Gawker Owner: Gizmodo's iPhone Scoop Didn't Make Me Money

Gizmodo bought the next-generation version of this iPhone for $5,000, scoring it a major scoop -- but, Gawker owner Nick Denton insists, no money.
Gizmodo bought the next-generation version of this iPhone for $5,000, scoring it a major scoop -- but, Gawker owner Nick Denton insists, no money.

With characteristic humility, Gawker Media owner Nick Denton describes his company's acquisition of an iPhone 4Q -- two months before Apple (AAPL) was set to unveil it -- as "pretty much the biggest tech scoop ever." But while there's no question the story brought Gawker millions of page views, what it hasn't brought so far, Denton says, is money.

The story of how Gizmodo got its hands on the device thanks to the carelessness of an Apple employee and the commercial instincts of an anonymous middleman has been big news all week, and it was naturally the topic of choice at ContentNext's roundtable on the State of Gadget Media Wednesday.

While many observers have assumed that Gawker has recouped the $5,000 it paid for the phone many times over -- one writer estimates the company's windfall at $150,000 in extra ad revenue -- Denton said that's far from the case. "There were no immediate revenue benefits whatsoever -- in fact, only costs," he says.

Costs of 'Biggest' Scoop

Besides the price of the phone itself, he says, there was the $7,000 in extra bandwidth required to support all those millions of page views, the traffic bonuses he now owes to Gizmodo's staff, and "whatever legal bills we end up paying."

Ah, yes, those legal bills. As I've written, the company could face prosecution and/or a civil suit if it's determined that the seller didn't make sufficient effort to return it to its owner and Gawker didn't make sufficient effort to establish the legality of the sale.

I asked Denton to explain how he could be confident Gawker had met the legal requirement, when my own reporting suggested he hadn't. "I dodged your question yesterday," he replied, "and I'm going to dodge it now." Give the man credit for being forthright.

Of course, for Apple to win lawsuit against Denton, it will have to show that it suffered damages. It's far from clear that a two-month-early glimpse of the phone and a description of its physical features will translate into any real competitive advantage for Apple's competitors.

Was Apple Actually Harmed?

Denton himself suggested the company has indeed suffered from this episode. To wit, by completely derailing Apple's planned unveiling of the product -- always a breathless PR extravaganza -- he deprived it of precious publicity, replacing it with exposure of a kind that's much less likely to lead to sales. "Chatter around the iPhone now is much less valuable than chatter around the iPhone would be in June, when people are able to buy it," he says. Apple lawyers, are you taking notes?

Not that Denton showed any hint of remorse. Responding to a question about whether he would have handled anything differently if he had it to do over again, he said, "We would've been better off holding the story of the guy who lost the phone until Tuesday morning."

Not, as you might think, because a day's notice might have been more merciful to that person, who -- as a result of the story -- has become a laughingstock who will be lucky if he keeps his job with Apple, but because it would have resulted in more page views if Gawker had spread the stories out.

Ruining careers isn't the sort of thing Denton scruples over. "I'm a big believer in responsible journalism -- responsible to one group: our readers," he says. "Anybody who starts to worry too much about Pulitzer Prizes or the opinion of j-school ethicists is going to let down their audience."