Costly Apple iPhone scoop
By Sandhya

Gawker is the most powerful blog group in USA and its technology and gadgets blog Gizmodo broke the biggest tech scoop of 2010. Gizmodo published exclusive details of the new Apple iPhone months before it was to hit the market.

Apple has cash reserves of $40 Billion and even though it started off as a computer company, today it makes the largest chunk of its profits from iPhones.  Apple’s product secrecy has been raised to an art, and is part of its exclusive branding campaign.

In mid April, more than 10 million people logged on to Gawker to see what the next Apple iPhone looked like.  Tens of millions of people in every country read about the Gizmodo scoop in their local newspapers and TV stations.

Respected Indian tech blog Digital Inspiration speculated that Gawker’s Gizmodo would have made $150,000 just from selling ads to the increased traffic. 

But the reality is what while Gawker and Gizmodo may have gained in reputation and traffic; they may have actually lost money.  Gizmodo paid $5,000 for the phone, $7,000 in increased bandwidth, huge bonuses to the reporters who broke the story and may have to shell out substantial amounts in legal fees. 

Gawker owner and boss Nick Denton told the Daily Finance

“ 
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.

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.
“