Feb 192012

I just finished reading through a post by Dan Lyons. Lyons goes over the top at times, and the title gives a clear hint at the tone — “Hit men, click whores, and paid apologists — welcome to the Silicon Cesspool.”

There is a lot going on in this post. To get the full picture be sure to click through the links, especially the NY Times piece that discussed the mobile social media service Path uploading user address books without their knowledge. I’ve also read the attacks on the NY Times reporter by Michael Arrington and MG Siegler, former partners at TechCrunch and now at CrunchFund. CrunchFund is an angel investor firm and one of their portfolio companies is Path.

Lyons strongly dislikes Arrington and Siegler, and they him. The invective can be fun to read, but also a little distracting.

Lyons does a good job laying out the business model behind CrunchFund, and the inherent conflict of interest in covering firms you’re invested in. I also like the parallel made to the pay for play analyst firm approach from the first tech bubble days. I remember that well from my Advertising.com days and it’s an apt analogy.

Siegler makes some good points regarding the decline in technology reporting. He is a highly dubious source of such commentary, however. He cashed in at TechCrunch, succeeding via the same tactics and attitudes he now claims produces technology reporting that is mostly BS.

That stipulated, many of his points sound accurate to me about what is happening. The focus on pageviews not research, the impossible number of stories published daily, the greatly expanded coverage beats and the huge contraction of media sounds right to me. I’ve heard the same from trade reporters I respect and have known for years.

In his post attacking Nick Bilton the author of the NY Times article, Arrington fully assumes the investor mentality.  He calls public opinion a mob, and despairs that companies are forced to issue apologies when business practices create controversy. Somehow VC backed companies are the victims here, and changing course in the face of consumer feedback threatens innovation.

So where does all this leave us? Regarding Path, I’ve written extensively about the need for transparency around today’s online quid-pro-quo. Personal information is traded for fun and useful online services. This deal simply needs to come out of the shadows, and most consumers will accept it. If startups want to avoid the “mob,” as Arrington describes it, this is a simple way to do it.

Regarding tech reporting, the model Arrington and Siegler have set up does not bode well for the future. In addition to all the existing challenges facing tech reporting, there is now a business model being tested for how to monetize becoming an influencer. Should this model succeed, it can only further erode the objectivity and quality of reporting by anyone who aspires to follow in CrunchFund’s footsteps.

Of course Arrington and Siegler are free to use their influence any way they want, and their new business model is compelling when viewed purely from a financial perspective. It’s just not good for the rest of us.

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