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The New York Times, Facebook and the average reader

by Robert Teitelman | Published June 4, 2012 at 11:51 AM

The public editor of The New York Times waded into the swamp of the Facebook initial public offering this weekend and emerged looking soggy. Arthur Brisbane accepted the fact that the paper had written some reasonably skeptical pieces during the runup to the IPO, but then wheeled and argued that the paper could have done so much more to warn off retail investors from participating. "For example," says Brisbane, "The Times could have delved much more deeply into Facebook's last-minute disclosure on May 9 about the challenges it faced with selling advertising on mobile phones." The Times could have explored "the implications of the mobile shift in depth, but that didn't happen." And the Times could have waved "a red flag on the day of the IPO," particularly to small investors. Brisbane offered up a culprit for this transgression by omission: the fact that the Times tries to cater to two audiences, a general reader on its regular Business Day pages and a professional Wall Street crowd in DealBook. Brisbane seems to think that if the Times didn't have that professional crowd in mind, it would have written more stories about the IPO for a general reader. At this point, Brisbane submerges.

Let's concede the public editor some ground. The Times probably could have been a little more hysterical about the perils of Facebook, though the fact that there was anything negative at all is an improvement on the usual hype over anything tech. Whether this would have had any success in deterring small investors is another question. A lot went wrong with Facebook, only part of which involved slowing earnings growth, which the Times did report on, just not enough to satisfy Brisbane. If the Tmes had written four stories, might not the public editor have wanted eight? Even with the knowledge of slowing growth, the possibility that Facebook could still perform like other social media IPOs was strong. Should that possibility not have been aired? Brisbane here is engaging in that tendency of every chair-bound critic: retrospective certainty. He is also essentially arguing several very odd things for a newspaper like the Times. First, that the paper pick stocks more aggressively for a bunch of wide-eyed small investors who need help. Second, that the Times, based in the world's largest financial center, ignore a large audience of professionals to cater exclusively to someone vaguely defined as an average reader or small investor (Brisbane never wrestles with the fact that most average readers aren't day traders). The Times may juggle those two audiences well or poorly, but to ignore the financial crowd in New York City is like the paper in Las Vegas ignoring the fact that there are lots of gamblers around.

It may also be that DealBook's focus on Wall Street provides more sophistication than might normally be the case; getting to the bottom of what occurred in this IPO, with its greenshoes and technical glitches, requires some knowledge of the IPO process. Of course it's impossible to prove that the Times is any better off with DealBook than without. (As it's impossible to prove the opposite.) What's more evident is how naïve and boosterish websites and business sections that simply cater to small investors, who are regularly beset by enthusiasms, tend to be. Brisbane makes that very point without realizing it when he praises Eileen Brown, a social media consultant who blogs for ZDNet. Brown is a professional and ZDNet is a specialist, a trade, site. No average readers here.

There's a further point that Brisbane manages to miss. What makes him so certain Facebook was such a disaster? Well, you say, the newly issued stock fell like a rock. Besides, everyone says so. But of course that judgment hangs on the prevalent notion that for investors big and little the point of an IPO is to speculate on the opening pop, not to invest in the company's long-term future. Brisbane is basically agreeing that IPOs are there for small investors to make a quick buck. And he is implicitly suggesting that the IPO markets need to be made safe for little guys to speculate among the sharks. Brisbane isn't wrong about the challenges that confront Facebook, though he exaggerates the difficulties of the switch to mobile. And you don't have to be in the bag for Facebook to recognize that the company has been enterprising and inventive, and that it has ample resources, and an enormous installed base of users. These are great strengths. But tech companies tend to be volatile (see Apple, Amazon, even Google), such that even Warren Buffett, world's greatest stock picker, avoids them. Perhaps the IPO was overvalued. If that's the case, that's something we won't really know -- and neither will Brisbane or any of the paper's crack reporters -- for a few years. That is, unless you think that the role of a major global newspaper is to direct small and often naïve investors to essentially gamble more effectively.

One last thing, which also speaks to Brisbane's fixation on the "average reader." Brisbane is still clucking over Facebook while Europe appears to be coming apart. How Brisbane decides what the Times should cover is up to him. But it does strike one that the "average reader" in the U.S. is more interested in the Facebook IPO, which by any measure of historical importance barely registers, than the complexities of that globe-rattling situation across the Atlantic. Average readers, even small investors, show only the vaguest of interest in the continuing drama in Europe. Does that mean the Times shouldn't cover it -- or should reduce its coverage in order to play to the crowd of average readers? And should the Times treat Europe simply in terms of small investors? That's the logical extension of Brisbane's fixation on average readers and their adventure with IPOs. - Robert Teitelman

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