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FTC to Monitor Blogs

Here we go again:  The government is looking to get into the business of regulating blogs, reports AP’s Deborah Yao.

Savvy consumers often go online for independent consumer reviews of products and services, scouring through comments from everyday Joes and Janes to help them find a gem or shun a lemon. What some fail to realize, though, is that such reviews can be tainted: Many bloggers have accepted perks such as free laptops, trips to Europe, $500 gift cards or even thousands of dollars for a 200-word post. Bloggers vary in how they disclose such freebies, if they do so at all.

The practice has grown to the degree that the Federal Trade Commission is paying attention. New guidelines, expected to be approved late this summer with possible modifications, would clarify that the agency can go after bloggers — as well as the companies that compensate them — for any false claims or failure to disclose conflicts of interest.

At OTB, we mark even rather obvious advertisements as “advertisements.”  People are still apparently confused, as I’ll get the occasional comment (and see many at other blogs) questioning how we could write one thing and yet be endorsing some conflicting product/candidate/cause on the sidebar.

Further, Yao is taking a handful of cases — some of which I suspect are apocryphal — and generalizing.  The “trips to Europe” thing is almost certainly the BlogAds/Dutch Tourism Board trip that several of us participated in three years ago.  Despite the fact that the very conditions of the offer required full disclosure and that none of us regularly wrote about Holland, this somehow offended the ethical sensibilities of journalists and continues to stick in their craws.

I occasionally get offers to write posts — or publish posts others have written — for money.  I’ve always declined.  But the free laptop and $500 gift cards and “even thousands of dollars for a 200-word post” that Yao whines about are mythological or so incredibly rare as to be meaningless.  The number of blogs on which a 200-word post would be worth “thousands of dollars” would not require the use of both hands to count.   (Advertisers:  If you disagree, please contact me.  I don’t need a new laptop but for enough thousands I’ll be happy to extol the virtues of Viagra, Online Poker, or Ron Paul.  I’ll need a couple extra thousands on the last.)

It would be the first time the FTC tries to patrol systematically what bloggers say and do online. The common practice of posting a graphical ad or a link to an online retailer — and getting commissions for any sales from it — would be enough to trigger oversight.

Seriously?  That’s just insane.  In the interests of full disclosure:  Any link on OTB that offers to sell you a product is some sort of advertisement.  This is a blog, not a store.

“If you walk into a department store, you know the (sales) clerk is a clerk,” said Rich Cleland, assistant director in the FTC’s division of advertising practices. “Online, if you think that somebody is providing you with independent advice and … they have an economic motive for what they’re saying, that’s information a consumer should know.”

How, precisely, would this work in practice?  At a store, I pretty much presume anyone trying to sell me something is an employee of the store, even if they’re not wearing a name badge of some sort.  Online, however, isn’t caveat emptor the obvious rule?

The guidelines also would bring uniformity to a community that has shunned that.

As blogging rises in importance and sophistication, it has taken on characteristics of community journalism — but without consensus on the types of ethical practices typically found in traditional media.  Journalists who work for newspapers and broadcasters are held accountable by their employers, and they generally cannot receive payments from marketers and must return free products after they finish reviewing them.  The blogosphere is quite different. “Rules are set by the individuals who create the blog,” said Lee Rainie, director of the Pew Internet and American Life Project. “Some people will accept payments and free gifts, and some people won’t. There’s no established norm yet.”

But journalists employed by someone else get paid.   That’s the nature of employment.  Independent bloggers, by contrast, are entrepreneurs.  Actually, most make no money or barely cover expenses, making them, in effect, hobbyists.

Even beyond that, the notion of journalistic purity vs. blogospheric greed is nonsense.  Newspapers, magazines, and broadcast networks rake in huge amounts of money from advertisers and sponsors.  The difference is that those outlets are compartmentalized whereas blogs tend not to be.  As I noted in the Bloggers in Amsterdam post, “I am not only the chief writer for the site but also the publisher, advertising manager, circulation manager, human resources director, and IT manager.”  Once upon a time, that was true for newspaper owners, too, before they became big businesses.

Existing FTC rules already ban deceptive and unfair business practices. The proposed guidelines aim to clarify the law and for the first time specifically include bloggers, defined loosely as anyone writing a personal journal online.

But here’s the difference: Most media companies have huge staffs and access to legal counsel.  Do we seriously expect people to hire lawyers before launching a mommy blog?  Apparently so.

If the guidelines are approved, bloggers would have to back up claims and disclose if they’re being compensated — the FTC doesn’t currently plan to specify how. The FTC could order violators to stop and pay restitution to customers, and it could ask the Justice Department to sue for civil penalties. Any type of blog could be scrutinized, not just ones that specialize in reviews.

So parents keeping blogs to update family members on their child’s first steps technically would fall under the FTC guidelines, though they likely would have little to worry about unless they accept payments or free products and write about them. But they would need to think twice if, for instance, they praise parenting books they’ve just read and include links to buy them at a retailer like Amazon.com Inc.

That’s because the guidelines also would cover the broader and common practice of affiliate marketing, in which bloggers and other sites get a commission when someone clicks on a link that leads to a purchase at a retailer. In such cases, merchants also would be responsible for actions by their sales agents — including a network of bloggers.

This is simply insane.  I tried Amazon affiliate links in the early days of OTB, found them ineffective, and removed them.  Others, like InstaPundit’s Glenn Reynolds, use them to what I presume (given that they’ve maintained them for years) is great success.  But there’s nothing insidious about the practice:  Books and other products are listed and people are free to buy them, with a tiny cut going to the site that posted the link.  You’re rather obviously at Amazon’s site and have to jump through quite a few hoops to order the item. Where’s the danger to consumers in that?

This sort of thing is more problematic:

Over the holidays, IZEA ran a campaign in which bloggers who don’t normally shop at Sears Holdings Corp.’s Kmart stores were given $500 gift cards and encouraged to write about their experiences in the stores. To reduce the chance of a bad review, the retailer said it avoided bloggers who previously made negative remarks about the company.

[…]

Mandatory disclosures could change how reviews are perceived online because many Internet users might never imagine that bloggers get compensation. “I don’t think, for the average reader of a blog, it immediately comes to mind that they actually have a relationship with the company,” said Sam Bayard, a fellow at Harvard’s Berkman Center for Internet & Society. “You think about (blogs) as personal, informal, off the cuff and coming from the heart — unfiltered, uncensored and unplanned.”

Now, this is something I would decline. In addition to not being sure how I’d spend $500 at KMart, it strikes me as a bit sleazy.  On the other hand, I’m not sure why the FTC would investigate something like this but allows the common practice of product placements in movie and television programs.  Most viewers are unaware that the hero’s wearing of an Omega watch was secured by payment of princely sums.

Surely, the federal government has better things to do than scouring blogs looking for undisclosed conflicts of interest?

UPDATE: Aaron Brazell, who tipped me to the story on Twitter, weighs in on his blog (as well as the comments on this post).  The gist of his argument is that nothing is changing but the medium:

Businesses are still subject to FTC regulations that protect the consumer from the overrun of over-capitalistic companies trying to beat the competition at the expense of the consumer. This new regulation will simply update existing regulations to more specifically clarify that, hey, yes, companies have to play by the same rules when it comes to bloggers too. Companies should be enforcing their legal requirements on anyone peddling their goods in a quid pro quo or financial exchange. This is fair trade.

I don’t disagree with that.  The problem with the proposed change — or perhaps the misreporting of it by Yao — is that it appears to target bloggers as publishers rather than merely extend existing limitations on advertising to blogs.   I’ve got no problem with the FTC going after advertisers for illegal practices. If a blogger engages in payola, though, the penalty should be exposure and loss of journalistic credibility, not fines from the FTC.

UPDATE IIEd Morrissey has more thoughts on this, focusing on the Amazon Affiliates program.  This, though, strikes me as the heart of the matter:

Bloggers do not occupy either a public-airwave space or a space with shortage of bandwidth.  They speak openly and freely, and have to maintain their credibility with their readers in order to maintain the kind of readership where these links start to accrue revenue back to the blogger.  If readers think the blogger is nothing more than a shill, then readers will disappear.  The free market takes care of itself in the blogosphere, especially in terms of credibility.

Quite right.

Story link from Aaron Brazell (@technosailor) via Twitter. Image via Tom Kirkendall.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He earned a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. James H says:

    I see some really big pitfalls here. First, this could potentially raise a barrier to blogging for a lot of people. If the FTC is gung-ho about going after small-scale bloggers, then this basically raises a huge cost barrier to people who might want to blog. If you gotta consult a lawyer before you write about how great your favorite candy bar is, then only the biggest, most well-financed bloggers will keep at it.

    Second, this would be a really handy way to harass bloggers. If you’re a large company and you don’t like a critical blogger, a couple lawsuits alleging benefit to that blogger could effectively put him out of business. SLAPP indeed.

    Third, how does this interact with comp copies and whatnot? Marketing campaigns have a long history of sending free samples to journos in the hope of getting positive reviews. Does a blogger suddenly face liability for taking a free sandwich and then writing about it?

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  2. Eric Florack says:

    Does anyone not understand that we’re looking at the first step toward control of the one voice government has been unable to control… Blogs?

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  3. I see some really big pitfalls here. First, this could potentially raise a barrier to blogging for a lot of people. If the FTC is gung-ho about going after small-scale bloggers, then this basically raises a huge cost barrier to people who might want to blog. If you gotta consult a lawyer before you write about how great your favorite candy bar is, then only the biggest, most well-financed bloggers will keep at it.

    Who said anything about the Feds “going gung ho”? As far as I see it, they are enabling themselves to be able to step in should it be necessary (selectively).

    Look, I share cynicism of the government as much as anyone probably on this blog. But it doesn’t have to be another reason to panic.

    Also, James, the mommy blogosphere is notorious for getting tons of crap for paid reviews. It’s insane, really. In fact, check out the beginning of the civil war going on in that demographic.

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  4. All of this presumes that readers of blogs are to ineffective to protect themselves without government intervention. Imagine a world in which readers of blogs could decide which blogs they want to read on their own. One of the factors the bloggers could consider would be conflicts of interests. If read a story by Glenn Reynolds about puppies going missing around the University of Tennessee law school, I can take into account any potential conflict of interests involved. If I read a story written by a former artillery officer on the dangers of picking up the clap while junketing to Amsterdam, I can add the appropriate grains of salt.

    I suspect that as any blogger gets to be even mildly successful, they will then find the spontaneous competition to be sure and expose any conflicts. What we don’t need is a government means that could potentially expose conflicts sooner but could also potentially be used to silence those who don’t worship the great Obama.

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  5. James H says:

    Who said anything about the Feds “going gung ho”? As far as I see it, they are enabling themselves to be able to step in should it be necessary (selectively).

    Well, Aaron, I’m raising that possibility, for one. Because there have been absolutely no cases, ever, of federal agencies overstepping their bounds, really.

    I will admit, however, I’m relatively ignorant of the mommyblogs. The subject does not interest me, and I am highly unlikely to become a mommy.

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  6. PD Shaw says:

    The mommy blog link was interesting, but ultimately lends weight to the view that the problem is self-policing. The mommyblogger is identifying the issue and committing to a higher standard, which in turn will lend her and others like her greater credibility. It’s what gives Consumer Reports and Baby Bargains more weight than the salesperson, the friend or stranger.

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  7. Well, Aaron, I’m raising that possibility, for one. Because there have been absolutely no cases, ever, of federal agencies overstepping their bounds, really.

    heh.
    well, the issue here too, is that once given a power, the government will invariably take powers granted for ‘rare instances’ and make them a matter of routine.

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  8. In this case, it’s less of a crackdown on bloggers as it is a crackdown on companies trying to exploit loopholes to get around advertising and fair trade restrictions imposed on them in traditional avenues, but non-specified in new media. This is not new power for the government. It’s the same power that already exists but is clarified for the 21st century. That’s an important note.

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  9. James H says:

    Aaron:

    I haven’t had time to dig into the regulations much, but are they talking about de minimis contributions at all? The free sample for journalists has been a PR tool for a very long time. You send journalists the product, or a coupon for the product, in the hope they’ll write something positive. In the case of a movie, a book, an energy drink, or a bar of soap, you’re talking about approximately 10-15 bucks in terms of the “bribe” handed the blogger or reporter. Is this really a threat?

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  10. James Joyner says:

    Aaron,

    I don’t doubt that some number of mommybloggers are sleazoids. I’ve encountered a lot of the pay-for-play stuff in the gossip-sphere, too. I’m just not sure why the consumers need protection from this. If you’re taking purchasing advice from some page you found on the Internet, I can’t feel too sorry for you.

    And I naturally presume that government will abuse its power. Bloggers who alienate public officials will almost certainly generate more scrutiny than those who keep a low profile.

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  11. […] some readers of Outside the Beltway see the move as indicative of future malfeasance by the federal […]

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  12. AJ Lynch says:

    If you look at some of the Obama appointees’ financial disclosure reports (for example Jared Bernstein), you will see he was paid almost $90,000 to appear on CNBC in 2008. At the same time, he was employed by the Economic Policy Institute which paid him a nice salary.

    The CNBC payments were for numerous appearances but I don’t think TV stations are required to disclose who is paid and why they are paid. So why the focus by the FTC on blogs?

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  13. […] Update: James Joyner agrees. […]

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  14. If you look at some of the Obama appointees’ financial disclosure reports (for example Jared Bernstein), you will see he was paid almost $90,000 to appear on CNBC in 2008. At the same time, he was employed by the Economic Policy Institute which paid him a nice salary.

    That’s commerce and it’s already regulated. My friend charges $10,000 per speaking engagement. That too is regulated. Giving someone something with the hope of goodwill is not regulated. It should be as it is advertising and marketing that the company would have paid to a legitimate source in a legitimate way but is not currently. Thus the attention on the business being done with bloggers – not the bloggers themselves. That’s my read.

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  15. Ed Piman says:

    This is all very simple. Just about the only place you can find criticism of the ever expanding role of the state is on blogs. Ergo, there needs to be fewer blogs. An end-run around that pesky 1st Amendment is necessary. What you can’t ban outright you smother slowly with regulation.

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  16. tim maguire says:

    Who said anything about the Feds “going gung ho”? As far as I see it, they are enabling themselves to be able to step in should it be necessary (selectively).

    Posted by Aaron Brazell

    Bloggers who alienate public officials will almost certainly generate more scrutiny than those who keep a low profile.

    Posted by James Joyner

    BINGO! Enforcement will also ratchet up whenever it becomes the issue of the moment. However lax and selective the enforcement may be, the government is aggressively creating a landscape where everyone is in violation of some law all the time. That way, sure, they may for the most part be reasonable in enforcement, but any time they want to pick someone up they can because that someone is violating something.

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  17. Jim,MtnViewCA,USA says:

    “As blogging rises in importance and sophistication, it has taken on characteristics of community journalism — but without consensus on the types of ethical practices typically found in traditional media.”
    The traditional media follows ethical practices? When did that start? Seems worthy of a blog post, IF true.

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  18. […] Joyner doesn’t suspect a political aspect, but he used the word ‘insane’ a […]

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  19. Eric Florack says:

    What tim says.

    Also:

    Bloggers do not occupy either a public-airwave space or a space with shortage of bandwidth. They speak openly and freely, and have to maintain their credibility with their readers in order to maintain the kind of readership where these links start to accrue revenue back to the blogger. If readers think the blogger is nothing more than a shill, then readers will disappear. The free market takes care of itself in the blogosphere, especially in terms of credibility.

    Quite right.

    Once small problem with this idea, correct as it is; The current administration has at every opportunity, eschewed free market solutions because they don’t beleive in them.

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  20. The mommy blog link was interesting, but ultimately lends weight to the view that the problem is self-policing.

    Indeed, but tiop-heavy and ineffectual policing by government has superseded effective self-policing in all manner of other spheres, so the blogosphere is far from immune.

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  21. […] to support the blogger? Stay tuned on that, too. One way or another the government is going to try to regulate the content of blogs and the wild-west free-speech […]

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  22. […] the same time, though, we do feel queasy about the FTC starting to extend its reach to the blogosphere. While we dislike the idea of not disclosing these gifts, we’re not sure having […]

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  23. […] the same time, though, we do feel queasy about the FTC starting to extend its reach to the blogosphere. While we dislike the idea of not disclosing these gifts, we’re not sure having […]

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  24. E.D. Kain says:

    Well that’s ludicrous. Thanks for the heads up…

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  25. pst314 says:

    “What some fail to realize, though, is that such reviews can be tainted: Many bloggers have accepted perks such as free laptops”

    As opposed to stereo review magazines which get lots of free stuff to review and never write bad reviews, not to mention the computer magazines, and so on.

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  26. kwo says:

    Rather than regulating blogs, why not regulate advertisers? They’re the ones with the money, and they’re the ones creating the conflict of interest. You wouldn’t need to restrict their ability to advertise on blogs, just require their advertising to disclose itself as such, even if they’re paying for a review.

    For example, the Las Vegas Tourism Board pays Joyner $2000 for a 200 word blurb on his favorite casino. The advertiser has to disclose this payment on a public report, and they must also have Joyner disclose the relationship in his blog post. If Joyner neglects to do this, it’s the Tourism Board that takes the hit, not Joyner.

    Hm, probably wouldn’t work.

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  27. Rather than regulating blogs, why not regulate advertisers? They’re the ones with the money, and they’re the ones creating the conflict of interest.

    If you read the proposed FTC regulation, you’ll realize that that is what is happening. The blogs stuff is more about pointing out that businesses can’t just simply use blogs to get around the system. Not necessarily about bloggers themselves, tho some spillover might exist.

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  28. George says:

    I find user comments in blog product reviews to be very useful when purchasing items with many choices like cell phones and tires. The bad reviews where someone else warns of a cell phone with poor battery life or tires with poor traction in the rain help me avoid the same mistake. I discount positive reviews and zero in on specific complaints.

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  29. anjin-san says:

    This seems like serious government overreach to me. Time to get on the horn to members of congress.

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  30. Welcome the the New World Order.

    Step by step, inch by inch, we are losing our freedom.

    Please begin asking and voting for politicians who see their job as firing government employees. We Americans used to be capable of taking care of ourselves. What has happened to us?

    –The UnPatriot

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  31. […] the bright bulbs at Obama’s Federal Trade Commission have decided to regulate blogs based on the premise that undisclosed financial relationships between bloggers and businesses could […]

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  32. PD Shaw says:

    Looking at the proposed rules, I notice that they would apply to [shock!!!] comentors as well:

    An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

    This is a situation where the cure is far worse than the disease. It’s better for readers of message boards to assume individual bias, rather than rely upon an unenforceable FCC mandate.

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  33. […] Politics So I saw this story (linked from the Instapundit, of course) and read this paragraph. FTC to Monitor Blogs Savvy consumers often go online for independent consumer reviews of products and services, scouring […]

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  34. […] how some reviews can run up to thousands of dollars in compensation for a short, 200-word post. James Joyner is skeptical of the data, and comments further, from a libertarian perspective on how this can affect free speech for […]

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  35. […] FTC to Monitor Blogs. […]

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  36. Appetites says:

    FTC Regulation of Blogs?…

    I read a story this afternoon about the potential for Federal Trade Commission regulation of blogs; a story to which I was linked by James Joyner’s Blog. The original article posits that blogs have become a popular way for folks……

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  37. Scott says:

    I for one totally disagree with this.. it is paramount to government censorship at the least, total media control at the most.. What happened to our 1st amendment? Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
    This is my freedom of speech the government is toying with now..

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  38. […] we seriously expect people to hire lawyers before launching a mommy blog? Apparently so.” [James Joyner via Instapundit; Ron Coleman] Earlier here and […]

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  39. An Interested Party says:

    How fascinating that some of the comments on this thread look very similar to what some liberals were saying during the Bush years…I guess it all depends on whose ox is being gored…

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  40. I agree. Is there any same regulations for periodicals too?

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  41. Andrew Feinberg says:

    Just FYI: “Embedded Advertising” aka product placement has been the subject of an ongoing rulemaking at the Federal Communications Commission for several years now, specifically when targeted at children.

    This practice is already illegal in broadcast television, but the wording of the rule is unclear. The proposed rule, which former Chairman Martin never actually put to a vote, would have explicitly proscribed product placement in children’s programming.

    But this would only be limited to broadcast television because the FCC’s authority only extends to broadcasters, and its only real weapon is non-renewal of a license, which almost never happens.

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  42. […] and bias disclosure that I’ve been making for years: Obama’s Federal Trade Commission have decided to regulate blogs based on the premise that undisclosed financial relationships between bloggers and businesses could […]

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  43. […] from people who actually work in the intersection of blogging and marketing. I particularly liked this summary from James Joyner of Outside the […]

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  44. […] of course, Love is talking about the regulation of Blogs, as proposed by the FTC yesterday, but this seems to speak to the campaign being run by the […]

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  45. […] Secondly, the FTC (Federal Trade Commission), is going to be monitoring blog sites to detect when a…. It’s too bad they do that for the major news outlets, as they are never objective during and after elections. […]

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  46. james says:

    This is to stifle free speech, and part of the big media’s latest attempts to stifle independent journalism and advertisement and start making sure they’re the ones getting paid again. Instead of getting their act together and making room for independents, they want the government to help them, which is only too willing to stifle the rise of independent media.

    Big media has all kinds of conflicts of interest, which is why many things aren’t mentioned.

    Even last three presidents had conflicts of interest with Wall Street, the health care industry and the oil industry, but apparently it’s only the regular person and independent journalists that need to be investigated.

    Maybe the AP monopoly and the executives that had the hush hush meeting on how to keep their monopoly should mention why they avoid major discussion on the Afghanistan oil pipeline troops are dying to defend and why money keeps getting funneled back to Goldman Sachs that donated so much money to Obama before they start coming down heavy on the average citizen who has something to say and posts ads to pay for expenses.

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  47. james says:

    Maybe we’ll still have at least the BBC. Are they restricted to the AP like most American news conglomerates? I ask because while the AP seems to hype up the Afghan pipeline as a “conspiracy theory”, the BBC actually reported it.

    It’s the hush hush in the mainstream AP media that makes people less than trusting of ulterior motives in a monopolized AP environment. Most of the people arguing against addressing the conflicts of interest that I heard said that such a pipeline was unfeasible. Why was 2 billion dollars committed 2002 then right after the invasion? It’s just that the AP acts like people are retards not to notice these things and ask questions as to what their tax dollars are really being used for.

    At the same time we’re talking about an axis of evil, another pipeline is proposed by these same people to go from Iran through Pakistan. Did anyone ask Iran about this? No, we just spend 400 million more tax payer dollars to stir up insurgency and destabilize the religious leadership. Remember when Russia said the US was instigating insurgency and we denied it for years? Remember Gates and Brzezinski confirmed years later that Russia was correct and we were lying and did create insurgency before Russia invaded in order to lure them there?

    It may have been noble or not back then. The point is that so far, when there’s an accusation of lying and abuse and covert intervention, more often than not we have been the liars, and it’s a stifled, monopolized press that makes us seem dumb. Now they want to restrict it even more? How much control do they want?

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  48. […] found that story because of this one, on Outside the Beltway. The author, James Joyner, closes the post (well, technically, he closes the update to the post) […]

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