Choose Bedmates Wisely

These are the Web’s Woodstock days. From small start-ups to corporate behemoths, the name of the game is to bed as many partners as possible.Online publishers have finally realized that they can’t just put up some wickedly cool content and expect the world to beat a path to their Web sites. Without distribution, you’re dead. Which is why companies are hopping into bed with one another faster than you can say “Powered by ATT (T) WorldNet.” Check out a random sampling of recent partnership deals: Lycos (LCOS) with Information Please; MindSpring with CNN Interactive, CNET (CNET) and Playboy Online; Excite (ATHM) with Music Boulevard and SportsLine USA; and Yahoo (YHOO) with Bluefly, among many others.

Build a virtual love shack with a major business player and you can fatten your bank account and boost your stock price. But that kind of partnership also raises sticky questions of editorial integrity. It’s not hard to find conflicts of interest.

Consider, for example, Microsoft (MSFT)’s new personal finance site, MoneyCentral. When the site launched on Oct. 14, Microsoft handed over a large chunk of editorial real estate to Merrill Lynch (MER), getting an unspecified wad of cash in return. “That’s one of the reasons financial institutions are excited about it, because their content modules are integrated into the page,” says Amanda Young, product manager for MoneyCentral. “We’re providing a unique opportunity to go beyond buttons and banners.”

The trouble is, only a discerning user can tell which is paid content and which is not.

“There’s a fundamental difference between information provided to get at the truth and information provided to persuade someone to do something,” says Bill Doyle, director of money and technology strategies at Forrester Research (FORR). “Journalists prefer the former, and marketers the latter. Consumers have understood that fundamental distinction in newspapers and magazines, but that Chinese wall is being perforated on the Web.”

Microsoft, which still hopes to attract four more advertising partners to the site, is hardly the only company to hawk financial content slots to the highest bidders. Almost every search engine does it. So does America Online (dossier), which raked in $75 million last summer to spotlight three companies in its Brokerage Center. The deals eventually could come back to haunt them.

“In the end, it won’t serve Microsoft well because the quality of the user experience will suffer,” Doyle says. “They’ve ceded control of their content to an advertiser.”

Consider the current mating dance between Wired Digital and Charles Schwab. According to sources at Wired News, the two companies have discussed creation of a cobranded Web page, sponsored by Schwab, with business headlines, story summaries and stock prices provided by Wired Digital. As part of the deal, Wired News would beef up its Internet financial coverage by hiring two full-time contract reporters, to be paid out of the proceeds from the deal.

That provision — which would essentially require that Schwab pick up the salaries of reporters covering the Internet business beat — raised a few eyebrows in the Wired Digital newsroom. An editor who broached the subject at a staff meeting was told the discussions were still preliminary.

Schwab won’t comment on “potential alliances,” but Wired spokesman Andrew de Vries says “the deal is still on the table,” unaffected by the October purchase of Wired Digital by Lycos. De Vries waves off concerns about a potential conflict of interest: “It’s not an issue because of the strong divisions between our marketing and editorial staffs,” he says. “We make it very clear to our partners that they have no influence over editorial, and we make it very clear to the user what is editorial and what is advertising.”

Maybe so, but arrangements like this give journalists the willies. They smack of conflicts of interest.

Reporters at Internet news outlets shouldn’t have to meet a higher standard than their brethren at old-media outlets. But Web news executives are so wrapped up in the business of driving eyeballs and watching the bottom line that they sometimes pay insufficient heed to one fundamental truth of journalism: Credibility is our only currency.

Reporters like to think of themselves as independent-minded SOBs. But they can also be careerists, uninterested in rocking the boat. It’s just possible they’d pull some punches to avoid irritating a business partner. If that happened, it would make us all a little poorer, less trusting and less informed.

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JD Lasica
Written by JD Lasica
JD Lasica is an entrepreneur, author, journalist, photographer and blogger. | CONTACT