How Checkbook Journalism Gave Gizmodo Its iPhone Scoop

How much is exclusive early access to one of the most eagerly awaited consumer electronic products in the world worth? That depends on how you measure it.

You could say it's worth $5,000. That's how much Gizmodo paid to get its hands on a fourth-generation iPhone that some unwitting Apple (AAPL) employee apparently lost in a bar.

Or you could say it's 2 million. That's how many page views per hour the gadget blog received after posting its story about the phone.

For Nick Denton, Gizmodo's owner, Gawker Media's founder and a proud practitioner of checkbook journalism, those two numbers form a very satisfying equation. Several sites were offered access to the phone by a party claiming to have found it in a bar in Redwood City, California, but only Gizmodo was willing to produce the necessary cash, and to do so quickly enough to keep it out of competitors' hands.

Engadget, Gizmodo's chief rival (and a sister site of DailyFinance) also had a chance to bid after earlier publishing photos of the phone, but ultimately demurred, says editor in chief Joshua Topolsky. "We aren't in the habit of paying for scoops," he says. "We don't think checkbook journalism is a way to get good information, and it encourages awful behavior in tipsters."

Selling a Lost Phone?

Indeed, there would seem to be some question about what, if any, legal right the finder of the "lost" iPhone had to shop it around. Gizmodo's story makes it clear that its editors recognized the phone as a prototype produced for testing purposes -- meaning they knew it was the property of Apple. Presumably the party who sold it to Gizmodo knew that as well. Whether or not Apple's tester temporarily let the device out of his or her sight, the finder knew he was auctioning off someone else's property, and his desire to preserve his anonymity suggest a fear of prosecution.

Topolsky says the murky legal status of the phone figured in Engadget's decision to pass. "When you introduce the idea of selling access to a device when it's clear it's not yours to begin with, that's a pretty sticky situation," he says.

Asked whether he's concerned his company may have committed a crime in buying the phone, Denton says that Gaby Darbyshire, Gawker Media's chief operating officer, researched the relevant case law and came away satisfied that Gizmodo was in the clear. Moreover, Denton says Gizmodo, having reaped its page view harvest, is working to learn the identity of the person who lost possession of the phone and will return it to that person, or to anyone who establishes a legal claim to it.

As for Apple, he says, "We haven't had any official communication from them."