FTC and Blogger Disclosure Rules

As I argue in my essay Individual Branding the web presents important and amazing new possibilities for individuals to earn money and much of that potential will flow from one’s online reputation. In short, as one blogs or shares information in another form, one becomes a trusted source and can start extract money from those activities. I argue that those acts have the seeds of the possible destruction of Benkler’s world of sharing. Today the FTC has targeted a practice that arguably could increase the reliability of social network endorsements but will also upset many people.

As CNET reports, “Independent bloggers who fail to disclose paid reviews or freebies can face up to $11,000 in fines from the Federal Trade Commission, according to revisions to the agency’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising” published Monday.” The FTC has not updated the Guidelines since 1980. The press release is here. The full text of the Guides are here (pdf). It is 81 pages, and I have not read it as yet but one thing people should know is that the effective date is December 1, 2009.

From the release it appears that the guides take am expansive view of what presents a moment to disclose “The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.” CNET suggests that celebrities and “mommy bloggers” could be in trouble under the new rules. (Here is my prediction on the riposte to come but that I don’t think is accurate: “The FTC hates moms. In a down economy and with more and more people needing new ways to earn, the FTC actions are a direct attack on the importance of moms.” Now back to our regularly scheduled blogging.)

There are a ton of oddly connected things here. First, I just blogged about CITP and its FedThread project. That project would allow one to track this sort of moment rather quickly. Second, I was just at the Works In Progress Intellectual Property Conference at Seton Hall (which was yet again an excellent conference and for which everyone at Seton Hall deserves many thanks) where Zahr Stauffer presented a fascinating paper called Novels for Hire: Branded Entertainment, Copyright and the Law that I think will have something to say about these changes. As one blog notes, the practice of giving journalists freebies is common. Zahr’s paper shows how advertising and novels have had a rather curious interaction over the years. I think the paper will help understand the way writing and advertising have co-existed in either good or bad ways at different times with the shift to blogging fitting in as part of that history. The paper should be available soon so keep an eye out for it.

Electronics and other big ticket items seem to be where the concerns are. I look forward to finding out whether book, film, and music reviewers have to tell readers whether they received a review copy of the book. In general if one only says nice things about a review subject, one might receive more books etc. I think that non-professional blogs and other online information sources such as rating systems and FaceBook will allow people to find out whether they should buy a product (i.e., one might use a personal network to ask whether a product is good). That practice could undercut the quiet payment model.

Here is a possible way to understand this turn of events. 1) Secret endorsements die out and full disclosure of what has been given is the norm. 2) Small bloggers and big agencies are no longer able to seem credible as reviewers. 3) If people want independent reviews, they must pay magazines or other pay sources who can afford to buy the review items and avoid the taint of being given free stuff. 4) The public does not want to pay and instead reads the blog reviews with the disclosures and augments the research with social networks and user ratings which are more difficult to fake and possibly more reliable. 5) Yet again paid, professional independent news and reviews seems to be squeezed out.

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8 Responses

  1. Joe says:

    Well, looks like the time-honored word of mouth method wins again.

  2. A.J. Sutter says:

    Having been a newpaper music reviewer, a magazine book reviewer, and a book author, I think the notion that publications will, or should, pay for review copies is a little naive, as well as being counterproductive.

    One issue is budget constraints, which are worse now for print media than in the past. Unless you and your editor love to publish scathing reviews issue after issue, you have to kiss a lot of frogs to find books worth reviewing. When those are academic or professional books at $70-$200 a pop, it’s hard to find an editor who’ll spring for a bunch of them on spec, especially after you wind up reviewing something that costs $29.95. Several of the books I reviewed would never have been reviewed in my publication (or in the local market at all) if the publisher hadn’t granted my request for a review copy. For the record, 35% of the books I’ve reviewed to date have been review copies, the others having been purchased on my own dime or by my magazine.

    Another issue is salience. Lots of review copies come unsolicited, and for good reason: otherwise, the works would never get noticed. All of the albums I reviewed as a music reviewer were sent to my newspaper unsolicited; my editor would hand me the stack every month, and I’d select a few. Much of what I did review I’d never have selected from the cover alone. Similarly, my publisher sent out review copies of my books to some media outlets; given the huge number of books poublished in Japan, they would never have found my books otherwise.

    “In general if one only says nice things about a review subject, one might receive more books etc.”: Yes, but that’s not the only, or even the main, motivation for positive reviews in print media. At least in my own case, if I ask for a review copy and then find that the book was awful, I find something else to review. Outside the New York market, readers and editors have a limited tolerance for negative reviews issue after issue. As a writer, I do too. I prefer to review books about which I can say something nice, though I’ve made a couple of exceptions.

    There’s no question that some positive reviews can be tainted by conflict of interest, but in established media the incentive is very unlikely to be getting free books or CDs. Especially in media where the reviews are written by illustrious freelancers, such as NYTBR, NYRB, TLS, and some European literary magazines, the incentive is that the review author wants to get his or her own books published. (The very tight French literary world is especially prone to this mutual back-scratching.) Review copies aren’t part of that problem. Instead, they very often perform a service to authors and the public, by helping good things get noticed.

  3. DCLawyer says:

    Clearly this is aimed at the CNET’s of the world, but are there exceptions for small time amateurs?

    Is there a need to police the style and fashion blogs, which may praise a paint or scarf having received a free copy or item in the mail?

  4. micko says:

    How are they to police the billions of financial website posts per year.

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