New rules to end 'blogger payola'

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

Some bloggers are keen to make money from their efforts

US regulators will for the first time crack down on bloggers who fail to disclose fees or freebies they get from companies for reviewing products.

The Federal Trade Commission, FTC, decided to update its nearly 30 year old guidelines to clarify the law for the vast world of blogging.

Offenders could face eventual fines of up to $11,000 (£6,900) per violation.

The updated policy on how advertisers can use endorsements will also apply to celebrities and research firms.

Until now, bloggers had not been covered by the guidelines - something which had concerned consumer groups. They had argued for a long time that the links between some bloggers and companies were not always totally transparent and clear for readers.

"Consumers are increasingly dependent on the internet for purchase information," said Jack Gillis of the Consumer Federation of America.

"There's tremendous opportunity to steer consumers in the wrong direction."

There is nothing in the new rules about how disclosures must be made.

"That's left up to the endorser," said Richard Cleland, assistant director of the FTC's division of advertising practices.

"It can be a banner, part of the review. The only requirement is that it be clear and conspicuous."

'Material connections'

The FTC said its commissioners voted 4-0 to approve the final web guidelines, which will take effect from 1 December. The commission had unveiled a draft of the proposed policy last year.

The blog by advertisers for bloggers who advertise

In a statement the FTC said "the revised guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement.

"Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."

The guides are not binding by law, but rather interpretations of law that hope to help advertisers comply with regulations.

The new policy will also apply to Twitter, Facebook, Yelp and other forms of new media advertising.

"The new rules on bloggers are the most far-reaching attempt to stamp some guidelines of conduct on the blogosphere, which in general operates according to informal codes and the notion that "inauthentic" bloggers - including those not disclosing commercial relationships - will suffer in the web's court of public opinion," wrote Michael Learmonth of Advertising Age.

'Trust'

Reaction from the blogosphere to the FTC's new guidelines over what has been dubbed blogger payola has been mixed.

"The concept of disclosure is not new to BlogHer. The trust of readers is everything," said Elisa Camahort Page, a co-founder of BlogHer the main news, entertainment and information network for women online reaching more than 15 million each month.

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"We have never been in favour of a universal code of conduct but we think that what the FTC has introduced is simple and achievable for anyone who wants a professional relationship with the market and to retain the trust of the reader," Ms Camahort Page told BBC News.

Wayne Sutton, who is a social media strategist and hosts a social media podcast at TalkSocialNews.com agreed.

"We're in a time when companies will try (to) leverage individuals who are community leaders or have a large audience for brand awareness...but if you want to keep them (readers/followers), being honest or "transparent" is the best way to do so."

Jeff Jarvis is a professor of journalism at New York's City University and long time blogger and sees things differently. In a blog post he attacked what he called "the FTC's misguided, dangerous ad/blog endorsement rules."

"I think that openness is the best fix for questions of trust and advise companies and politicians and certainly governments to become transparent by default as enlightened self-interest.

"But mandating this for anyone who dares speak online? Foolish," wrote Professor Jarvis.

On Twitter the issue became a trending topic.

"New FTC proposed rules on product endorsements are big-brotherish in extreme, unworkable and downright dangerous," tweeted Dan Gillmor, director of the Knight Centre for Digital Media Entrepreneurship.