Facebook, Henry Blodget & the Shleifer Effect

June 14, 2012 — Leave a comment

God bless Henry Blodget and his Business Insider concept. He’s taken pieces from the Huffington Post and Gawker models and brought them to business media, a “journalism” market most would say is far too buttoned down for sensational style reporting.

Well, it turns out business readers are just as big of suckers for tabloid headlines as any other group. I count myself in there, too. I confess to being an avid (perhaps too avid) follower of all Blodget posts on Business Insider. I’m not ashamed of it. The dude is smart and occasionally very insightful. (Following him on Twitter, however, will exhaust you. He can give the best teenage gossip girls a run for their money.) The piece he wrote for New York Magazine about Mark Zuckerberg, The Maturation of the Billionaire Boy-Man, was an impressive specimen of long form journalism. And he went deep on analysis and commentary (here) of Zuckerberg’s letter to investors from Facebook’s S-1 filing, to the benefit of anyone interested in understanding the CEO’s motivations. Finally, he provided a sensible perspective on the whole sham of IPO pops with this article:  Everyone Who Thinks IPO “Pops” Are Good Has Been Brainwashed

But you must take Blodget’s approach with a grain (or two…or three) of salt. You must recognize that his purpose is to entertain as much (or more so) as it is to inform with a journalist’s rigor. Blodget’s job is to give his audience that fix of instant analysis, irrespective of whether the facts queue up in a straight line.

Since I bought shares of Facebook (write up here), I’ve been particularly interested in his coverage there.  It’s been a fun ride. Let’s do a quick re-cap…

The latest was this story from the afternoon (caps are his): GOOD NEWS FOR FACEBOOK: Big Advertiser Says Performance of New Mobile Ads Is Very Promising. A positive news story, of course. But it’s reversing course from his standing trend, as demonstrated by these headlines:

 

Blodget is a one man Shleifer Effect machine! In the course of a month he takes us from enthusiast to depressive and back again, spinning the story each time for maximum attention-grabbing affect. That’s his spiel, and I don’t fault him for it. But I do see his hyperactive approach as a microcosm for what traditional financial media does, just much slower turnaround. Blodget cycles from mania to depression a few times a day, eager for the clicks and agnostic to what might generate them. Traditional financial media works in slower waves, but they’re no less captivated by the prevailing mood and only slightly less eager to portray complex issues as absolutely bad or absolutely good.

Paul Dryden

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