Mark Cuban has a dumb media business model

Mark Cuban has a dumb media business model

Summary:  Mark Glasser over at PBS's MediaShift blog has been writing about Mark Cuban's media project: Sharesleuth.com , to provide “independent Web-based reporting aimed at exposing securities fraud and corporate chicanery.

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 Mark Glasser over at PBS's MediaShift blog has been writing about Mark Cuban's media project:

Sharesleuth.com , to provide “independent Web-based reporting aimed at exposing securities fraud and corporate chicanery.” Cuban hired St. Louis Post-Dispatch investigative business reporter Christopher Carey to be editor of Sharesleuth.

The revenue model is that Mr Cuban will short the stock of a company that is covered by Sharesleuth and use the proceeds to fund the site. A report by Sharesleuth on Xenthanol, a company founded to produce alcohol from wood waste hit paydirt:

On the day that the Xethanol report was published on Sharesleuth, its stock went down 14% to $5.95 — and that’s way down from the price of $12.65 when Cuban shorted 10,000 shares of Xethanol stock back in May. Yesterday, the stock was at $5.09.

Yes, we do need to find a business model to pay for journalism but this is not it. Journalism cannot be seen to be profiting from specific types of stories. This is completely unethical. Journalism should profit only from the quality and the timeliness of a broad range of news stories, and other reports.

This type of issue is not confined to Mr Cuban's adventures in media. To a lesser extent, it will become an issue at news organizations that pay journalists on the basis of how many pageviews their stories receive.

This type of compensation encourages sensationalism and it discourages journalists from working on important stories that benefit society. The pageviews  model is increasingly used in small media companies such as Gawker Media and it will hit and hurt larger media companies.

This is all part of the changing economic model for journalism, and it includes experimentation. Some of it won't be pretty.

Link to MediaShift . Digging Deeper::Mark Cuban's Sharesleuth Takes Business Reporting to Ethical Edge | PBS

UPDATE: I just realised that Mark Cuban is out in the stratosphere, he doesn't have anyone to tell him "it's a really bad idea, it really is." That is not a good place to be. Look out...

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9 comments
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  • Don't like Capitalism?

    The stock market is a tricky business. Everyone seems to have their own idea about where it is going. If you had gone with oil futures just a month ago - you would be losing your shirt right now. It SEEMED like it was a good bet!

    I still like the idea of a terrorism stock. People placing their own money in such a stock is a better indicator than some (free) online poll.

    People will bet on anything. Why not make some money along the way? P.T. Barnum would be proud . . .
    Roger Ramjet
    • Nope

      Never liked it. A model based on gambling (stock market), greed and the law of the jungle (competition). See any rationality or logic in that?

      So funny that open source is the new communism ;-)
      TonyMcS
      • Open source...

        Since you mention open source... it is the new communalism :-)
        foremski
    • Nothing to do with capitalism...

      It's to do with uncovering corporations lying but lies can be uncovered in more ethical ways. IMHO.
      foremski
  • Good Lord.

    From Sharesleuth.com:
    > We?re looking for companies that were built for
    > fraud, for executives who are enriching themselves
    > at shareholder expense, and for businesses whose
    > behavior runs counter to their stated objectives
    > or to the public interest.

    No doubt they'll find them, too. And, since they have to eat, if they don't find them, chances are they'll still find them.

    > In certain instances, the majority partner of
    > Sharesleuth.com is going to make personal
    > investments based on information we uncover.
    > Those investments will be fully disclosed, so
    > that readers can evaluate any potential
    > conflicts of interest.

    No doubt they'll start with a number of legitimate stories. But when your business model is depends on ruining those companies that you cover, I'd say EVERY story is a potential conflict of interest. Just the act of reporting will certainly affect the stock, so I'm wondering how Mark Cuban will deal with the inevitable charges of insider trading. Maybe he can get a cushy cell in the Enron wing of his local minimum-security prison.
    dave.leigh@...
    • Yes, indeed...

      The conflict of interest becomes so messy it interferes with the journalism.
      foremski
  • Mark Cuban is unblievably down to earth.

    This is just plain, smart marketing. We are talking about it now arent we? He is not saying he will do it forever, he is simpling starting with this model. He is letting everyone know their mission is great reporting on corruption.

    David Jemeyson
    ccisat1dxj
  • I actually really like the idea!

    Since when is it unethical to investigate corporate problems and publically unmask them? Is it more unethical to draw your money from a legal stock play than advertising? Some of the ads that support Web sites are downright unethical, in terms of how they violate the readers' privacy.

    Yes, Mark Cuban is a bit scummy. His wealth and business success does not mean that he is perfect. However, I do not see the difference between him using truthful information to generate money on the stock market and another media publisher using their Web site or newspaper or magazine to advance their political or financial agenda.

    Should [i]The National Review[/i] or [i]Mother Jones[/i] or [i]The New York Times[/i] or any other publication be demonized for presenting their own slant on a story? No, not at all. Indeed, Cuban's venture is actually more ethical, because he is presenting raw facts with little analysis. Most publications spin the facts to meet their needs.

    Is there a difference between a publication which takes a tiny nugget or truth, blows it all out of proportion, and prints a sensational headline and lurid front page picture to plump up sales, and a publication that prints wholly factual, verifiable information in order to manipulate stock prices? Not really. The end result is the same. Should the SEC or FTC or FDA, or any government organization be forbidden from making any statements that might alter stock prices? No way. Would you prefer that a corporation be allowed to silently manage their business into the ground, taking the stockholders, customers, and vendors with them, just because the person who dug up the dirt stood to make some money off of it?

    Making stock market plays based on knowing something ebfore someone else does is legal and ethical. It is only insider trading when the information you use is information that could not (and maybe might not be) obtained by anyone else at the same time. Cuban is not doing insider trading, he is just doing a ton of research, to his advantage. There is nothing wrong with that.

    J.Ja
    Justin James
    • Self-fulfilling

      Journalism is about writing stories that matter without any commercial intent. This model is not.
      Also, this approach becomes self-fullfiling, the mere hint of Cuban shorting a stock would run it down, even before the evidence is offered.
      foremski