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 II: Ed 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.