Saturday, January 14, 2012

What business are they in?

My mentor (What? You don't have one!) and I were talking recently and he referred to something I had just said as "Knock's Rule #1". I didn't recall ever defining a "Rule #1", so I asked him to explain. I don't always realize it when I say something really smart, but he does.

Whenever we are talking about sources of information, or pretty much anything we read, I almost always ask the question, what is the business of the source. Ah yes, I remember saying this a few hundred times. Example: Most news sources make their money (both income to cover expenses and profits for themselves and their investors) from advertising. The price you pay for your local news paper covers only a small portion of its expenses. The rest is made up by advertising. Without advertising, they would close their doors. They wouldn't have a choice. Circulation numbers are important, not so much for the income they produce, but because the higher the numbers the higher the advertising rates they can charge.

So when you are reading something, ask yourself what business the source is in and take that into consideration when deciding how much trust to put in the source. This doesn't mean that because the business is advertising, and not primarily public service news reporting, that there isn't a great deal of journalistic integrity. There are varying degrees, which you have to sort out for yourself.

Some key points:
  • The financial news and analysis provided doesn't have to be reliable or correct. It just has to fill the space and bring you back to read again and to buy products from the advertisers. Have you really analyzed the performance of Cramer's stock picks? Not likely.
  • The local, national, and international news you get isn't always the most important stories. They publish the ones that they think will attract your attention. For a test, check out some non-US news portals and see the difference in what kind of stories they publish. For one thing, the US has way more on celebrities, gossip, and trivial cutesy stuff. (They used to call that "human interest", which was the worst journalistic assignment you could get, often assigned as a punishment to a reporter who messed up.)
  • Advice columns and blogs don't have to be useful. They just have to attract your attention long enough to hit you with ads.

An exception came to my attention as I read the news over my morning tea. I was reading an exceptionally good article that was so good that I was somewhat startled. I then applied "Rule #1". This particular news outlet is selling just one thing: its own subscription. They offer some really good free articles to get you interested enough to buy a subscription for $80/year, or $149/year for both the online version and their monthly printed version. (I don't know, but suspect that there is advertising in their printed version.) To get and keep subscribers, they must be worth it. Sources that rely primarily on subscriptions are more likely to be reliable. ... but not always!

You don't need to go nuts analyzing every source of information, but you should consider it as you read. "They" are not all out there to benefit mankind. Don't be Stupid: consider the source.

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