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Fake Steve Jobs has a post contrasting how TechCrunch and New York Times are covering the Zynga success story and the underlying scams and tricks.

It’s really interesting to see -

1. New York Times sing the praises of Zynga even though they write things that ought to make them realize Zynga is a manipulative company -
   

   Game creators talk openly about their strategies to make people pay for virtual goods: get them addicted, then steer them to purchases that speed up the pace of the game and help them succeed.

2. BusinessWeek talk about the App Economy and sing the praises of Zynga - even comparing them to Google.
   

   Zynga has the vibe of a young Google (GOOG). Just like the search giant in its early days, the company has a masseuse on staff and chefs who serve up two meals a day.

3. Mike Arrington of TechCrunch goes to a conference, gets into an argument with the CEO of one of the scam companies and then blogs about it and blows the lid off all the scams, including their rather shady strategy of hiding scam ads just from Mike Arrington’s account -
   

   They weren’t taken down though. Or rather, they were, but just for me. Other users were still seeing the same mobile ads. 

The only site doing any sort of ‘investigative journalism’ in this case is TechCrunch.

What is the Real Story Here?

Let’s look at the surface story -

1. Facebook is struggling to book profits (though they did hit positive cashflow).
2. Zynga, a company that makes social games for Facebook and monetizes via virtual goods and offers, is making somewhere in the vicinity of $100 million a year.

That makes little sense.

• Advertisers can’t make money off of targeted ads i.e. they can’t sell books to people who love books, etc.
• At the same time companies can sell virtual gifts.

There is a good reason to believe the hype – It provides two great storylines i.e.

1. Wow! Zynga have found a way to monetize social networks. The golden age of social networks is amongst us.
2. Apps and Games in Social Networks can be a viable business.

So what do New York Times and Business Week do – they let Zynga’s kings of spin take them for a ride.

• They actually talk about virtual goods as a good business even while they write that the strategy is to get people addicted and then monetize them.
• They don’t uncover the even seedier side of offer scams.

What do we miss? The Real Story i.e.

A company is selling made-up nonsense to people who are addicted to a game.

As a bonus they are also scamming these same people with scam offers from mostly illegal companies.

Why is TechCrunch the only news source that caught it?

There are literally tens of thousands of people involved in all of these companies. There are tens of millions of people playing these games.

Why is it that the main stream newspapers were only listening to Zynga’s PR team?

The New York Times article actually came out after the scams were revealed – they still manage to find only positives. Fake Steve Jobs is as appalled as me -

The piece could not have been nicer if it had been written by Zynga’s PR people themselves.

Here are the comments the story includes -

1. Positives from a Venture Capitalist who has invested $10 million in virtual goods – Don’t you think his perspective might be clouded by his interests?
2. Positives from another VC who has invested in two virtual goods companies. More of the same.  
3. The CEO of Zynga.
4. 1 customer who buys virtual goods.
5. A 13-year-old who buys virtual goods.

That’s the equivalent of writing about cigarette companies and interviewing the CEO of Philip Morris, two big tobacco investors, a 25-year-old smoker, and a 14-year-old smoker.

Times write this -

For outsiders, the selling of virtual goods — items with no actual value in the real world — might seem the very definition of a swindle.

But often, strong — and somewhat rational — motives are at work.

Perhaps if it meets the very definition of a swindle then asking two VCs who’ve invested in it is not the best idea.

Why not investigate the ‘possible swindle’ angle more?

Does this mean Newspapers deserve to die?

Perhaps this is an isolated incident.

Or perhaps this should make us ask questions -

1. NY Times Bits Blog, October 21st, 2009 - Buying Virtual Goods that also Do Good. 
2. NY Times, October 29th, 2009 - To Harvest Squash, Click Here.  
3. NY Times, November 3rd – Facebook Farms.
4. NY Times, November 6th, 2009 – Virtual Goods bring Real Paydays. 

New York Times has managed to write 4 positive Zynga articles in the last 20 days, 3 in the last 10.

Zynga’s PR department deserves a bonus.  

You make the call - Does a newspaper that is so easily duped by a scam company deserve to survive?

Filed under: news Tagged: | journalistic integrity, lack thereof