The danger of Citizen reporters - $100M in Apple trades

Today a false rumor was circulated on CNN about Steve Jobs having a heart attack. This rumor quickly sent Apple's stock (AAPL) into a nose dive, losing about $10 in just a few minutes. During this time roughly 10 million shares traded hands, transferring about $100M around from one single rumor posted in a credible location by someone who was obviously incredible.

This isn't that far removed from the recent debacle that occurred when an analyst picked up an old story about United's bankruptcy and published it to Bloomberg as if it were happening again. That screwup cost about $1.3B by my estimation in transferred wealth.

Yet again the value of information is shown to be rather high in this information rich age. The value of a credible brand is also proven.

The implications for newspapers are numerous. First, the answer to reducing costs for journalists has frequently been a reliance on citizen reporters. Reducing costs is obviously the nice way to say layoffs. These citizen reporters don't have the same standards as professionals. Errors like this are bound to occur more often, and manipulation of the system just became much easier. Even the pros aren't perfect, but there is at least some accountability built into the system. Trying to put checks and balances into citizen reporting will take away most of its cost and speed advantages.

A second important implication is how citizen reporters put your brand at risk. It won't take too many of these falsehoods before a trusted brand looks like the National Enquirer. Even bad reporting and self motivation can quickly erode the trust of a newspaper brand.

A third implication, and the real opportunity, comes from reversing the weakness. Newspapers are the slow, fact checked, deep reporting source. They need to be proud about it and make their checking systems even more apparent and transparent. I can honestly say that the average person has no idea how many people look at a story before it makes the paper. Now is the time to tell them.