(For our newer readers, I used to work for the premier supplier of newspaper software systems, and in the dim and distant past was a writer with the Worcester Telegram – so I still follow what’s going on in the print world quite closely)
The Sunday New York Times had a very intesting article this morning entitled “I Got the News Instantaneously, Oh Boy” which was written by Media Writer Tim Arango. In it, Tim takes on the issue of how United Airlines had 1 Billion in market valuation disappear due to a simple error that republished an old article from 2002 on the Internet.
Human error seems to have played only a minor role. The financial damage was mostly the result of the interplay between the algorithms that search and compile information from the Web and the ones that Wall Street firms and hedge funds use to make trades automatically.
“I think it underscores the financial arms race that trading has become,” said Prof. Andrew W. Lo of the M.I.T. Sloan School of Management. “The downside of the technology is occasional glitches like these.”
A 2 billion dollar glitch? Ouch! Actually, we’ve seen it all before – when Engadget leaked an email in May of 2007 that caused Apple to lose 4 billion in valuation in the time it takes most of us to make a cup of coffee. My post at that time – entitled “$2B in Lost Ethics”:
With blogs, forums, and citizen journalism taking a more prominent role in news, we’ve created a monster. The basics of journalistic ethics and responsible reporting hasn’t been forgotten on the net, it never really existed. The problem for us is that the newspapers are adopting consumer generated content so quickly, it’s only a matter of time before something like this happens again, and it very well could happen in print someplace like the New York Times, or your local paper.
The Times hits the nail on the head:
Eliminating the human touch from the process seems to be what wiped out all that value in United’s stock — because any person who follows the company or owns the stock likely would have known to dismiss the bankruptcy report as old news.
“If you put a person in, it catches a lot of errors, but it slows you down,” said David J. Leinweber, the founding director of the Center for Innovative Financial Technology at the Hass School of Business at the University of California, Berkeley.
The problem we face is that in our Google-centric world, the assumption is not only made, it is accepted, that a really good algorithm can replace a human as the gatekeeper in news. This is how last month we got the famed Google map with pinpoint on Savannah, Georgia in an article on Russia’s incursion into South Ossetia.
The true meaning of the Times article is this: “you need us…because we at least try to get the story correct.”