FTC’s Blogger Disclosure and Ethics Rules Are Terrible Idea

Hi, I'm from the government and I'm here to regulate the blogosphere

Bloggers who test and review products, get freebies from companies, or make money from clients have been warned: the government is watching you.

In a move that would mark a major step into regulating online speech, the Federal Trade Commission (FTC) is planning to issue guidelines for individuals who write, review or comment about commercial products and services on their own blogs or in the comments sections of websites.

The FTC rules would require bloggers and commenters to back up any claims they make and disclose whether they received any pay or benefits from the companies they cover. Some of the things bloggers might have to disclose to the feds include any gifts or direct payments, companies who buy advertising on the blog or site, and commissions on “clickthroughs” they receive from website ads. Failure to disclose such arrangements could mean substantial fines and potentially staggering legal costs.

The new guidelines, which are expected to be voted on later this summer or fall, are spurred by anecdotal reports that some bloggers have accepted perks such as free laptops, trips to Europe, gift cards or even thousands of dollars in exchange for a 200-word blog post.

“Online, if you think that somebody is providing you with independent advice and … they have an economic motive for what they’re saying, that’s information a consumer should know,” Rich Cleland, assistant director in the FTC’s division of advertising practices, told the Associated Press.

The FTC regulates what advertisers can claim and how they say it. In the proposed blogging guidelines, the government is poised to apply a sledgehammer to a non-problem. The guidelines will do more harm than good, constraining vigorous online discussion and endangering developing business models that could support greater expansion of the Internet.

In looking at the rules, constitutional questions immediately come to the forefront. Can the government mandate editorial policies for online writers, particularly if the consequence is a choice between self-censorship or a government inquiry? Can the FTC fairly and reliably act as after-the-fact arbiter, determining what constitutes editorial content and what constitutes advertising? These are rules that would be difficult to impose on tradition print publications. In broadcasting, attempts to regulate product placement (that strategically placed can of Coca-Cola) on TV shows have proved troublesome. And the regulating the Internet will be a lot more difficult than that.

In a story about the looming FTC plan, the Associated Press featured Rebecca Empey, a New Hartford, N.Y., housewife who makes $800 a month from five blogs. Empey has received a bird feeder, toys, books and other free goods from advertisers-gifts she disclosed to her readers. Now she worries that even a casual mention of an all-natural cold remedy she bought herself could trigger an FTC probe. “Will I be sued because I didn’t hire a scientist to do research?” Empey asked.

The ethical thing for bloggers is to disclose what compensation or sponsorship agreements they have-and many already do. Even if they don’t, it’s not the government’s job to make ethical decisions for bloggers. Remember that blogs, like their print counterparts, succeed or fail based on the quality of their content. A blogger who gets the reputation as a shill will see a falloff in credibility and visits. An honest writer, on the contrary, will draw more readers and offer advertisers a better value proposition. The audience can determine the trustworthiness of sources without the government’s help.

Ostensibly, the rationale behind the FTC’s advertising regulation is consumer protection. The idea is that big corporations can control the marketing message, which traditionally has been tailored toward a mass audience and one-way (think TV and print). Blogs subvert this model, however.

When advertisers approach the Internet, they look to leverage characteristics intrinsic to connectivity. The medium is interactive, and feedback can be immediate. Commercial messages can be viral. At the same time, successful promulgation of a message is not guaranteed, as the very viral nature of the web also reduces advertisers’ power to control the medium. Blogs are vital to getting the message out.

Bloggers, commenters, and reviewers, the vast majority of which are unpaid, can quickly endorse or refute marketing claims. In some cases, shills are easily identified. Movie studio publicity departments regularly try to mimic “fanboy” postings, complete with misspellings and grammatical errors, in order to slip favorable movie reviews onto Harry Knowles’ influential Ain’t It Cool News site. But legions of legitimate commenters will immediately point out that the comments are clearly planted by those attached to the film. The FTC needs to give readers some credit for being able to separate the hype from the real.

Finally, given the massive size of the blogosphere, the FTC cannot fairly regulate it. As of April 2008, there were 112 million blogs worldwide, with 175,000 more being added every day, according to Technorati, a blog search engine. There is simply no way to police every blog. On top of that, the FTC also plans to police the countless comments readers post on blogs about products and services.

Unless the FTC is planning on launching the biggest federal bureaucracy ever (and I’m not putting it past them), the government’s enforcement of these proposed blogger rules will be completely arbitrary. The likely victims of the policy will be bloggers who are lucky enough to build an audience, gain some influence with readers and thus appeal to advertisers. In a nutshell, the FTC will punish bloggers for their success.

The Internet is thriving without regulation and the last thing it needs are a bunch of federal nannies policing blog posts and the comments sections on websites.

Steven Titch is a policy analyst at Reason Foundation.