BOB GARFIELD: The Big Apple is powered by gossip, but the electrical grid nearly overloaded last week when the best gossip was about the gossips themselves. Here's the story we first heard: supermarket magnate Ron Burkle was bothered by the bad press he was getting in the city's leading gossip column, called Page Six, in The New York Post. So he asked a part-time Page Six scribe, named Jared Paul Stern, for some advice. According to Burkle, Stern suggested he could help – if Burkle invested in his clothing line and fed him gossip about his friends. Then, reportedly, Burkle set up a sting. He secretly captured Stern on tape allegedly asking for a $100,000 initial payment plus $10,000 a month in return for keeping negative information out of The Post. A clear case of blackmail, or is it? The Times went to town, publishing more than 10,000 words on the story, but The Boston Phoenix soberly notes that perhaps the paper's skepticism should have been aroused by the fact that its sources turned over only six heavily-edited minutes of roughly three hours of recordings. What's more, it was Burkle, not Stern, who asked, how much do you want? And, according to the snippets quoted in The Times, it was Burkle who tried to put the magic words signifying extortion in Stern's mouth – but Stern never quite says them. So this week, the coverage began to swing in favor of Stern. Meanwhile, the matter is under investigation by the Manhattan U.S. Attorney's Office and the FBI. Yes kids, lies fall like rain in Slander City, but a few years ago, reporter Jessica Siegel ran into a Page Six gossip monger who couldn't help telling the truth.

JESSICA SIEGEL: The billionaire has not released his secret videotapes unedited to the public, but who needs his Page Six tapes? I've got my own, made in public, of Ian Spiegelman, a different Page Six part-timer, speaking at a crowded Learning Annex talk in 2003. The topic? How to get onto Page Six and avoid bad press.

IAN SPIEGELMAN: We have this kind of attitude, and also, more importantly, a reputation where if you screw with us, if we can make things bad for you, we're going to make things bad for you. And in that vein, Page Six is the main kind of attack arm of The New York Post.

JESSICA SIEGEL: The audience was enthralled as he told how the scandal sheet discovered Paris Hilton, when she was unknown, attacked actor Alec Baldwin as "The Bloviator" for his Democratic politics and said nice things about celebs like Gwyneth Paltrow and Mariah Carey because they were nice to Page Six staffers. And the list went on and on, as he described a complex system of revenge, quid pro quo and favoritism used to get the most followed gossip in America.

IAN SPIEGELMAN: We all respect that the different people who go into writing the page have their different accounts, their different people they deal with and have to, like, protect and also their different wars that they have to persecute. It's a lot like being in a mafia family.

JESSICA SIEGEL: Mafia family. Hmm. Those are the exact same words accused scribe Jared Paul Stern used in the videotaped meeting to explain how Page Six works. And even Post management admits that staffers there accept pricey favors, like when column editor Richard Johnson allowed soft-porn king Joe Francis, of "Girls Gone Wild" fame, to underwrite his lavish bachelor party. But does "The Sopranos" mentality extend to criminal extortion? Reached at home in Catskill, New York, Jared Paul Stern denies it, and he insists it was the billionaire who suggested the meeting, supposedly to invest in his clothing line and media consulting.

JARED PAUL STERN: He initiated a meeting with me last summer in an obvious plot to set me up, and he tried to trap me and make it look like I was saying or doing something I wasn't and tried to peddle it to the authorities, who were interested, and has now gone to The Daily News and launched a smear campaign.

JESSICA SIEGEL: Why do you think he's doing that?

JARED PAUL STERN: I think he's a real paranoid guy and I think he's obviously got some secrets that he's very anxious to hide, and I think that he was out to destroy The New York Post.

IAN SPIEGELMAN: When you're on a gossip page, really half your job is to just instill terror in these people.

JESSICA SIEGEL: That's Ian Spiegelman at the Page Six seminar.

IAN SPIEGELMAN: Every time you call, its bad news and it's going to be worse every time I call. Every time you're mean to me, my items will be that much worse.

JESSICA SIEGEL: But being mean is not illegal, and laws to protect news gathering make it tough to prove that a journalist is guilty of extortion. But it's not so hard to prove when reporters are guilty of faulty ethics, especially in this case, says NYU journalism professor Michael Norman.

MICHAEL NORMAN: It goes way beyond the pale. I mean, you know, again, any time you've got a financial interest in any enterprise, you can't possibly be looked on as an objective observer.

JESSICA SIEGEL: Speaking of objectivity, some are saying that The New York Times has lost some of it in covering this scandal because The Post is a competitor, even though The Times is portraying the whole battle as a lowly tabloid war. The New York Sun, another city daily, declared in an editorial this week that The Times is taking way too much pleasure in The New York Post's days of shame.

IRA STOLL: Rather than bemoaning this breach of ethics, The [LAUGHING] Times – there's a sense from reading the coverage in The Times that they're a little bit gleeful about it.

JESSICA SIEGEL: Sun managing editor Ira Stoll.

IRA STOLL: They've had 13 reporters whose bylines have appeared in coverage of the story, and just for comparison's sake, they've given it more than twice as much coverage as the Israeli or German elections. These companies are competing for a billion dollars a year, at least, in advertising in New York City and circulation revenues that go with it and influence over policy in New York. If The Times sees a chance to undermine The Post's reputation and make it seem unsavory or corrupt, there's an incentive to push a story like this.

JESSICA SIEGEL: Maybe. But so far, the only party in the scandal to see concrete financial benefit is alleged perpetrator Jared Paul Stern, who says the publicity is boosting sales at his clothing line, Skull and Bones. The most popular item --$95 polo shirts, the very ones that billionaire Burkle bought in a $5800-order before their dealings went bad.

JARED PAUL STERN: He was photographed wearing them. He was on stage with his good pal, Bill Clinton, wearing one. If he lied about everything else, I think he genuinely did like the polo shirt.

JESSICA SIEGEL: Probably not any more. Meanwhile, Jared Stern is not the only one hoping to make money off the scandal. Ian Spiegelman, that other Page Six staffer, was fired several months after he spilled the beans at that 2003 seminar, but next month he's publishing his second novel, “Welcome to Yesterday.” It's got all the gritty details of the gossip underworld – and payoffs. Is it fact or fiction? While the gossip columns are famously loose with the facts, it does matter to the FBI. For On the Media, I'm Jessica Siegel.