Blog regulation at the FTC

Maybe we all mistook which alphabet agency would come after blogs first.  Originally, blogs fought against regulation from the Federal Election Commission, which hinted darkly at categorizing blogs as campaign speech and enforcing McCain-Feingold restrictions on bloggers.  Only a concerted and bipartisan effort at the time put an end to that foolishness.

Unfortunately, the effort to regulate blogs in the Obama administration will come from the Federal Trade Commission, as the FTC announced over the weekend:

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.

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.

I participate in the Amazon Affiliate program, which gives me a small percentage of sales realized through my links to books, movies, and other products.  I disclose this on my show posts but not on every post I write about books or movies, because I assume that readers understand that a link back to Amazon when discussing such products isn’t just a selfless offer of help to Jeff Bezos.  I declare this as income at the end of the year — in fact, I get a 1099 from Amazon for that very purpose.

No one has ever approached me to write a blogpost for “thousands of dollars”, not at 200 words or 20,000 words, to sell a product or not.  If there are bloggers making that kind of money for 200 words, well, God bless you.  I don’t know who’d be foolish enough to make that kind of offer.  Maybe it’s from the new Government Motors marketing department, because I’m not sure the blog exists that can generate the sales necessary to make that a cost-effective strategy.

The FTC apparently sees this as the payola scandal of the 21st century, but that’s really ridiculous for a couple of reasons.  Payola deals with licensed broadcasters using public airwaves, a limited resource, to engage in personal corruption that harms others, namely the artists who don’t bribe show hosts to play their records.  In fact, the broadcasters themselves hate payola, because hosts also used to promote products without compensating the station itself, as well as choose records on the basis of bribery.  As a part of our agreement with AM 1280 The Patriot, the NARN had to sign anti-payola agreements.  They’re serious about keeping it out of the studio, and for good reasons.

More to the point, though, an Amazon affiliate program doesn’t make you rich, or anywhere close to it.  It gives bloggers some pin money at best.  The FTC, though, apparently has this program specifically in mind:

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 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.

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.

This is the equivalent of using a bazooka to kill a fly.  If the trade and consumer issues in the US are resolved to the point where the FTC’s biggest problem is bloggers recommending books and DVDs to their readers, they’ve just made the argument for their dissolution.

Update: James Joyner agrees.

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