Update 2:  Now Cleland says, "If people think that the FTC is going to issue them a citation for $11,000 because they failed to disclose that they got a free box of Pampers, that’s not true. That’s not going to happen today, not ever." (via)

Update: The FTC is now saying that the $11,000 fine is not accurate, at least for the first violation. Fast company got some responses from Richard Cleland, assistant director, division of advertising practices at the FTC, who says:

“That $11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. To the extent that I have seen and heard, people are not objecting to the disclosure requirements but to the fear of penalty if they inadvertently make a mistake. That’s the thing I don’t think people need to be concerned about. There’s no monetary penalty, in terms of the first violation, even in the worst case. Our approach is going to be educational, particularly with bloggers. We’re focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they’re saying is true?” [empahsis added]

Cleland addresses more of the concerns here.

Original Article: The Federal Trade Commission has released its revised guidelines concerning the use of endorsements and testimonials in advertising. The revisions include a focus on "bloggers" and social media users, requiring them to properly disclose when they have received payment in the form of either money or product from a company or organization and produce content regarding said company or organization. The word is that bloggers can be fined up to $11,000 per post for not disclosing.

Have you ever mentioned a free product you received online and not disclosed it? Comment here.

The reasoning behind the guidelines seems noble enough – provide transparency and keep consumers safe from hokey information. However, the concept of the government dictating how this happens does not sit well with a lot of people. The revisions (which can be found in this 81 page document [pdf], should you care to peruse them [they start around page 55]) have ruffled quite a few feathers and the conversation has become one about free speech.

Well-known author/editor/publisher Jeff Jarvis makes a really good point. He says the FTC assumes that the Internet is a medium. "It’s not. It’s a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don’t think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they’re making media. They’re connecting. They’re talking," he says. "So for the FTC to go after bloggers and social media – as they explicitly do – is the same as sending a government goon into Denny’s to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed."

It’s not hard to find echoes of Jarvis’s sentiment all over the web. Although, I don’t believe I’ve seen it as eloquently put as with the Denny’s analogy. Still, not everyone sees the FTC regulations as a bad thing. In fact, Google’s Matt Cutts stepped into the conversation with Jeff Jarvis, expressing a bit more enthusiasm for the guidelines.

"As a Google engineer who has seen the damage done by fake blogs, sock puppets, and endless scams on the internet, I’m happy to take the opposite position: I think the FTC guidelines will make the web more useful and more trustworthy for consumers," he says. "Consumers don’t want to be shilled and they don’t want payola; they want a web that they can trust. The FTC guidelines just say that material connections should be disclosed. From having dealt with these issues over several years, I believe that will be a good thing for the web."

Commenters essentially tell Matt the whole thing would smell a lot better if he were the one regulating it. The reasoning for this is that Matt is involved with the industry. He is not a government worker that has been one his whole life. He’s been in the field. He knows the score. The argument coming from most of the opposition is not about the fundamental principle of making content more trustworthy for consumers. At the root of it, it appears that people are much more concerned about a government body of regulators who aren’t necessarily involved with online content production telling them how it is, when there are many, many questions about what falls under the criteria.

A number of these questions are nicely placed in an "open letter to the FTC" from Ron Hogan at MediaBistro’s GalleyCat. Here are a few of them:

- If an unpaid blogger at the Huffington Post "endorses" a consumer product without meeting the FTC guidelines for disclosure of "material connections" to the makers of that consumer product, who’s liable: the blogger or the Huffington Post?

-  If a blogger prints out a series of blog posts and distributes those printed copies, is he now the publisher of a newspaper or magazine? If so, the Village Voice is distributed for free, so can a blogger/publisher distribute his newspaper or magazine for free, too?

-  What if a blogger confines herself to stating demonstrably proven facts about a book, its author, its contents, and the matter of its publication? Does the FTC consider that an endorsement? What if she confines herself to stating such facts and includes links to an ecommerce site? Has her writing somehow been transformed from a statement of fact to an endorsement? 

There are plenty more where that came from. The list goes on. You can probably think of a few yourself. It may be hard for the guidelines to be enforced. The FTC does acknowledge that its guidelines aren’t exactly the law themselves. The FTC says:

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.

It should also be noted that the rules presumably apply to publications beyond bloggers and social media users, but for some reason it appears that "bloggers" are the ones with whom the FTC had on its collective mind when drafting these guidelines. You have to wonder if they are able to come up with a definition for "blogging" (others have had trouble in the past. Even those directly involved in the online content industry). The rules are scheduled to take effect on December 1st.

What questions do you have about the FTC’s guidelines? Share them here.

Editorial content sharing deals like the one noted by Paid Content could be a more widely seen event. Jeff Jarvis called it "a model for other news organizations to take care of commodity news."

Business news forms the commodity in question here. Paid Content noted the IHT’s agreement with Bloomberg for business content expired, giving Reuters the opportunity to slip in and seal the deal.

"This is more than syndication: buying a piece of content. This is a form of outsourcing – you take care of that so I don’t have do (and so I can concentrate on my real value – hint: local)," Jarvis said on his blog.

That’s a truer statement than Jarvis may realize. Reuters has been a presence in outsourcing writing to places like India.

The outsourcing could apply to other areas. Jarvis cited several brands with strength in reporting on niches – ESPN in sports, People in entertainment – that could fill a publications content while reporters focus on local stories.

Reuters’ agreement with IHT may be a stepping stone toward deals with other publications like the New York Times. "Business by Reuters" launches on January 7th online and in print.

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The key quotes from Jeff:

"It is clear, through them, that at least at some levels, Dell has changed its culture and certainly its attitude toward bloggers. They now see value in reaching out. As they’ve said before, bloggers tend to state their problems clearly, which makes it easier (and, I assume, more efficient) to solve them. A problem solved is not only a customer likely to be saved, but also often leads to good PR and branding as the bloggers recount their happy endings."

and

"Welcome to the age of customer control. This isn’t just crowdsourcing. This is crowdmanaging. Companies still fear this. But, hell, if even Dell can lean back and let its customers begin to take charge, anyone can."

and

"[Here] is the genius of Lionel Menchaca [Dell blogger]. In a flash, he transformed the image of Dell in my eyes. From a company that wanted to look at but not touch people like me, that wanted customers to come deal in the company’s space on the company’s terms, here suddenly was a guy who spoke honestly and directly. He admitted the company’s problems. But he also answered back…Here, we all could see, was a reasonable man. He immediately earned the respect of me and many other bloggers; this, too, was a point of coalescence. Like Robert Scoble, he gave a borgish company a human voice. He gave us respect and got respect in return.

It works."

Indeed, it does work. As technology life cycles shorten, real connections — real relationships — between people are the long-term differentiators of a business.

(hat tip: johnnie moore)

Comments

Tag:

WOMMA took some time to blast PayPerPost after an article about one of their participating bloggers, Colleen Caldwell, made it to the Los Angeles Times. Her offense? Posting a disclosure policy generated by PayPerPost to disclose her acceptance of compensation for blogging about various topics.

Beard took a peek at the WOMMA statement, and at the LA Times article in question. He noted the participation of Jeff Jarvis and Jason Calacanis in the Times interview; their commentary subsequently made it into WOMMA’s piece.

There are some deeper issues in play, especially when it comes to disclosure. Beard found that Calacanis, and Jarvis to a lesser extent, have room to improve in that area. First, Jarvis:

Jeff is collecting email addresses every time you place a comment, so you would expect some kind of privacy statement, especially with the amount of tracking going on.

You would also expect some kind of physical mailing address, because in some ways his blog is performing WOMM for the various businesses in which he has involvement.

Beard’s issue is more with privacy at Jarvis’ BuzzMachine; Jarvis has a lengthy disclosure page, but it is not accessible from single blog posts.

Now for Calacanis’ site, where Beard finds much more to poke:

I can’t give you an example of Jason Calacanis’ disclosure policy, he hasn’t got one.

It is well known that he has financial connections with www.ThisNext.com which is present all over his website without disclosure.

Jason’s ThisNext connection is also important, because in many ways ThisNext is a competitor to PayPerPost, and online reviews sites are not immune to problems with shilling reviews.

When Jason attacks PayPerPost is it really just because of ethics and his concern?

Beard wraps up everything by going back to the WOMMA piece, and what he saw as a contradiction between their recent statement and point number 5 in their FAQ.

That section of the FAQ answers the question about why there aren’t specific rules about what people should say. But in their anti-PayPerPost commentary, they call for "strict guidelines" on disclosure.

It would be instructive if WOMMA could deconstruct the PayPerPost disclosure policy as Caldwell has posted on her site, and indicate what may be construed as deceptive, unfair, or unclear. Along with why WOMMA should be the ones qualified to do so.

Online Video Continues To Grow

Our publisher Rich Ord passed along his notes on Jeff Jarvis’ talk at VON. We’ve buffed them up for your perusal.

…or we should say a complete lack of service as he recounted in several “Dell Hell” posts

Jarvis is doing just fine, and he spoke at pulvermedia’s VON about online video coming along to explode TV.

“Trust is the King. It turns out that trying to own content and control distribution is really expensive,” he said. “If conversation is king then all of us content creators are partners not competitors.”

That means the big guys in media are not in control of that conversation anymore; the people are. The big old networks are in catch-up mode, and some of their actions look desperate.

The networks and the TV stations have been antagonizing each other, by posting video content online. Jarvis illustrated why the Internet is so important now that longtime partners like these would anger the other side.

“When Jon Stewart went on CNN Crossfire he had 150,000 viewers … but then he published his appearance on iFilm and as of this moment it has been viewed on the web over 2 million times,” he said. “The free network has power.”

Jarvis has six suggestions for web video, which we will list here:

1. We must get on advertising act together. We must do this in an open way and an appropriate way…and 30 seconds will not be appropriate.

2. Redefine network. It is the job of the network to find the good [stuff] for us … it is not about distribution anymore. We are no longer one size fits all. Prime time is my time. We will be networks. Our new TV needs its own remote control.

3. We need to get the old networks to distribute our content on TV. They can help bring advertising dollars. We should be convincing the networks to put their stories up on YouTube. If it is good we will distribute it for them.

(For our take on advertising and television, please read Google TV Ad Partner: Guess Who? – David)

4. Avoid the bubble. We just don’t want to be stupid.

5. Don’t let our videos become soulless. Realize that the golden age of TV wasn’t that great. We need to encourage the good stuff.
.
6. Think live. I want to see live TV on the net and mobile because it gives us the ability to communicate with each other live.

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David Utter is a staff writer for WebProNews covering technology and business.

"Oh, Agent Starling, do you think you can dissect me with this blunt little tool?"
-- Hannibal Lecter opines on the issues facing advertisers looking for metrics in the world of syndication, Silence of the Lambs

How has syndication impacted your business? What do you need to see from advertising products before you will implement them in your syndicated content? Tell us more at SyndicationPro.

The Syndicate Conference touched off this morning at New York’s Roosevelt Hotel for two days of discussion on RSS feeds, blogs and podcasting as a medium for advertising. WebProNews publisher Rich Ord and managing editor Mike McDonald listened in on the proceedings.

Conference chair Eric Norlin commented, “I’m not sure I know what syndication is anymore either. It started as blogs, but now there is a bunch of other stuff,” before introducing Jeff Jarvis for his opening remarks.

Jarvis wondered if RSS sends a tacit approval of syndication, to which Norlin noted that marketers might not know just what it is they want to measure with syndicated content from a metrics standpoint.

Money should find its way to syndication from advertisers, Jarvis thinks. He illustrated several points that those marketers should consider. For metrics, feeds can deliver information from cookies about the system reading the feed, list how often feeds are viewed, and tell how many users have opted in to receive those feeds.

Feeds can carry advertising, as companies like conference sponsor Yahoo have demonstrated. Feed publishers can enable a layer of sophistication with their advertising and tracking methods by wrapping feeds with the technology needed for that.

Jarvis also reiterated an opinion he’d made in AdAge recently, that there needed to be an open ad marketplace so advertisers who want to spend money on blogs could give it to blogs who really would like to have that money.

“Advertisers love us,” he said of blogs.

Part of what advertisers may not like is the unavoidable possibility of not being able to measure all of the syndication taking place.

“Isn’t there an element of blogs/syndication that is inherently immeasurable?” Jarvis asked. “If you have an idea and then I link to it/add to it and then subsequent bloggers link and further progress the idea…how do you measure that?”

Jarvis also noted the media versus syndication conflict taking place, as the longtime controllers of distribution, the media, tries to come to grips with the aggregation prowess of the blogosphere.

He cited the example of a CNN story featuring The Daily Show’s Jon Stewart, and how the story moved from being seen by a few thousand people to being posted as a torrent file seen by millions.

Tagging has been an even hotter lightning rod when it comes to feeds. Jarvis observed how a true tagging standard does not exist. Tags created by authors aren’t as indicative as tags generated by end users; also some people use Technorati tags, others use Del.icio.us.

Judging by Jarvis’ comments, perhaps the next great achievement for syndication will be the establishment of a uniform tagging system. Technorati tagging came under fire from a few attendees of the keynote, with one person in particular who was online and having problems with Technorati.

That was when “Dave of Technorati support” introduced himself to the person and proceeded to help him. “Dave” was David Sifry, founder of Technorati.com.

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