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Author Topic: The problem with online ad alternatives  (Read 1010 times)

40hz

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The problem with online ad alternatives
« on: February 27, 2012, 02:11:31 PM »
Please file this under: Be careful what you wish for.

In an earlier DC forum topic there is some discussion about the problem with online advertisements.

A recent article by Dan Lyons over at The Daily Beast shows, however, that there may be far worse things than online ads when it comes to so-called tech "news" sites.

(With thanks to Shell Extension City for this find)

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Ethical or Not, Silicon Valley Bloggers Hit Up VCs for Angel Funds
Feb 22, 2012 4:00 PM EST


It’s a win-win game: Bloggers write favorably about both sides’ portfolios, and everyone exits with 100x returns. Even social media maven Robert Scoble is getting in on the game. But whatever happened to journalistic integrity?

Trend alert: In Silicon Valley, popular bloggers are realizing that instead of trying to make a living by selling ads, they can instead hit up venture capitalists for money. As I described last week in a post on my personal blog, these savvy bloggers will use the money to create “angel funds,” which they in turn will use to make investments in small startup companies—which bloggers often hear about before the rest of the world. Those investments, if bloggers are smart and/or lucky, could end up being worth millions.

I can't quite see how such an arrangement could possibly get around several US securities laws. But I'm not an attorney. And any VC worthy of the name has top notch legal talent on their payroll. So I'm guessing there's ways to do this without violating "insider trading" regulations, and rules governing IPOs.

Of course that leaves out the problem with where this practice will lead as far as online journalism is concerned. Especially now that so much of the sub-30 age bracket prefers blogs and other non-traditional 'news' sources over their mainstream counterparts.

Quote
(from the article)

Traditional journalists cringe at this kind of “hacks for hire” business model, but from an utterly cynical perspective, it’s kind of brilliant—as long as you can get over the whole “ethics” thing.

Remember, these guys are bloggers, not journalists. Why shouldn’t they use their blogs to get rich? It sure beats trying to make money selling those crappy little ads in the side column.

Either way, it shouldn't come as any surprise something like this is in the works - or that somebody like blogger Robert Scoble is interested in it. :-\

iphigenie

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Re: The problem with online ad alternatives
« Reply #1 on: February 27, 2012, 02:29:51 PM »
It doesnt look all that shady to me - this is seed capital we're talking about, and a lot of it even in the valley is not full VCs but a network of angels. Angel funds are quite common, after all.

So if you are a blogger and your income is safe, why would you not be tempted to invest and participate instead of only just watch. And why would you not be courted as a way to gain cred/cash/connections for a startup, when there are so many.

Even journalists need to buy products and make savings and investements and it's not necessarily a loss of integrity to do that

40hz

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Re: The problem with online ad alternatives
« Reply #2 on: February 27, 2012, 02:48:36 PM »
why would you not be tempted to invest and participate instead of only just watch

Can't speak for the rest of the world. But in the US, you can find yourself walking a very fine legal line doing that if your words can be interpreted as attempting to influence and manipulate the price of a public stock offering. Which is one additional reason why VCs are notoriously tight-lipped.

This almost seems like they're trying to get around it by using bloggers to generate buzz for them.
 :)