IAB CEO: October 2009 Archives

blog-header-rr.gifAn Open letter from Randall Rothenberg to FTC Chairman Jon Leibowitz, calls on FTC to rescind Blogger rules.


Jon Leibowitz, Chairman

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Dear Mr. Chairman:

So there I was last Saturday, about to send out on my Twitter feed — which automatically updates my Facebook page and links to my personal blog — a photograph of this wonderful baked halibut dish I’d just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I’d pulled from my favorite cookbook, Delicioso! The Regional Cooking of Spain by Penelope Casas. But before I could press the “post” button, I stopped and canceled the whole thing.

I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn’t want you guys to haul me into court and fine me for violating the rules you’ve just promulgated to muzzle social media.

I know what you’re thinking – I’m just confused. But so are the 22 million bloggers currently collecting audiences in the United States and the nearly 140 million Americans registering news and opinions through social media channels like Facebook, MySpace, Friendster, and Twitter. The source of the confusion: The new set of Guides Concerning the Use of Endorsements and Testimonials in Advertising, issued on October 5 by the Federal Trade Commission that you chair.

As you’re undoubtedly aware, the revised Guides, an update of principles the Commission originally established in 1980, have generated a firestorm of controversy within the ad-supported interactive media industry. Of particular concern are footnotes, asides, and elaborations in the Guides – as well as reported commentary by Commission staff – which indicate that opinions published by individuals have less protection than speech promulgated by large corporations; that “traditional” distribution channels deserve more protection than innovative online channels; and, finally, that the Internet, the cheapest, freest, most accessible communications medium ever invented, should have less freedom than other media.

Different Disclosure Requirements

It’s the Commission’s own words that have sewn this controversy and confusion. On pages 47 and 48 of the 81-page Guides, your staff

…acknowledges that bloggers may be subject to different disclosure requirements than reviewers in traditional media. In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides…

In contrast, if a blogger’s statement on his personal blog or elsewhere (e.g., the site of an online retailer of electronic products) qualifies as an “endorsement” – i.e., as a sponsored message – due to the blogger’s relationship with the advertiser or the value of the merchandise he has received and has been asked to review by that advertiser, knowing these facts might affect the weight consumers give to his review.

With all due respect, Mr. Chairman: Huh? Does the FTC really intend to probe America’s opinion-mongering apparatus this closely? Do you have a team of Freuds and Jungs able to examine “the weight” consumers give such opinion – and the way they weigh that weight?

Naturally, this expedition from Oceania – that’s the place Big Brother ruled – should be worrisome to all Americans, and to all viewers, readers, listeners, users, and providers of any communications medium. But for the 400 members of the Interactive Advertising Bureau, most of which are small and medium-sized enterprises struggling to build their businesses in the face of the worst decline in marketing spending since the 1930’s, the implication that online social media represent a separate class of communications channels with less Constitutional protection than corporate-owned newspapers, radio stations, or cable television networks is of particularly grave concern.

They – and we — are not arguing that bloggers and social media be treated differently than incumbent media. After all, most newspapers, magazines, radio stations and television networks, in recognition that Americans are embracing new forms of social communications, have established their own blogs, boards, Facebook pages, Twitter feeds, and the like. Rather, we’re saying the new conversational media should be accorded the same rights and freedoms as other communications channels.

Stop Deceptive Advertising

All of us would agree that false and deceptive advertising should be stopped, and penalized when it slips through and is caught. We agree that paid testimonials and endorsements should be labeled. But in taking business ethics and attempting to give it the force of law, the Commission is stretching the definition of remuneration to ludicrous lengths. More frightening – certainly to the 22,000 womens-issue bloggers” on BlogHer, the 218 sports-fan facilitators on SB Nation, and the 302 people Tweeting to me daily – is that the FTC’s new Guides open the door to extremely selective pursuit and prosecution of those least able to defend themselves against government’s hammer: the solo entrepreneurs and opinionated individuals who are most vital to the functioning of our democracy and economy.

That fear, I fear, is supported by the Commission’s own words. For example, in an interview with the blog edrants.com, FTC Assistant Director of Advertising Practices Richard Cleland took decades of common practice in offline media — specifically the acceptance by reviewers of free books from publishers — and said that bloggers engaging in the same activities could be subject to prosecution. “The primary situation is where there’s a link to the sponsoring seller and the blogger,” said Mr. Cleland. The repeated supply of free books could constitute “compensation,” thus triggering an FTC review and, possibly, sanctions.

“You can return it,” Mr. Cleland said, when asked how a social mediator could avoid this fate. “You review it and return it. I’m not sure that type of situation would be compensation.” Otherwise, “if a blogger received enough books, he could open up a used bookstore.”

The ignorance of established offline media practices is more than mildly surprising. Take a walk through New York’s mecca of used books, The Strand, or the Portland emporium Powell’s, and you’ll find bin upon bin of “reviewers’ copies,” direct contravention of Mr. Cleland’s declaration that “most of the newspapers have very strict rules about that and on what happens to those products.” (My own shelf of review copies from my days as a journalist attest to how wrong he is.)

Shackle Online Media

But of greater concern is that the Commission is translating this ignorance into rules that would specifically shackle online media while exempting our offline cousins and competitors from equivalent constraint. Publish? You might perish: “Consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.” Have a lot of Facebook friends? Better watch it, you dot-commie: “If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be ‘endorsements.’”

Indeed, to copious industry protests that provision of free samples, tickets, and services to independent reviewers has been a staple of media since media began and shouldn’t be regulated more strictly online than off, the Commission simply disagreed and said it will “consider each use of these new media on a case-by-case basis for purposes of law enforcement.” So if Niero Gonzales fails to flash “freebie” across each review of a first-person shooter posted on his gamer site Destructoid.com, will he be dragged down to Pennsylvania Avenue for a civil investigation? If I blog on randallrothenberg.com about the dozens of free management books I receive each year from publishers, will I, John Wiley & Sons, or Harper Business be subject to a penalty? Again with all due respect, Mr. Chairman, the Commission’s Guides really provides no guidance at all.

You must know that, because in the days following the release of the revised Guides, the FTC has been furiously backtracking about their implications, in an apparent attempt to soothe the blogosphere. “We are not planning on investigating individual bloggers,” Mary Engle, the Commission’s Associate Director for Advertising Practices, told reporters this week. “We will be focusing any enforcements on advertisers, not on individual endorsers.”

But the Commission is being disingenuous. “The recent creation of consumer-generated media means that in many instances, endorsements are now disseminated by the endorser, rather than by the sponsoring advertiser,” the Guides state. “In these contexts, the Commission believes that the endorser is the party primarily responsible for disclosing material connections with the advertiser.

Individuals More Liable

In other words, the Guides DO allow you to pursue bloggers. They DO hold individuals more liable than larger corporations. They DO explicitly say online social media have less protection than offline corporate media. They DO obstruct online companies’ opportunities to drive cultural conversation more than offline companies’. They DO threaten with prosecution book publishers, movie producers, and other companies that supply products to individual social media conversationalists.

This confusion easily could have been avoided. The IAB and other industry organizations clearly identified the risks to free expression and provided the FTC significant, formal First Amendment guidance when you first mooted the new guidelines earlier this year. We offered to bring in bloggers, social media executives and others from among our membership and work with you to develop practical guidelines and self-regulatory mechanisms that would protect consumers from real harm, while assuring that independent opinion in digital media isn’t stifled.

But Commission staff did not follow up with us on our offer, held no public hearings on the proposed Guides, and ultimately dismissed our concerns. Instead, they took the perverse - and Constitutionally dubious - step of saying that individuals writing in social media bear greater liability than do those writing for offline, one-way media.


Mr. Chairman, these are the types of vital regulatory issues that, if decided without due care and reasoned judgment, will impair the continued growth of news and content in the online space. I urge the Commission to retract the current set of Guides and to commence a fair and open process in order to develop a roadmap by which responsible online actors can engage with consumers and continue to provide their invaluable content and services.

Regards,

Randall Rothenberg

President and Chief Executive Officer

Interactive Advertising Bureau