Schwartz is right about Internet disclosure -- he just doesn't go far enough

Publishing "public information" through a for-profit media company should be optional, not required. Publishing important public information on the Internet should be mandated (and free), and not optional.
Written by Dana Gardner, Contributor

Sun Microsystems CEO Jonathan Schwartz has had another brilliant and innovative idea that extends the benefits of the Internet to make businesses more productive while saving them money. The idea is to level the regulatory playing field around SEC disclosures policy by using -- yes, in 2006 -- the Internet.

Mr. & Mrs. Publicly Traded Company, you too can publish on the Internet so that nearly anyone with access to a browser can acquire your public information. Yes, that should include your financial information on a timely basis, and not just the dimensions of your latest product, driving directions to your offices, and the names of your board of directors.

It seems obvious that a company's Web site, blogs, podcasts -- any publicly available Internet distribution means -- have become the primary and best means to communicate with ... well, the world. And viola, release of such information can be precisely controlled and timed so that everyone anywhere gets fair access to it at the same time. No extra charge.

Yet sadly there remains, as Schwartz points out publicly, an anachronistic requirement by U.S. government regulators to adhere to disclosure policies that mandate how information is to be made "public." Publicly traded companies, in adhering to SEC policy on making financial disclosure fairly and equitably available, must issue "press releases" through certain channels, arrange specific conference calls (a nifty 19th century addition), and also to publish such information in designated "newspapers of record."

Similar legal publishing requirements, by the way, exist on the local, state, and other federal levels for lots of "public information" -- from real estate transactions, to intentions to do various business activities, to many sorts of "public notices." Maybe you noticed them, in that tiny print, buried in the back of your local newspaper ... or most likely you didn't. But they are there, they are paid for, and they are legally mandated.

We even still often call this information distribution process "press release," even though there's no printing press necessary. Leave the trees alone. Actually there's no media companies required either. Information distribution is increasingly direct from business-to-business (B2B) and business-to-consumer (B2C) via the Internet -- and not B2M2B and B2M2C (business-to-media-to-business or business-to-media-to-consumer). What do we need the media in there for when it comes to companies reaching their own communities, or the general public?

Schwartz's excellent point, that the best way to make such important information easily and fairly available is via the Internet, goes even further than he alludes to. And just as it's easier to use a search engine to locate the price of a silk scarf at Bergdorf's than it is to find that email you sent last week to your boss -- it should be, and is, easier to look up "public notices" via Internet search than to buy and read a certain newspaper. Let's add structure to this fact.

Newspapers, wire services, press release distribution services -- they all benefit from disclosure laws and regulations that treat public information as it it's 1953. The companies that own these traditional publishing vehicles (all of which also use the Internet to distribute their information and ads) enjoy a government-required, highly profitable, predictable, recurring revenue stream from the need to make information "public." Warren Buffett liked the model so much he bought the company.

Well, you can bet that these publishers lobby fiercely to keep these outdated mandated notices requirements on the books. And you can bet that lawmakers and regulators are a bit timid when it comes to stepping on the big toes of big old media, especially around election time. (Of course, I think politicians should also dodge media and go direct to their voters, but that's another blog entry.)

So let's be sensible here. Protecting old media from the Internet is as worthwhile as banning Craigslist from San Francisco so to preserve The Chronicle as a great ark of Fourth Estate journalism. Why are there these artificial props behind old media (which are usually for-profit, publicly traded global companies) that really don't need a subsidy from tax payers and other businesses? Why should Rupert Murdoch automatically benefit just because a corporate bond gets issued on Wall Street?

Let's drop this obsolete newspaper tax on commerce. Let's make the investment the public has made in the Internet offer them yet another productivity return, and be recognized as the best public vehicle for public information dissemination that it is. Publishing "public information" through a for-profit media company should be optional, not required. Publishing important public information on the Internet should be mandated (and free), and not optional.

So I'm all for Schwartz's request that the SEC allow for the Internet and its offspring, the Web and blogosphere, to become (at the choice of the company) the exclusive vehicle -- the best, most effective, and cheapest means available -- for the dissemination of important financial information. Any information.

But if we're going to take that step, let's recognize what it means. The Internet is now up to the task of public information -- all public information.

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