traits called 'honesty' and 'integrity' are required for that.

Photo credit: Nima... via Flickr.

Patricio Robles

Published 2 July, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (2)


cherry wright

If a positive write up about something you have a financial interest in is unethical, and I'm not disagreeing with you, where does that leave editorial content promoting stuff monetised with affiliate links? Simonseeks for example, is the content editorial written by journalists as the site claims or is it PR using editorial to sell stuff? Or is the content SEO? And what are you saying readers need to know?

about 9 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy


I think it really depends. There are no hard and fast rules here. Intent is very important.

In the case of Blodget, the post is so over the top as to have little to no journalistic value. The disclosure is there, but the news of Gilt's financing is presented in such a promotional fashion as to have no credibility. It's clear that Blodget's intent when writing his post was to serve as a cheerleader for Gilt, not to act as a reporter presenting important news to his readers.

I'm not familiar with Simonseeks. I don't see an inherent problem with affiliate links in editorial so long as there's disclosure. But again, intent is very important. If every piece of content Simonseeks publishes presents product in a glowing light and there's absolutely no balance (eg. a discussion of a product's pros and cons), it would be pretty obvious that the intent is to sell product, not to inform readers. That'd be a problem if the content is being offered as the product of real journalism.

about 9 years ago

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