Ten months after the Nasdaq topped 5000 and then began its downward drift, journalists finally are feeling the pressure. In the last few weeks, hundreds of journalists have been laid off from New Economy magazines and from Web sites whose big-name backers suddenly realized that they were drinking the same Kool-Aid that fueled the explosion and subsequent crash of so many dot-coms.
Rupert Murdochs News Corp. eliminated around 200 positions by transferring the production of its news, sports and general entertainment Web sites to its television units. In a statement, the president of News Digital Media said the companys "fear that television and Web programming would rival each other" was wrong. Last week, CNN, which is now owned by AOL, followed suit, cutting 400 positions by consolidating its television and Web operations. Meanwhile, New York Times Digital cut 69 jobs while reasserting its confidence in "the Internet as an additional medium" for profitably serving customers.
What were the executives of those organizations thinking? Wouldnt you expect people who make a living evaluating business and technology to make smarter decisions about the Internet than the average dot-com executive or venture capitalist? Unfortunately, the answer is no. The availability of large amounts of money has revealed that journalists are as vulnerable as anyone else to rising to positions above their level of competence, and the market has not yet figured out how to value information that is offered online.
One result is that the media played a critical role in driving up the Nasdaq by glorifying the acquisition of wealth and by hyping Internet startups that had no viable business plan, products or profits. Obtaining media coverage is still important for any startup that hopes to go public, and the number of new publications and Web sites made that task easier. Few journalists have had the courage to retrace their steps through 1999 and 2000 and admit their mistakes.
But there is something else happening, as well. The Internet is a disruptive technology, and as it creates and destroys entire categories of media outlets, it gives ordinary people access to information previously available only to a well-connected elite. Housewives now can bypass journalists and go directly to company Web sites; they can hunt through government databases; they can compare information from many sources.
All information is suspect—anyone can doctor a press release or alter a picture—but on the whole, more people are better informed. And while it is dreadful to be laid off, the number of journalists now joining their dot-com sources in the unemployment lines may result in more empathetic and more informed coverage when this particular media shakeout is over.