(Note: These are first impressions, and I’ll be updating this posting.)
The Federal Trade Commission noticed a while back that marketers of brands, products and ideas have used new media in some incredibly dishonest ways. These include paying people or giving them freebies in return for positive mentions and not requiring (or even encouraging) them to disclose that they’re being compensated.
So with laudable goals, the commission issued a document (390k pdf) aimed at better disclosure — with penalties of up to $11,000 in fines for violations. Basically, the FTC is saying that if you have a “material connection” to a product or service you’re praising, you are an endorser who must disclose that connection.
Sounds good, doesn’t it. But when you read the FTC’s ruling, published today, you get the sense of a government-gone-wild travesty. Why?
First, the new system is unworkable in practice, which is bad enough. Worse, the rules are worryingly vague and wide-ranging. Worse yet, they appear to give traditional print and broadcast journalists a pass while applying harsh regulations to bloggers (and others using conversational media of various kinds). Worst and most important, they are, in the end, an attack on markets and free speech, based on a 20th Century notion of media and advertising that simply doesn’t map to the new era.
The advertising of the past was a one-to-many system. Call it broadcasting. The Internet is a many-to-many system. Call that conversation. They are not the same.
The FTC would deal with this essentially by throwing sand into the gears of online conversations. The rules are explained through examples — which means that almost no one can be sure that what he or she is doing, at least at the margins, is allowed or forbidden.
Here’s an example of the practical unworkability of what the FTC demands.
I disclose my various affiliations with companies when I do blog posts relating to them (or at least I try; I don’t doubt that I’ve forgotten to do this from time to time). And I have a long “About” page that includes my various financial and other interests. That page notes, among other things, that Google has loaned me a bunch of Android phones to use with students for experiments.
I’ve posted a number of Twitter tweets about Android, including my preference for that environment than Apple’s restricted system. Where, exactly — in a post with a total length of 140 characters — should the disclosure go? Has the FTC, for all practical purposes, just forbidden all positive comments about products and services on Twitter when the person doing the posting has a relationship of any kind with the company? Do I want to be the FTC’s guinea pig in a lawsuit where the world works this out?
And what about the extremely common practices of traditional media? Every news organization covering technology gets freebies by the container-load. Book reviewers’ offices overflow with volumes sent by publishers. Subsidized or even complimentary travel, food and other things of this sort are common but too-rarely disclosed.
The answer is transparency. But do I want the feds enforcing it, especially when their rules can be interpreted narrowly or widely, depending on the circumstance?
Again, let’s be clear that the motives behind the FTC’s rules seem to be well-intentioned. I also loathe the odious practice of using bloggers and other online conversationalists as commercial sock puppets in a sleazy online word-of-mouth operation. Let’s also agree that disclosures are always better than hiding one’s affiliation with a company.
We already have laws against fraud. Let’s enforce those — first against the serious fraudsters, who keep getting away with it — before we even consider harsh regulations on speech.
We all want more transparency. I don’t see this as the right way to get it.
But I do predict one outcome of this FTC action: a slew of court cases. This is a full employment act for First Amendment lawyers, who have better things to do.
Note: Sam Bayard, assistant director of the Citizen Media Law Project at Harvard’s Berkman Center for Internet and Society (disclosure: I’m a co-founder of the project), corrected me on my initial language, in which I called today’s document “revised rules” from the FTC. He writes:
They are non-binding guidelines meant to help advertisers, bloggers etc comply with the FTC Act:
“The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.” (from FTC press release today).
As a matter of substance, you’re right that they will have much the same effect as rules because one would have to face an enforcement action by the FTC to challenge them — not a pretty prospect at all. And their status as guidelines doesn’t lessen your concerns with practical workability, vagueness, and lopsidedness because the FTC will use them itself as guidelines for when to pursue investigations and bring enforcement actions.
I’ll be updating as I learn more. Meanwhile, for more reactions, take a look at some of these postings:
- Jeff Jarvis: FTC Regulates Our Speech
- ReadWriteWeb: FTC to Bloggers: Disclose Freebies or Face $11,000 Fine
- MediaBistro: Transparency is Key
- Edward Champion interviews FTC official in charge of this. One word: Wow (and not in a good way).