On Tuesday, the US Department of Justice arrested a couple in Manhattan, both in their 30s, and charged them with a conspiracy to launder cryptocurrency stolen during the 2016 hack of the virtual currency exchange Bitfinex. The amount of cryptocurrency that the Justice department seized is currently worth about $4.5 billion, which makes this by far the largest seizure in the history of the federal government.
As stories mount, we are learning more about the couple, Ilya Lichtenstein, 34, and Heather Morgan, 31.
A fact I learned about Heather Morgan that especially alarmed me is that as recently as late January she was an occasional contributor to Inc.com, going back to January 2016, when I was the editor-in-chief of Inc. magazine and Inc.com. It may surprise readers to know that I have no idea who she is, and no recollection of anything she published on the site while I worked there (I left Inc. in the fall of 2019).
In a 2019 YouTube video, Morgan explained that she found her way into the annual Inc. 5000 conference and approached an Inc. editor, who explained to her how to apply for a column. No one I’ve spoken to has any recollection of signing her up. (Inc.’s current editor did not reply to an interview request.)
How, one might ask, does an editor-in-chief repeatedly publish the work of a writer he knows nothing about? Good question. In 2014, following several other publications, Inc.com decided to create an “open contributor network.” The online contributor network on a mass scale can be traced to the launch of The Huffington Post in 2005. Initially, founder Arianna Huffington conceived of the site as a group blog for some 250 celebrity figures from literature, media, and Hollywood, including Walter Cronkite, David Mamet, Nora Ephron, Warren Beatty, Maggie Gyllenhaal, Arthur M. Schlesinger Jr., Diane Keaton, and Norman Mailer. Ten years later, the company had been sold to AOL and claimed to have a network of 100,000 contributors—with plans to expand to 1 million.
Although The Huffington Post expanded and evolved in a variety of ways, the massive network of contributors – most of whom were not paid to write – was a significant factor in the company’s financial success; at the time of the 2011 sale The Huffington Post’s annual revenues were estimated by AOL to be at least $60 million. (In 2018, The Huffington Post announced that it was moving away from its contributor network.)
The model evolved at Forbes.com in a direction largely attributable to an executive there named Lewis DVorkin. In 2009, DVorkin had launched True/Slant, a general interest website in which contributors were paid not a flat fee per submission but rather based on how much traffic their posts generated. Also crucial to this model was that the contributors, once contracted and trained, published directly to the site, with effectively no editing prior to publication. True/Slant did not stay around for very long, but Dvorkin sold the company to Forbes (an initial True/Slant investor) and began to remodel Forbes.com along these lines.
By the time Inc. began seriously considering its own network in 2014, Forbes.com had well over 1000 contributors and had experienced dramatic growth in Web traffic (and therefore in digital revenue, since the more web pages that are read, the more advertisements are served, meaning more money to the publisher).
We weren’t considering this step primarily for editorial reasons. Rather, we recognized in 2014 that while Inc.com traffic was growing, there were a large number of competitors in online business journalism, and our ranking in size – in the middle to lower end of the list – was holding our business back. Moreover, we had a sense that there was ample room to expand not only the volume of what we were publishing, but also the range. The Inc. brand was a credible vehicle for many other types of stories (such as personal finance and product reviews) and formats (such as video) than were feasible in a monthly print magazine. We believed that Inc.com readers would benefit by hearing from a much wider group of columnists: company founders, academics, experts in particular business areas (such as law, human resources, and accounting), marketing experts, cutting-edge technology CEOs, and many more.
We began a massive recruitment effort for online contributors, and I was thoroughly impressed with how many we found in a fairly short period of time. Those publishing once a week or less frequently were not paid for their work. To be paid, contributors had to publish a minimum number of posts per month and, as with Forbes.com, their payment would be tied to traffic—a fixed amount for every 1000 page views. Since we were selling ads on those pages for more money then we were paying the contributors, our interests and the contributors’ interest seemed aligned.
But there were abuses: Beginning in 2016, we learned that an unscrupulous group of marketers were offering to pay our contributors to link to their clients. We found ways to contain and crack down on that practice, and also assigned one of our reporters to investigate the practice. We also reported our findings to the Federal Trade Commission, although it must be said the agency did nothing to follow up.
This week’s news convinces me that, regardless of its effectiveness, the open contributor network carries too much baggage for publishers.
James Ledbetter is the author, most recently, of One Nation Under Gold: How One Precious Metal Has Dominated the American Imagination for Four Centuries. This essay is adapted from his chapter in Media Capture: How Money, Digital Platforms, and Governments Control the News.