Online Referrals Stir Journalism Ethics Questions

CNet Inc. is spending $100 million on an advertising campaign that tells America what it does--mainly run stories and reviews of technology products on its Web site.

“Buying a computer?” blares one of its newspaper ads. “Maybe you should start at a place that doesn’t sell any.” But when surfers to CNet.com read a PC review and click on the adjacent link to learn more or buy from a vendor, CNet gets a piece of the action.

“Any click we get to any of these merchants, we get paid for,” said CNet Managing Director Jason Fischel. “We’re giving them a customer at the checkout stand.”

Dozens of Web journalism sites, ranging from little-known special-interest pages to the Los Angeles Times and New York Times, are quietly getting money for steering surfers to merchants.

“What we’re seeing is just the tip of the iceberg,” said Josh Schroeter, founder of the Center for New Media at Columbia University’s Graduate School of Journalism. “Traditional media companies will increasingly be integrated with commerce and community. The commerce part of it will become the lifeblood.”

Schroeter and some other Web watchers see this as natural evolution and a good thing. But the lack of disclosure of these increasingly close relationships unsettles many journalists.

“I don’t see how you can get around these transaction relationships, but why these online sites don’t let people know about them frankly just baffles me,” said Paul Grabowicz, coordinator of the New Media program at UC Berkeley. “It is really critical.”

The most common instance in the trend is referral deals between sites running book reviews and Barnesandnoble.com or Amazon.com, which are trying to sell books to impulse buyers. Some critics say that some sites might be tempted to review books more favorably if they receive a commission on book-buying transactions.

The New York Times posts Barnesandnoble links next to individual reviews, as do the Los Angeles Times and online magazines such as Salon.com. Sites generally get single-figure percentages of the book selling price for those referrals.

“We clearly distinguish between any advertisement on our Web site and/or our e-commerce partners from our news content,” said New York Times spokeswoman Lisa Carparelli, who argued that the links are plainly not Times content.

Leah M. Gentry, editorial director of new media for the Los Angeles Times, said she sees no conflict because the links appear beside negative as well as positive reviews and are stylistically distinct.

“It’s clearly a Barnes & Noble feature,” Gentry said. “If it was presented as an L.A. Times feature, I would worry about disclosing [the commissions].”

Critics say the book referral deals are the top of a slope that slides down to arrangements like CNet’s or others that haven’t yet come to light.

One of the features at Wired Digital, now owned by the portal company Lycos, is the Wired index of technology stocks, an index the publication writes about regularly. What isn’t widely known is that every time a reader clicks on the index to learn more, then downloads or orders a prospectus for a fund tied to that index, Wired gets paid. Critics say that might tempt the editors to tailor their coverage to the prospect of revenue--by running bigger stories when the index is up than when it’s down, perhaps.

Wired Digital Editor-in-Chief George Shirk said that doesn’t happen because the fee per click is insignificant in terms of revenue and that the prospectus is offered as “very much of a reader service.”

Shirk said other noneditorial products are clearly marked. Asked whether Wired should disclose the payments, he said: “That’s actually a good idea.”

The lapse concerns some journalists in and out of the company.

“I believe that all paid links should be disclosed,” said Rafe Needleman, a former CNet executive who heads Red Herring magazine’s online edition. (Red Herring online, which covers the business of technology, doesn’t disclose its Barnesandnoble payments, CEO Chris Alden conceded.)

‘From an Editorial Perspective, It’s Slimy’

Of course, many things on the Net are for sale, even if they don’t appear to be. Yahoo, one of the most popular places on the Web, routinely steers surfers to the sites of business partners, as do countless other companies.

At Yahoo’s finance page, for example, clicks for auto insurance information lead to a policy quote page run by InsWeb, an insurance agency that went public last month and which agreed to pay Yahoo more than $9 million, according to its Securities and Exchange Commission filing.

With only a few out of millions of sites turning anything resembling a profit, it’s understandable that news sites are trying new methods to raise a buck.

“From an editorial perspective, it’s slimy. As a business move, it’s brilliant,” Needleman said of undisclosed payments.

The tension has gotten worse as advertisers, the chief source of revenue in the industry, have grown frustrated with low response from traditional banner advertisements.

They have been pressing all Web sites, including those dedicated to journalism, to accept payment completely or partially based on the number of people clicking through an advertisement or even on the number of people who buy a product.

Dan Brekke, a contributing editor of Wired magazine and a former editor at Wired Digital, said the issue needs addressing.

“Should there be some sort of fuller disclosure? Absolutely,” Brekke said. “A lot of Web-savvy people will probably assume that there is some reciprocal arrangement, but the fact that there has to be a state of assumption is a problem.”

CNet, which owns the journalism site News.com, has caught flack in the past for its ties to selling.

Early in 1998, CNet Chief Executive Halsey Minor wrote a blistering electronic memo to his staffers, telling them that producing great journalism wasn’t enough.

“Great editorial is not a goal in and of itself. For us, great editorial simply supports a larger mission of helping consumers and corporate buyers find and acquire the right product,” Minor wrote, according to an account in the online magazine Salon.

Minor and others later said his missive didn’t mean that any news should be slanted.

But compare CNet’s approach with that of its closest competitor, Ziff-Davis’ ZDNet.

ZDNet owns a variety of technology news sites, reviews and even a price-comparison system very similar to CNet’s. But it gets no money for referring surfers to merchants.

“The main reason that ZDNet is so well respected by its users is that it has unbiased reviews,” said company Vice President Barry Griggs. “If the user perceives that we have crossed the line, our credibility is in question. Word of mouth will carry this to a bad place.”

Transaction-based advertising isn’t the only ethics issue confronting online journalism.

Wired Digital has sections that are openly sponsored by those covered in it. Ongoing coverage of the MP3 digital music format is sponsored by Microsoft, for example, and IBM sponsors a section on electronic business. When offline publications, including Time and Newsweek, have allowed sole advertisers to sponsor special sections or entire issues, they were heavily criticized by their peers.

The Industry Standard’s online edition has turned down sponsorship proposals that would have allowed it to add staff because it didn’t want to have news judgment colored by the money, said Editor in Chief Jonathan Weber.

While many critics think the transactional-ad problem would be solved with greater disclosure, other problems are only exacerbated by disclosure.

Take Intel’s sophisticated effort to generate buzz around its Pentium II and Pentium III launches.

The dominant microprocessor company routinely reimburses customers such as Compaq or Dell for some of their ad spending, as long as the ads feature the “Intel Inside” slogan.

During the new chip launches, Intel tried to get some media sites to optimize their pages for the chips, meaning they would look better when viewed on machines with the latest chips. Intel then gave advertisers who placed ads on those pages special subsidies, thus making ad sales easier.

ZDNet took the bait and made the disclosure, arguing that it served its technophile audience. Time magazine’s Web site made the technical changes but balked at telling readers about the Intel deal.

“We never had the slogan on the screen,” said Time New Media Executive Editor Dick Duncan. “I wouldn’t use the term ‘disclosure’--it was a damn tout.”

GreenTree Refuses Ads for Products It Sells

Ironically, some of the strictly commercial sites show signs of getting it right, journalistically speaking.

Amazon.com was widely faulted for secretly taking money from booksellers for giving their books prominent placement on its pages or on “editors’ choice” listings. It then began disclosing which recommendations are paid for, although the disclosures are made on separate pages from the book descriptions.

Writers at Amazon and at CDNow, which make their money almost exclusively by selling things, boast of complete freedom to criticize chart-topping books and records. CDNow, for instance, describes the teen popsters Backstreet Boys’ current hit CD “Millennium” as “superficial ear candy.”

And GreenTree, a Web site for nutrition products, says it won’t even accept advertising for products it sells. There are no such ads on its site now.

With commercial sites behaving that well and new all-review sites such as Epinions.com sprouting up, journalism outlets would be well advised to watch the line between church and state, say critics such as Berkeley’s Grabowicz.

With all the competition, individual companies should take the initiative and disclose exactly what they are doing, trusting consumers to make the right judgments, he said.

“Otherwise,” he said, “we’re leaving ourselves open to all kinds of suspicion about our credibility.”

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Times staff writer Joseph Menn can be reached at joseph.menn@latimes.com.