Narrow vs broad: blogging and the FTC

Sunday’s Virginian Pilot brought two opposing views on the FTC’s proposed regulation of blogs, which I mentioned briefly in this post. The views were provided by J.R. Hoeft of Bearing Drift and yours truly. Hoeft posted his (unedited) op-ed on his blog last week, while mine (as printed in the paper)  is below the fold.

Reading the two of them side by side today, I was struck by the narrow view of Hoeft, who seemed to limit his remarks to political blogs, who, from my reading of the FTC guidelines and public comments, are not the target, anyway.  His take – that the government, via the FTC,  is attempting to limit free speech – is a misunderstanding of the role of the FTC.

There is a whole world of blogging out there that does not include political blogs. Technorati’s Top 100 blogs counts only one political blog in the top 10, while six spaces are taken by technology blogs. What the FTC is trying to do is make it clear that when advertisers pay for endorsements, the relationship between the endorser and the advertiser as well as the compensation is disclosed. This blogger gets to the core of the argument:

There already are fair trade regulations on the books that dictate appropriate ways for businesses to engage in commerce – whether marketing, communications, disclosures, advertising, etc. These regulations already exist to protect the consumer. As with many industries, new media was a disruptive introduction and businesses are left trying to figure out how to compete in a new landscape.The medium changes, but the business does not.

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.

That Hoeft thinks that blogs that write product endorsements for money can be “readily identified” without disclosure is naive at best. Even IZEA, who matches bloggers with advertisers, requires disclosure of the arrangements by its bloggers.

Political blogging is different. Here in Virginia, we do have financial disclosure rules for candidates and campaigns. There is no way that a blog “funded by a candidate,” as Hoeft says, is not in violation of those rules if it does not disclose that fact. Bloggers being paid by a campaign are under no such rule to disclose that fact, but as a matter of course, should do so, as it goes to the credibility of the blogger. And as much as Hoeft would like to think so, the blogosphere has not been self-correcting. It’s kind of like rubber-necking drivers who gawk at a car wreck: many blogs exist in the Virginia political blogosphere just for the shock effect. And some of them are among the most visited sites in Virginia.

In any case, the FTC does not appear to be trying to regulate political blogging. Bloggers are free to mislead and mis-inform the public without fear of Big Brother watching.

IT’S ABOUT TIME WE HIT THE BRAKES ON UNSCRUPULOUS BLOGGERS

By VIVIAN J. PAIGE

THE BLOGOSPHERE is all atwitter about the pending oversight of the Federal Trade Commission. New guidelines are expected late this summer and with them will come a bit of taming of the wild, wild world of the Internet.

The FTC is charged with protecting consumers. It administers a wide variety of laws. A quick check of its Web site — http://www.ftc.gov — gives you an idea of how broad the commission’s authority is. It has won judgments against bogus billing companies, payment processors, foreclosure prevention specialists and corporate merger violators. It is the FTC that requires those disclosures you often see in the fine print of ads, such as “results not typical.”

It should come as no surprise, then, that the agency would want to make it clear that endorsements and testimonials in the new media are subject to the same rules as other advertisers.

The Internet has grown exponentially over the years. Reston-based comScore Inc. estimates that the total U.S. Internet audience in May was in excess of 193 million individual visitors. That’s a whole lot of folks to try to persuade, as the ad man says, to “buy my product.” The Internet has increasingly become the source of information on products and services. Most consumers are aware, if they wind up on a commercial Web site, that someone is probably getting paid to write about the product or service featured.

But what about the bloggers? Most consumers aren’t aware that many bloggers participate in various marketing arrangements to make money. Some simply place ads on their sites.

Technorati, a leader in tracking and indexing blogs, reported in 2008 that 54 percent of blogs contained some form of advertising. Other bloggers participate in pay-per-post arrangements, earning hundreds or thousands of dollars for each post. Still others write reviews for pay, either in cash or goods.

When I co-owned an online technology site, we often received software or other small items for free in exchange for a review. Generally speaking, we had to return the pricey items after reviewing them, but times they are a-changin’. Reports of free computers, trips and other items are no longer as rare as they once were.

Some bloggers disclose these compensation arrangements; others don’t. Although the rules already apply, for the most part it has been within the discretion of the blogger whether to disclose these arrangements. Some blogger groups, such as the Media Bloggers Association, of which I am a member, encourage, but do not require, its members to embrace transparency and to disclose anything “that might influence or appear to influence” the blogger’s independence and integrity. I take the standards of the MBA seriously. The proposed guidelines would make others do the same. Failure to do so would subject the blogger — and the advertiser — to penalties.

In its announcement, the FTC proposed three new examples to be included in the guidelines reflecting material connections between endorsers and advertisers as they relate to the new media. Comments on these three were specifically requested, and the public comments didn’t disappoint. Interestingly enough, not a single one of the 17 public comments came from bloggers. (The public comments are available at http://www.ftc.gov/os/comments/endorsementguides2/index.shtm)

Most of the comments came from trade organizations, who count advertisers among their members. Several said that regulating the new media was premature, with a couple of them saying such regulation would have a “chilling effect” as bloggers and other viral marketers would shy away from offering opinions that might subject them to claims of misleading the public.

I say hogwash. One of the main reasons bloggers blog is because they have something to say. Regulating blogs isn’t going to change that.

While the FTC believes that the industry should self-regulate, it is obvious that, for the most part, it has not. Bloggers who already adhere to transparency standards have nothing to fear from these proposed regulations. Those who don’t — consider yourself warned.

Vivian J. Paige, a certified public accountant, writes a blog at http://blog.vivianpaige.com. She lives in Norfolk.