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Dumping on BW cover on Digg


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August 04, 2006

Dumping on BW cover on Digg

Stephen Baker

To say that Rafat Ali has issues with the BW cover on Digg would be putting it mildly. In his Paid Content post, he calls it "the most fisk-worthy Web 2.0 story ever written." He says it's "riddled with so many inanities, without any sense or logic, or journalistic norms, it sounds like a parody of a parody."

I just read the story and learned a lot. I do have one issue on content. Despite some cautions about dot-com behavior, the story does appear to validate sky-high Web 2.0 valuations. This section, for example, made me uneasy: "So far, Digg is breaking even on an estimated $3 million annually in revenues. Nonetheless, people in the know say Digg is easily worth $200 million." The question is whether these people in the know are talking about what Digg could get in today's market, or what it's worth. Should there be a distinction there? That said, this was not a financial story with lots of room to explore the ins and outs of Web 2.0 valuations.

I think one thing that irks Rafat is the writing style, which attempts to capture the mood, patterns and lexicon of the Valley Boys. Any time that an established mag like BW tries to capture a different (read younger) demographic, we're going to rub some people the wrong way. Like any experiment, it'll have misses as well as hits. Heather and I got our share of grief when we wrote our Blog cover in a "blog" style a year ago May. Some found it contrived. (It was, of course. Any time you try out a new voice, it's contrived.) In an a biting post, Nicholas Carr wrote: "Is that really the style of a blog? I'm so ashamed."

I see quite a few enthusiastic comments below the Valley Boys story on BW Online. Do you think it merits a fisking?

09:39 AM

BusinessWeek

My main issue with the story was using the $60 million number in the cover title without ANY explanation in the story of how it was derived.

To say "How this Kid made $60 million in 18 months", is inaccurate given that it that sum has not been "made" as in "in one's pocket". That'd be the way most mainstream readers would read and understand that sentence.

I have no issue with trying different writing styles, blog-inspired or otherwise.

Posted by: Michael Parekh at August 4, 2006 12:55 PM

What's really odd is that the people from Business Week don't seem to recognize the problem everyone has with this story. It has nothing to do with the style of the writing.

It has everything to do with claiming he made $60 million. It's flat-out false. He hasn't made anything, other than whatever salary he takes from the company. What you meant, was that according to some people (who are unnamed and who may have different motives) his stake might possibly maybe worth $60 million. That's INCREDIBLY different than saying he's made $60 million.

And that distinction isn't a little slip up, it's a huge error. On the cover of your magazine.

You say "it's not a financial story," but that's not the issue. It's factually inaccurate in a business story. Any time a company raises money, do you say that the founders "MADE" that money.

The whole problem with the last bubble was that too many people equated investment money with revenue... and here you are making it even worse by not even attempting to distinguish between an imaginary valuation and "revenue." It's beyond shoddy journalism -- and to see it in a magazine like Business Week is ridiculous. You guys should know better. The fact that your response has been to defend this is even worse.

Posted by: Mike Masnick at August 4, 2006 06:38 PM

Articles on our industry based on "hype" are never good. Especially since we all preach that we don't want to go back to how it was in 1999 when no real "business" was being done.

The authors of this article did not live through the times that many of us did, they just don't, and can't get it. They are writing based on "knowledge" which they are getting from other articles and what people tell them as opposed to writing from "experience" which means they lived through it themselves.

How about speaking to some third party people for this article who cover this indstry for a living? Instead the article only spoke to people at the company or people at the company that game them money. Of course there is only going to be one side to the story. Poor journalism, sloppy.

Posted by: Dan Rayburn at August 5, 2006 11:11 AM

(Sent this to PaidContent as well)

Fisking the Fisker

As a regular reader of both Paidcontent and BW I’m curious about PC’s assault on the BW story about Digg, which supposedly “is riddled with so many inanities, without any sense or logic, or journalistic norms, it sounds like a parody of a parody.” After seeing Rafat’s reasons for the above statement (see comment 18 here: http://www.paidcontent.org/bw-omg-like-totally-digg), I’m even more baffled. Tackling them one at a time from what I consider a relatively objective POV, these are my conclusions:

The $60 Million figure (and the $200 million figure): Why did BW put $60 million on the cover? The logic issue is pretty straightforward…if you concede that YouTube is worth $200 million and Rose hase 30-40% of that then he’s “made” $60-80 million. As to the $200 million, it seems people don’t agree if Digg.com is worth that much. It’s certainly an interesting question with no concrete answer, but based on recent dot-com sales I think you can make a case either way, so I don’t fault BW for this. Perhaps they should have quoted a specific, credible analyst or whatnot, but I’m fine with how they handled it. I agree it can be disputed, but don’t think it’s “inane” or a “parody of a pardoy” or factually in accurate, etc.

As to Alexa, the factual part of the story is correct. Whether you find Alexa’s results useful or not, that’s up to you. I don’t find it a bad comparison from an Alexa-to-Alexa standpoint for the purposes of this story (yes, I read blogs.zdnet.com thing and yes I understand it). While debatable, it’s not on its face factually incorrect or inane.

In terms of the demos being too simplistic, I don’t agree at all. TV often simplifies to focus on just the 18-49 demo for advertsing purposes, so saying Digg is popular with young, affluent males and that that audience is desirable to advertisers does not seem “that simplistic.” BW seems cleary in the right here.

For the MySpace comparison, Rafat just uses more aggressive name calling here, with no actual reasons for saying it’s the wrong comparison completely. If all you’re saying is that Digg has the potential to become an ad magnet because it’s become a phenomenon with a desirable demograph, like MySpace is a phenomenon with a desirable demo, it seems to be an apt comparison (which is the way I read it). BW seems cleary in the right here.

As to no detail on how Digg spends $3 million a year, a) it does not seem necessary and b) it seems obvious that an organization with full-time employees, office space and huge bandwidth costs could easily burn through that amount. I’ll concede the story certainly could have gone into details of how the $3 million is spent, but honestly it would give me no greater understanding of the overall picture so I’m fine skipping it. The $200 million was addressed above.

As to YouTube vs Digg, Rafat says they are very different dynamics, which is true but irrelevent the comparison being made. The basic comparison is that a Web site with relatively little income that just breaks even can nevertheless have a huge valuation. Which of course can be true. BW seems cleary in the right here.

Not sure why Rafat chooses to list the “rumored $40 million from Yahoo!” as a point of contention as even he correctly notes they identified the rumor as, well, a rumor. BW seems cleary in the right here.

The one point Rafat scores 100% on is the line about 20% of a company giving VDs most of the equity, as the math does not add up from my POV. Rafat seems clearly in the right here.

Taken as a whole, none of these points seem to support the accusation that the BW story was “riddled with so many inanities, without any sense or logic, or journalistic norms, it sounds like a parody of a parody.” I only found one out-and-out inanity, I found the story did have its own sense and logic, it did seem to adhere to journalistic norms, and it was not a parody, or even a pardoy of a parody. At the end of the day I have to say, while I have quibbles with the BW story, I enjoyed the story and got good information out of it. And I have to say, PaidConent’s post, while engenering an interesting conversation, seems to be more of a personal attack rather than full of any actual useful information.

Posted by: Funfurde at August 8, 2006 05:21 PM

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Posted by: ?????????? at August 13, 2006 11:29 AM


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