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Bloomberg News Pays Reporters More If Their Stories Move Markets
- doctorless 8y agoWhy is this surprising? Their entire business model for having a news wing is to funnel traders into their terminal. Being the first to break market-relevant stories sounds like a plus, not a negative, even if the incentivization model is potentially encouraging to write stories with a bias towards moving markets.
- akhatri_aus 8y agoBecause the incentives can create stories that are untrue or corrected later.
- ccostes 8y agoI think this is where editors would come in who (presumably) don't have the same incentives.
- philipov 8y agothat's quite a presumption
- ggggtez 8y agoNot really. What do you think the role of an editor is exactly?
- philipov 8y agoDo you mean in reality, or in hypothetical not-dysfunctional fantasy world? Because in reality, the job of an editor is to avoid being fired for angering the corporate sponsors/owner, and anything about ethics, or upholding the standards of the publication, is merely coincidental. The role of an editor is to implement the owner's plan for the publication, and that means their incentives are clearly aligned if that plan includes paying reporters more for stories that cause their audience to act.
- Angostura 8y agoAs someone who edited various technology magazines for a decade or so, I wish someone had told me this. There I was going through life, thinking my job was to ensure a mix of stories that would be interesting to the targeted readership, that read well, that could be properly 'stood up' as factual and didn't land us in too much legal trouble. Oh - and to make sure the pages were filled on time and budget and that the editorial staff were reasonably happy, and that we referred to companies in the singular.
- raxxorrax 8y agoWasn't there an article about an editor of pc magazine getting fired for writing some slightly critical articles some weeks ago? I think the topic is how business interests from corporate sponsors are weighted against factual reporting. Not saying magazines have much choices, but manufacturers disallowing any criticism speaks volumes about their products. We should strive for more transparency here. Not that I would expect most tech articles to not be advertising these days. It has become a standard.
- Angostura 8y agoI've no doubt that there are some unscrupulous publishers. I worked at 4 different publishers over the years in the UK, 3 as an editor. The only times I spoke to the publisher about editorial content was (a) When we were producing the feature list for the year (those were heavy ad-gets) (b) on occasions where we had a good story that we thought could cause trouble so I wanted to consult a solicitor first.
- PeterisP 8y agoThat's a reasonable presumption - Bloomberg makes its money selling access to reliable information, the people buying their services are not reading Bloomberg for entertainment but in order to make financial decisions. The editors know where their paycheck comes from and, unlike most other news sources, have a strong incentive to avoid speculative clickbait.
- philipov 8y agoSpeculative clickbait is not the same as market-moving stories, and this isn't an article about Bloomberg paying reporters for clickbait. Market-moving stories are the ones valued by traders in making decisions, almost tautologically since trader decisions are the market. I don't see why the editors would have different incentives than the reporters.
- Bud 8y agoEvidence suggests otherwise.
- manicdee 8y agoHaving to correct a story minutes after a market movement has reaped the company millions in transaction fees seems like a small burden to bear.
- frutiger 8y agoBloomberg is not an exchange nor do they charge transaction fees.
- genericacct 8y agohttps://www.bloomberg.com/professional/product/multilateral-trading-facility/ https://www.bloomberg.com/professional/product/multilateral-...
- frutiger 8y agoBMTF is a tiny separate arm of the Bloomberg group that is incidental to its main line of business. Bloomberg is primarily a data/analytics/news company.
- tomp 8y agoMarket manipulation is a prison-worthy crime.
- forkerenok 8y agoIn this case (assuming intent) they would get charged by SEC, wouldn't they?
- askmike 8y agoYou can't design a system with (supposedly) misaligned incentives and hope the SEC will research everything and keep it fair. That would just shift the solution from: "Write articles that move markets" to: "Write articles that move markets in a way the SEC won't find out" Also how good do you think it would be for Bloomberg (from a PR perspective) if their reporters are getting charged left and right for market manipulation?
- 2_listerine_pls 8y ago> Why is this surprising? Are you really suggesting this shouldn't have been published? I rather know it for a fact.
- creaghpatr 8y agoIs that legal?
- gruez 8y agowhy wouldn't it be? they're not paying to move a particular direction, so it's not like they're pumping and dumping or shorting.
- hahan 8y agoprobably not. Even it is, if the cost of breaking laws is dwarfed by the revenue, i guess it's perfectly rational to do so.
- Lazare 8y agoPaying people more for doing their job well? Yes, it's legal. :) (I'm sorry if the answer comes off as flippant, but really, there's nothing particularly odd or unsavoury here. Journalists are paid to break stories that get attention or are otherwise important, and this is a perfectly valid metric for "important". Why would it be illegal?)
- ndesaulniers 8y agoSurely, this isn't abused. /s
- keyle 8y agoIf a journalis sells short a company stocks before printing a story that will shock shareholders, is that insider trading? What's the legality of that?
- landr0id 8y agoIf they got information from an insider, it could potentially be insider trading. Something somewhat similar happened when MedSec shorted St. Jude before publishing some security research about some hardware: https://arstechnica.com/information-technology/2016/08/trading-in-stock-of-medical-device-paused-after-hackers-team-with-short-seller/ https://arstechnica.com/information-technology/2016/08/tradi... I don't believe that case was considered insider trading but I may be mistaken.
- abstractbeliefs 8y agoBuying a product, realising it's trash, shorting it, and then telling people why you shorted it isn't insider trading. The giveaway in this case is that MedSec/Muddy Waters were not in any way insiders, they were simply smart enough to investigate a company and find out it was overvalued before anyone else did, and then pointed it out when they had their financial ducks in a row to benefit from it.
- pmorici 8y agoWould probably hinge on where the information in the story came from. If the story is based on insider information the absolutely it meets the definition of insider trading. If the journalist is simply using publicly available information then no.
- Lazare 8y agoShort answer: If they "stole" the information (by, say, bribing an insider), they it's probably illegal. If they found it out by being clever (by, say, buying some satellite images and counting cars in parkings lots), then it's probably legal. If you need to know how a court is likely to draw the line, talk to a lawyer. :) But in general, the fact that a journalist is involved doesn't really change anything. In general, you can trade on whatever information you may have; the exception is if you have some duty not to trade on it.
- wging 8y agoThere was no editorializing here by the poster of this article, but given recent news I have to suspect it's obliquely a claim that there may be certain incentives at play in the recent reporting of the SuperMicro issue (https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies https://www.bloomberg.com/news/features/2018-10-04/the-big-h... and Amazon/Apple/gov't-agency denials). I don't feel that I know enough to make claims about how justified (or not) that is, just pointing out why a story dated "Dec. 11, 2013" might have been posted.
- JumpCrisscross 8y ago> just pointing out why a story dated "Dec. 11, 2013" might have been posted And in the intervening years, Bloomberg News won itself a Pulitzer [1]. [1] https://www.bloomberg.com/company/announcements/bloomberg-wins-2015-pulitzer-prize/ https://www.bloomberg.com/company/announcements/bloomberg-wi...
- anilshanbhag 8y agoTheir hit piece on SuperMicro is a prime example. With zero hard evidence, they posted a multi-page hit-piece on them permanently damaging their brand developed over past 25 years. The stock is down 45%, added some more salt to US-China tension and the authors are happy with their paycheck. Libel laws need to be improved to hold shoddy reporters accountable for their work.
- whoopdedo 8y agoSuperMicro is also embroiled in an accounting scandal that arguably is more important to investors.
- tfehring 8y agoDid any new information about its accounting irregularities come to light on Wednesday or Thursday? If not, why would they have driven the stock price decrease on those days?
- housingpost 8y agoSupermicro was delisted from Nasdaq a month and a half before the article for shady reasons. They did a pretty good job damaging their brand all on their own. I'm sure they don't want to file a lawsuit where discovery shows what's really happening inside the company.
- anilshanbhag 8y agoAccounting issues are internal issues and can be sorted out - they do not affect a customer who is paying money to buy a server. If however someone spreads a rumour saying your server does surveillance for China - people will just go to another vendor to avoid the fallout.
- deleted 8y ago[deleted]
- brownbat 8y ago> recent reports that Bloomberg killed a China story to avoid irritating the Chinese government They don't mention which reports. Anyone recall the spiked story? Search results about Bloomberg and China are pretty crowded, given recent events.
- JdeBP 8y agohttps://news.ycombinator.com/item?id=18148037 https://news.ycombinator.com/item?id=18148037
- Bud 8y agoThis should instantly decrement Bloomberg's credibility, for all major stories, by at least 50%. I know it does for me. They are incentivizing sensationalism. This doesn't seem like a good journalistic practice.
- airstrike 8y ago> They are incentivizing sensationalism. As opposed to all the other media outlets who aren't?
- make3 8y agosomething is not right just because because others also do it
- strathmeyer 8y agoYeah maybe you should check out some other media outlets.
- Lazare 8y agoIt's ALWAYS been the case that journalists that sell more papers (or more recently, attract more viewers, or more ad impressions) get more prestige and money than ones who do not. If you thought that journalists were entirely disinterested seekers of truth, then uh...I just don't know what to tell you, but you're going to be really disappointed when you find out the incentives your doctor, lawyer, and car mechanic have. :)
- dwaltrip 8y agoThe modern ad-tech driven assault-on-attention mania is not similar in degree to what came before it, even if it is similar in kind. As engineers know very well, the qualitative properties of a system often change significantly when a parameter increases by an order of magnitude.
- Lazare 8y agoThe phrase "yellow journalism" is over 100 years old now. The talking heads on cable news are well aware that their salaries and continued employment depend on their ability to attract views. And there have been plenty of scandals in the "old school" serious print media of journalists making stuff up for prestige or renown (Stephen Glass, Janet Cooke). People look back with nostalgia on an era that never existed.
- paulpauper 8y agoUnless the story is really, really bad, it seems headlines barely budge the market these days, possibly due to the market becoming more efficient and an overall strong economic and buy-the-dips backdrop . I stopped paying attention to headlines years ago. volatility is in the toilet. It also depends on how one defines 'move'. A move of 1% can be attributed to other factors, and if 3 or 4 financial outlets are reporting the same story at once, it's hard to attribute it to Bloomberg. If you look at the example of Walmart they gave, the stock was already down 1.5% when the story broke, so it only fell 1.5% instead of 3%: https://amp.businessinsider.com/images/52a755546da811c04aecdb04-960-720.jpg https://amp.businessinsider.com/images/52a755546da811c04aecd...
- parhamn 8y ago"move markets" seems highly correlated with juiciness and high view counts which are standard practice. In fact, I can't think of many examples where they're not... have any good ones? I can also see a finance focused media outlet using that jargon internally to describe the underlying metrics (moving market's isn't really easily measurable directly anyway). To me, this doesn't seem like news. This seems like a bad jab at Bloomberg's credibility, which has been really important recently. There's probably a discussion to be had about for-profit media and reach optimization. But that's been done many a times over the discussions of public/gov't/nfp news sources.
- JumpCrisscross 8y agoAs a former trader, this doesn’t strike me as heinous. “Moves the markets” means “contains new and salient information.” That’s a good benchmark. The risk—that reporters will make things up for short-term gains—can be addressed through a tighter-than-usual editorial process. In the end, Bloomberg makes its money selling terminals. The organisation, as a whole, is strongly incentivised to police against crap. Perhaps too much so. This policy may serve to counterbalance that inbuilt conservatism.
- hef19898 8y agoReading through the comments below, that story is seen but some people as evidence that the Bloomberg story about SuperMicro and the Chinese hardware hack are wrong. Which is strange, because the tenor of comments under the explicit stories regarding the hack leaned more towards "absolutely possible". That the Bloomberg story about the hack went against Apple and Amazon, and indireclty against self perception, all of that could make sense after all, so.
- mortdeus 8y agoI think this does give an incentive to reporters to paint things in a more black or white biased one sided narrative. You can't just have an article that talks about the good and the bad and expect people to feel like they ought to buy or sell whatever is being talked about. How does this promote fair and factually accurate coverage over the politicized FUD bullshit we are constantly being fed by the media nowadays?
- mikekchar 8y agoFrom the perspective of Bloomberg, is that a reasonable concern? Their business is to sell information that allows people to decide if they should buy or sell, not to promote fair and factually accurate coverage. I think this is something to keep in mind when you read all news. There are many great and devoted journalists and they work hard. But there are also many great and devoted computer programmers. Just look at what we do in order to meet the demands of our businesses. It would be nice to hold journalism to a higher standard, but I don't think it is realistic.
- JauntTrooper 8y agoThey've stopped this practice, in part due to this article (note the date - 2013). I have friends who were journalists there at the time who told me about it.
- gcb0 8y agoany independent analysis to see if the incentives just didn't move under the table? "your article achieved so and so? don't mind that, we gave it a journalistic valid prize, here is your money bonus"
- panic 8y agoThe Register's article on Super Micro (written a few days ago) mentions this incentive: https://www.theregister.co.uk/2018/10/04/supermicro_bloomberg/?page=3 https://www.theregister.co.uk/2018/10/04/supermicro_bloomber... > Bloomberg reporters receive bonuses based indirectly on how much they shift markets with their reporting. This story undoubtedly did that.
- onetimemanytime 8y agoI guess the bonuses are not handed the day after, so there's time for the response and to see if the story was legit. Otherwise there's a incentive to write "XXXX Co to restate earnings since 2007, major fraud suspected" and to get it past editors one way or another. Linking the story with market moves can be legitimate, they are a business news org and market is moved by major investigative stories.
- zerof1l 8y agoSurely this piece of news coming after SuperMicro report by Bloomberg is just a coincidence. Surely Business Insider wrote that piece of news from their own initiative.
- lovich 8y agoIt's dated 2013. Someone brought this exact article in another thread and now it's been brought up to so doubt about the hacking article. Seeing situations like these has led me to an intellectual predicament. In the past year or two I have seen a massive amount of propaganda and now I'm left with a question that I hope others can answer. How can we have free trade when every trade is weaponized? How can we have a dissemination of information when any single group who wants power uses every post on the internet as a way to insert their own ideas? We make fun of anti vaxxers but then we see that a government used a vaccination program to find their enemies[1]. We make fun of the paranoid, but then a Snowden comes out and we discover that they werent actually paranoid. How does a society function when any given transaction, whether in physical goods and services or information, is used as a weapon against another group? I dont see how we get out of this without reverting to a super tribalist set of societies that calls out everyone who is different from the default group. Whether that's based on ideology, race, geography, etc we are all losing out because we have reached a point where there is no trust between anyone anymore [1]https://news.nationalgeographic.com/2015/02/150227-polio-pakistan-vaccination-taliban-osama-bin-laden/ https://news.nationalgeographic.com/2015/02/150227-polio-pak...
- robbiep 8y agoIt’s a long draw of the bow to go from the US tracking Osama under the guise of a polio campaign to your regular anti science anti vaccine westerner being justified in their pseudoscience. The answer to your question is the same way trust has always been built (and lost) - micro transactions establishing credibility and mutual trade and dependence, not in paranoia and closing doors, which is sure to only antagonise things
- Cypher 8y agoisn't that just the definition of click bait.
- openplatypus 8y agoSo that's how Apple and Amazon plans to discredit Bloomberg?
- EGreg 8y agoWait, can Bloomberg get a butterfly spread or put/call option ahead of a story? Or is that insider trading?
- _Codemonkeyism 8y agoClassic article structure, click bait title, two thirds exploring the headline, near the end reveal the click bait headline conned you - and be secure from being sued. "To say that people are getting a big $5,000 bonus for some market-moving win is completely wrong."