For most practitioners of new-media journalism, the key to ethics is transparency. So long as you disclose all your biases and interests in what you write about, you’re OK. The rest of the traditional guidelines in which journalists have been trained are up for discussion, it seems. The latest and, to me, most mind-boggling example of this trend comes from a column by James Rainey in today’s Los Angeles Times.

William Lobdell: Transparency Is All

In it, Rainey covers iBusiness Reporting, a new venture from William Lobdell, Rainey’s former colleague at the Times. Lobdell’s business partner in the venture is Barry Minkow.

If your jaw just dropped, that’s probably because you remember Minkow as the cocky young founder of ZZZZ Best carpet cleaners who was convicted of investment fraud in the late 1980s.  Today, though, Minkow actually works to uncover similar frauds through his organization, the Fraud Discovery Institute, which funds Lobdell’s project.

Rainey expresses some understandable skepticism about Lobdell’s approach. The business model for iBusiness Reporting is more than unconventional. It flies in the face of every journalistic code of ethics I’ve ever seen. Revenue will come not from advertising or subscriptions, but from shorting the stocks of companies the site writes about.

The traditional view is that you don’t write about companies in which you have a financial interest. If you do, and you don’t disclose it, you’re at least unethical, and possibly a crook. But with disclosure, Lobdell suggests in an FAQ page, the effect is just the opposite:

“In the end, iBusiness Reporting has much more at stake to get the story right than old media. We do not have the option of hiding a retraction in an unread print edition if we get the story wrong. Our business and our livelihoods depend on getting the facts right the first time.”

In essence Lobdell is saying, “I’m so sure that my story is correct that I’m placing this bet on it.” It’s no guarantee that he’s right, but it tells his readers that he is very serious indeed about his investigative footwork.

The iBusiness Reporting site is too new for me to judge how well its approach to journalistic ethics is working. To my eye, the site does not do quite enough to make its shorting practices clear.  I’d prefer to see a specific disclosure at the beginning of every story to ensure that even the most casual browser sees it. The site should also make clear when (if ever) it is not shorting companies it writes about.  With a revenue model like this, you probably can’t be too transparent.

Anyone interested in how journalistic ethics are evolving in the new-media era should read Lobdell’s FAQ page.  It’s a fascinating look at editorial ethics through a new-media lens.