The Federal Trade Commission intends to make bloggers who endorse a product disclose freebies they receive from the product's seller. Seriously.
The existing regulations require those endorsing a product for an advertisement to disclose a connection with the product's seller "that might materially affect the weight or credibility of the endorsement." Being paid to endorse a product, the FTC believes, is a fact that "might materially affect" the endorsement's weight or credibility -- unless the endorser is a celebrity, whom everyone assumes is being compensated.
But since "might materially affect the weight or credibility" is a mushy standard that could mean anything, the FTC has to use examples to show what it means. And it intends to add paid blogger endorsements to its little menagerie of examples (FTC report pp. 84-85 (pdf)):
Example 7. A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. The readers of his blog are unlikely to expect that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact would likely materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.
I don't know who tipped off the FTC attorneys to the blogosphere's existence, or what impelled him to do it, but he should be ashamed of himself. Who was raising the hue and cry over blogger endorsements? Who thought it was a good idea to sic an agency obsessed with balding treatments and miracle vitamins on the internet?
Anyway, the damage is done. The FTC attorneys have concluded that readers of these quirky and newfangled "weblogs" are entitled to the same protection from undisclosed endorsements that it guarantees TV viewers exposed to weight-loss and vitamin-supplement ads.
This is a silly regulation for many reasons. First, the FTC can't effectively enforce its rules now for MSM advertisers. There are just too many outlets (TV, newspapers, magazines, radio) and too many advertisers creatively gaming the rules. The FTC can't even control specific industries. It has been battling weight-loss and vitamin-supplement advertisers for decades. Everyone operates at the laws' fringes; the FTC makes a rule, the weight-loss people figure out a loophole, and so on. And so late night TV is filled with ads for all kinds of flaky weight-loss treatments.
Because the FTC struggles to regulate a few thousand MSM outlets, it has no chance of enforcing its rules among millions of blogs. No chance at all. Bloggers will be able to do what they want, confident in the anonymity provided by numbers.
And, second, even if the FTC could be a credible enforcer, why should it be? I seriously doubt it will improve the reliability of blog product endorsements. That ought to be the goal -- to improve the quality of the information floating around out there. An undisclosed "material connection" perhaps sometimes reduces the value of the endorsement to readers. But lots of other things impair the value of endorsements. The blogger might be an idiot, for example. Or the blogger, while not an idiot, has bizarre, undisclosed fetishes which might make his experience just a mite atypical. The blogger might not have done his homework on the product because he was lazy. Or he endorsed the product because all the cool people were doing so. In each case, the reader is likeliest to get the best information from the blogger who got the freebie.
Third, the few, good bloggers who do provide useful information don't need regulations like this. These are widely-read bloggers who have been around long enough to build up credibility with their readers. Few would want to risk that credibility by failing to disclose something their readers would expect them to disclose. And their readers might expect them to disclose a free book, meal or video game system. Or they might simply assume the freebies and shrug. For example, I assume Matt Yglesias and Tyler Cowen get free review copies of the books they review. I don't believe that either will take the edge off a bad review merely because they got the book for free.
Fourth, Google can fix any harm posed by a "tainted" endorsement in 200 milliseconds. When deciding which video game system to buy, I can pull up my local bloggers' review, but I can pull up a dozen others in just seconds, as well as discussion boards and professional product reviews. There have been several widely-followed econ bloggers talking up the Kindle. I suspect many of them got their Kindle gratis. I don't know. But when deciding whether to buy my kindle, I considered the possibility that their endorsements perhaps had an artificial glow. But I also looked at the product review at Amazon (the 1* and 3* reviews are usually the most informative). And I did other searches for blogs and discussion boards devoted to the Kindle. Acquiring information to counterbalance one compensated endorsement is virtually costless.
These are four reasons why the regulations will either be impotent or pointless. But here's the FTC's fundamental mistake: it doesn't understand that readers' expectations depend on the background rules. Under the current system, I don't know whether a given blogger is being compensated for an endorsement unless she discloses a connection. If she doesn't disclose a connection, then I have to treat her endorsement with a bit of skepticism (although thorough, thoughtful reviews are good at dispelling this skepticism), and will continue to do so until I've developed trust in her blogging. In an unregulated blogosphere, my default stance is skepticism.
Under the FTC regulation, if a blogger has an ironclad obligation to disclose freebies, then I'll expect him to disclose that he got a free copy of the product, and discount his endorsement appropriately. If he does not disclose a connection, I'll assume that he's not being compensated. Of course, he could be cheating, and we know the FTC will not have the resources to police this kind of misrepresentation. In this case, the regulation's only consequence will have been too disarm me, to make me a little more gullible.
In a world without a credible threat of enforcement, we're better off in the first scenario than the second. The FTC's existing rules for television have arguably made consumers more gullible. They vaguely understand that the government requires commercials to be accurate. But "accurate" is judged on a sliding scale; commercials make a lot of claims that are unlikely to be true but which "must" be true because the government is letting them appear on TV. In the worst case, the FTC regulations increase the risk of deceptive and misleading blogposts by giving readers false assurances that they are not being misled.
One might argue that my concerns are overblown and that these regulations will be harmless at worst. But this is wrong. They will cause blog clutter if nothing else. Tyler's book reviews will come (I presume) with an asterisk and fine print at the bottom. Food critics will have to run disclaimers at the bottom disclosing which meals were free and which weren't. Clutter is irritating.
And it will be particularly irritating to those of us who won't need to clutter our blogs because no one is sending us free stuff to endorse.
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