Social Media Blogger Crunching Start-Ups & Conflicts Of Interest

Traditional media has longed categorized bloggers as an unruly lot who choose to work outside of legitimate journalistic guidelines. Our editorial contributions have sometimes  been dismissed as pay-for-play fodder and at its worse - content farms - or "black hat" websites compiled for the sole purpose of stimulating Internet traffic versus publishing quality social discourse.

Google's ever-evolving algorithms have done its best to put bloggers in check, sometimes unfairly (see my previous post, "Google's Algo Overlords Plow Through Content Farms" and "Too Many Pandas & Not Enough ZooKepers"). Even the top ten blogs in the world have had their share of harsh critiques. Most recently when The Huffington Post was acquired by AOL, and sacked many of their staff members from their rank and file, it took a lot of heat for choosing note to compensate many of those that remained.

Michael Arrington, editor of TechCrunch has also caught heat for his "deep-throat" type of reporting and his schadenfreude lampooning of online gaming sites such as Zynga.

However, to date, none of these blog sites have been known to become active participants in the world of start-ups. That conflict of interest goes beyond the simple 'pay-for-play' models as it has the ability of swaying investors to chunk down major investment capital versus influencing consumers to purchase retail products.

Arrington, considered by many to be an outsider in investment circles has leveled acerbic critiques at high-level risk takers in the techie start-up space. This past September, he outed "Super Angel" investors for price-fixing, colluding in driving down valuations, shutting out smaller venture capitalists and reported many in the inner-circle were hatching a plan to compete collaboratively against Y Combinator and its new start-up model.

While at first glance, appearing somewhat tongue and cheek - in his post "So A Blogger Walks Into A Bar. . ."  - Arrington gets real serious, real fast in pointing out that he was not a welcomed guest when he intruded into to a "Super Angels" luncheon, at a well-known San Francisco bar and restaurant back in December, 2010.

This incident led the creators of "Facebucks & Dumb F*cks" to highlight Arrington's "China-in-a-bull-shop" tactics in their graphic novel satire.

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Shut out of a poker game with Bill Gates, Larry Page, Sergey Brin and Steve Jobs is heady stuff - and, in the novel, Arrington was quick to seek revenge by planting a seed of doubt with Mark Zuckerberg (aka Z-Man) that they these Internet bigwigs could not be trusted.

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Subsequently, as irony would have it, "Arrington the Outcast" has decided to wheel and deal on his own terms. When it was reported that he was starting his own venture capital fund to invest in start-ups, Claire Cain Miller at the New York Times described his actions as "casting aside one of the cardinal rules - that reporters should avoid conflicts of interest by maintaining distance from people, organizations and issues they cover," raising doubt once again "whether industry bloggers are (really) journalists."

Tim Armstrong, chief executive of AOL, which also owns TechCrunch debates against Tim ArmstrongTim Armstrongany conflict of interest. “We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it," he asserts. He even intimated his company could do exactly what they damn-well please, when he added, “TechCrunch is a different property and they have different standards."

So it comes down to this: Are we going to believe Arrington when he lauds the praises of one his recently acquired start-ups, or do you think that the man has further tarnished the reputation of the blogosphere, inviting even more criticism of the hard-working bloggers who make very little at doing what they love to do?

Readers and bloggers, please weigh in?

UPDATE: NY Times - September 13: Most likely, due to all the negative publicity attached to this story and the precarious positioning of Arrington riding both sides of the fence, it's been reported that AOL let the big guy go:

Michael Arrington, the TechCrunch blogger turned venture capitalist, is no longer an employee of AOL.

In a statement Monday, AOL said Mr. Arrington “has decided to move on from TechCrunch and AOL to his newly formed venture fund.”

But TechCrunch immediately cast doubt on how voluntary the move was, placing quotation marks around the word “deciding” in the headline “‘Deciding’ to Move On.”

Mr. Arrington, making a surprise appearance Monday at TechCrunch Disrupt in San Francisco, the start-up conference he founded, called it “a sad day for me.”

“It’s no longer a good situation for me to stay at TechCrunch,” he said. He said he would continue to work on the venture fund, CrunchFund.

Erick Schonfeld, who has been co-editor of TechCrunch alongside Mr. Arrington, has been named editor, AOL said. TechCrunch is also hiring new editors.