When Citizen Journalism Attacks: CNN Gaffe Causes Stock Drop

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Sarah Perez reports that a bogus story on CNN’s citizen journalism site iReport this morning, which claimed that Apple CEO Steve Jobs had suffered a massive heart attack, “spread like wildfire” across the web. The story, which has since been removed, was later fact checked by Silicon Alley Insider — a blog that actually employs journalistic standards — and Apple quickly squashed the report as a rumor. Jobs has indeed not had a heart attack.

But the damage was already done. Apple’s stock price fell about 10% as the bogus report spread across the Internet during the morning trading session (it has since recovered). Perez says that citizen journalism has failed us, noting that episodes like this reflect poorly on CNN and on citizen reporters who take their responsibility seriously.

But was it citizen journalism that failed us? Or was it the Internet in general? The web is the latest in a string of new technologies over the past hundred years that have continued to shorten the news cycle from days (newspaper) to hours (radio/television) to minutes (blogs/cell phones) to seconds (Twitter)? There is danger in the ever shorter news cycle.

This is not the first that time a stock has taken a hit because of a rumor or mistake that became widely reported as fact across the Internet.

A month ago, United Airlines saw their stock plummet 75% after a bug in Google news surfaced a six year old story about bankruptcy. Whether caused by a bug in Google’s technology or a shoddy content management system at the paper that failed to date, or put the wrong date on the old article is still up in the air. In the age of instant information, the point is that “news” on the Internet can have immediate or disastrous results whatever the source.

In May of 2007, a rumor reported on the widely respected blog Engadget — which is owned by traditional media company AOL — about delays for Apple’s iPhone wiped $4 billion off Apple’s market cap in just a few minutes. The stock recovered after Engadget posted a retraction, but again — a shoddy source led to disaster in just minutes because of how fast information spreads.

In February 2006, a Merrill Lynch report that the Playstation 3 would be delayed and cost $900 made Sony’s stock drop 3.6% in a day. Perhaps the analyst report would have affected the stock’s trading regardless, but the rumor spread like wildfire over the Internet.

What all these anecdotes tell us is that on the web, rumor has become a very powerful and dangerous thing. Much more powerful than it was ten or twenty years ago, when rumors couldn’t spread nearly so quickly and could often be squashed by pesky facts before doing much damage.

The specific case of the CNN iReport this morning highlights the need for trained reporters to vet rumors and report actual facts. Another, perhaps overlooked, lesson that we can take from this is that we all need to slow down and breathe. Take some time to make sure we get the facts straight rather than rushing to be the first to publish a story.

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  • http://altoonadesign.com halfasleeps

    wrong information spreads faster today yeah, but so do retractions don’t they?

  • Jon

    What’s a

    hard attack

    ?

  • http://www.historycommons.org/ Black Max

    The problem is not just misinformation. That is rife within “professional” media as well as in citizen journalism outlets. In this case, it’s the fact that the stock market acts like a hysterical 7th grade girl with the vapors. (More accurately, the people who comprise the stock market.) One single story sends them into a tizzy. What, someone said Steve Jobs had a heart attack? Agh, run like crazy to sell stock! The US Congress might not drop $700 billion on us in free money? Sell, sell, sell!

    Any and all journalism needs to be reviewed before it is posted as factual news. But Perez unfairly uses the issue of the erroneous Apple reporting to blast citizen journalism as a whole. Want some examples of erroneous professional journalism? Review the 2002 and 2003 articles by Judith Miller and Michael Gordon in the New York Times for some dead-wrong reporting that had even more impact than CNN’s blunder.

    Josh, you’re right in that journalists in general need to “[t]ake some time to make sure we get the facts straight rather than rushing to be the first to publish a story,” but in the increasingly zero-sum world of journalistic competition, that will never happen.

  • http://www.mockriot.com/ Josh Catone

    @Jon: It’s what we in the business call a typo. ;) Thanks, though, I’ve fixed it.

    (Ironically, I clearly didn’t take enough time to breathe and check my post before posting since I missed that typing error.)

  • tweetip

    1st Tweets ~ Steve Jobs Heart Attack ~ Timeline/Chart… http://tweetip.us/lkq3e

  • http://www.sagewing.com Sagewing

    Citizen journalism is always doomed to fail, just as citizen web design or citizen plumbing would fail, too. Why is it that people think that if they take some kind of twisted populist approach to journalism it will somehow self-correct and rise to any kind of standard?

    Sure, there are folks from the blogosphere that gain notoriety but blogs and the internet are just a new medium so the people who get noticed are STILL those who do great work, great research, have great style, or otherwise have something to offer.

    Of course, there are the occasional Cinderella stories and from time to time the blogging community makes a contribution to the media world (a useful one). But, the whole concept of citizen journalism seems flawed. When I tune into a media outlet I am looking for some kind professional standard to be met, and I’m skeptical enough about that happening with a big network to begin with!

  • http://www.historycommons.org/ Black Max

    Citizen journalism is always doomed to fail, just as citizen web design or citizen plumbing would fail, too.

    I absolutely disagree, and there are plenty of examples out there to prove my contention, including the site for which I write and do research. But, there is plenty of room to foul up in citizen reporting, and the monitoring and peer review needs to be strict and extensive.

    I’m going to Austria to do a presentation on citizen journalism (among other topics to be covered), and after I return, I’ll have the presentation available for posting on the Web. If you’re interested, drop me a line and I’ll send you the link when it becomes available.

  • http://mingz-online.com mingz

    I never believe what CNN says. What it said about wars in Iraq and Afghanistan is merely some fabricated stories. I’ll check other media if necessary.
    Only bloody idiot will believe in CNN.

  • http://www.sagewing.com Sagewing

    I’m going to Austria to do a presentation on citizen journalism (among other topics to be covered), and after I return, I’ll have the presentation available for posting on the Web. If you’re interested, drop me a line and I’ll send you the link when it becomes available.

    Certainly the peer review needs to be extensive. Your point is well taken – there are obviously degrees between ‘professional reporting’ and ‘citizen reporting’. I think of it as wild, unchecked, unsourced reporting by anyone with an email address but I suppose that’s a bit unfair :)

    Sure, I’d love to take a look at what you’re working on.

    I never believe what CNN says. What it said about wars in Iraq and Afghanistan is merely some fabricated stories. I’ll check other media if necessary.
    Only bloody idiot will believe in CNN.

    Well, someone could say that about Fox and we’d be back to the old partisan bickering. Better to stick to the topic.

  • http://www.historycommons.org/ Black Max

    Best not to believe CNN or Fox unless you’ve gotten independent verification from several sources. Over time, I’ve come to trust some reporters on an individual basis, as opposed to the outlets they write for. Hersh at the New Yorker, Landay and Strobel for McClatchy, Priest at the Washington Post, Singel at Wired, all have good track records in my mind.