Blogonomics: Breaking News

I'm glad that Jeff Bercovici has fisked the NYT's silly article on the hazards of blogging, because it means I don't have to. Instead, I can look past the idiotic central thesis to one of the pieces of supporting evidence:

One of the most competitive categories is blogs about technology developments and news. They are in a vicious 24-hour competition to break company news, reveal new products and expose corporate gaffes...
Speed can be of the essence. If a blogger is beaten by a millisecond, someone else's post on the subject will bring in the audience, the links and the bigger share of the ad revenue.

I used to work at a newswire, where people really did care when a rival wire beat us by a few seconds. In the financial newswire business, there really is a small number of traders who can make a large amount of money by getting the news just slightly faster than the next guy. But in the blogging world, that simply isn't the case. It doesn't make the slightest bit of difference if you're "beaten by a millisecond," or even if you're beaten by five minutes. Given the speed with which RSS readers refresh, or the frequency with which sites are crawled by Google News, or the avidity with which even the most zealous blog reader will refresh his favorite blogs' home pages, a few minutes here or there makes essentially no difference.

Now there are a lot of very competitive guys in the tech-blogging space. Brian Lam, the editor of Gizmodo, even shares with Jason Calacanis, the co-founder of Engadget, a passion for martial arts and for using fights as a metaphor for blogging.

He said he was well equipped for the torture; he used to be a Thai-style boxer.
"I've got a background getting punched in the face," he said. "That's why I'm good at this job."

In such a competitive hothouse, it's entirely predictable that bloggers will care about who got what first. But that doesn't mean that anybody else will really care - and it certainly doesn't mean that someone who was a few seconds faster will get the greater number of pageviews. If a big-name blog gets a genuine scoop, that will certainly garner pageviews. But when many different blogs are all presenting more or less the same information at more or less the same time, more or less independently? Then the who-gets-there-first game is pretty much irrelevant, as far as audience-and-links-and-ad-revenue is concerned.

One of the interesting things about the internet as a news medium is that although it's certainly faster-paced than, say, a daily newspaper, it's actually significantly slower than television, let alone newswires. As someone without a television, I feel this every time there's a Fed meeting: while the news of the rate cut, and of the market's reaction, is pretty much instantaneous on TV, there's generally a small but significant delay before the rate-cut news appears online, and it's usually a good 15 minutes before someone armed only with an internet connection can tell how the market reacted.

That said, speed is nearly always overrated, even in the world of newswires. Consider the case of a piece of news which moves the market: wouldn't you want access to that news a couple of seconds before the other guy? Well, yes, but only if the other guy not only doesn't know what the news is, but also doesn't know that there is any news. If there's a scheduled news event, like an FOMC meeting or an earnings release, then getting to the news a second early doesn't really help you, since no one is going to trade on the old information when they know that new information is coming any second.

In order to make money from getting news early, then, you need to be completely on the ball, glued to your screen; you need to recognize a market-moving headline when you see it; you need to know exactly which way the market's going to move (which isn't always obvious); and you need to be able to hit any open bids or offers very quickly before they get pulled. Yes, it's possible to make money that way. But it's not something which happens very often. A good trader generally doesn't make money from having information that other traders lack; he makes money from trading that information in the knowledge that everybody else has it too.

So when someone tells you about the enormous pressure that bloggers are under to Get There First, just remember that such pressure is entirely self-imposed, and serves very little purpose. There are lots of blogs which do very well out of Getting There Second: Gothamist is a good example. Me, I like to get there the same day, and when something's more than a couple of days old I often think twice before blogging it. But it's not something I'm going to have a heart attack over.