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FTC’s “Double Standard” Blogger Rule May Not Affect Wine Industry As Severely

The Federal Trade Commission’s new guide on disclosure of potential conflicts of interest for bloggers has staked out a position on the increasingly steep slippery slope of journalistic ethics. However, it may not affect the wine industry as severely as others.

DOUBLE-STANDARD GUIDELINE HOLDS BOTH BLOGGERS AND COMPANIES LIABLE

In brief, the new guidelines say that if a company provides a freebie to a blogger, both the company and the blogger are liable for severe fines (potentially as much as $11,000) if proper disclosure is not made. Precisely what form the disclosure should take is still not clearly defined, but should include, at minimum, all financial links and agreements between the blogger and the company and products written about.

The guidelines do not hold traditional media outlets to the same standard.

Tom Wark has done a thorough job of exploring the double standard side of the issue in his post, “This Wine Blog is More Likely To Deceive You“.

WINE — BUT NOT ACCESSORIES, BOOKS ETC — MAY BE OKAY

An interview with Richard Cleland who is with the FTC’s Consumer Protection Bureau, has indicated that enforcement standards may vary with regard to whether or not the freebie is not perishable, and thus able to be re-sold by the blogger.

Cleland has drawn a distinction between durable products such as books and electronic devices and those which could not be resold. Reviewers invited to a screening of a movie, or a music concert on the other hand, would not be subject to as much scrutiny.

He said that books or other durable products should be returned when the blogger is finished with them. This, however, raises the issue of wine tasting samples which could be re-sold if unopened, but which certainly have no lasting value once consumed other than to water plants and drive the sale of aspirin if not enough spitting occurs.

Wine tasting at an industry-sponsored event attended by many tasters — bloggers included — would fit Cleland’s interpretation for non-enforcement.

Under Cleland’s interpretation, wine books, corkscrews  and other durable items would need disclosure under the FTC’s guidelines. Free meals, tickets to wine auctions and other events probably would not.

PRODUCT SALE LINKS COMPLICATE THE SITUATION

The situation is further complicated by complimentary blog post links to a site that sells the product being reviewed, if such a sale would result in financial benefits to the blogger — the so-called “affiliate program.”

As Wine Industry Insight pointed out on September 9, the California ABC has already declared verboten any sort of performance-based affiliate system for wine or other alcoholic beverages.

FACEBOOK, TWITTER ALSO SUBJECT TO FTC RULE

Cleland told tech site, CNET, that Twitter and social networks such as Facebook and Myspace are also subject to FTC regulation.

WHAT SORT OF DISCLOSURE IS NECESSARY?

“As a practical matter, we don’t have the resources to look at 500,000 blogs,” Cleland said. “We don’t even have the resources to monitor a thousand blogs. And if somebody reports violations then we might look at individual cases, but in the bigger picture, we think that we have a reason to believe that if bloggers understand the circumstances under which a disclosure should be made, that they’ll be able to make the disclosure. Right now we’re trying to focus on education.”

WHY NO REGULATION OF LEGACY MEDIA?

Cleland’s position on the exemption of legacy media — television, newspapers, magazines — seems to be based on where the compensation comes from.

“We are distinguishing between who receives the compensation and who does the review,” Cleland told book blogger Edward Champion. “In the case where the newspaper receives the book and it allows the reviewer to review it, it’s still the property of the newspaper. Most of the newspapers have very strict rules about that and on what happens to those products.”

However, as legacy media continue to struggle — especially those that rely on dead trees and the U.S. Snail — owners are pushing the editorial writers more and more toward the same covert conflicts of interest the FTC aims to address.

TOTAL DISCLOSURE ALWAYS THE BEST PATH

The quality of journalism — online or legacy — is directly linked to its credibility. The only way to maintain credibility is to avoid a conflict of interest, AND to avoid the appearance of a conflict of interest.

Ultimately, unethical practicioners of journalism devalue their product — and their ability to sell advertising and subscriptions.

The total avoidance is best; disclosure is needed when avoidance is impractical — such as the financial impossibility of every wine writer to buy every bottle tasted or reviewed.

HONEST BLOGGERS COULD BE BETTER OFF EMBRACING THE FTC RULE

Blatantly unethical bloggers have certainly given the blogosphere a bad rep. And the honest have been smeared with the same brush.

By embracing the FTC disclosure requirements, honest bloggers can dramatically increase their credibility and the value of their editorial products.

FTC SHOULD LOOK AT LEGACY MEDIA

There are plenty of ethically bent journalists in legacy media. Some take payoffs. Some try to be a journalist while taking consulting fees from those they cover.

Some just plain get too friendly and cozy with the subjects of their coverage.

The FTC can’t do anything about the reporter who has drinks with the politician she covers, or the publications who feel bound to give good coverage in order to attract and maintain advertisers.

However, it can enforce its regulations against publications who write “articles” about local businesses in exchange for a fee. I’ve seen that in both of Sonoma’s newspapers who do not mark such paid content as “paid advertising.”

THIS IS AN OLD, OLD PROBLEM

As a former journalism prof at Cornell and UCLA, the issue of editorial conflicts of interest on the web has concerned me for a very long time.

Back in 1996, I launched a site called webethics.com. No one was interested and I eventually let the domain name lapse.

However, this morning I dug out the home page for that site. (the links have been deactivated since they don’t lead anywhere, anymore.

My colleague J.D. Lasica and I shaped this into a grant proposal for the Pew Charitable Trust. They paid for our trip to go meet them, listened politely and then said they didn’t anticipate this would be an issue for the Web.

That was when I stopped paying for the domain name.

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Comments

3 Responses to FTC’s “Double Standard” Blogger Rule May Not Affect Wine Industry As Severely

  1. This was very informative, but it begs the question of First Amendment right to Free Speech. It seems another invasion by ‘Big Brother”, in this case the FTC to inhibit the transfer on information or ‘speech’ from one party to another. I’m also curious as to how this would be enforced? I mean really the Blog Police?

    http://www.law.cornell.edu/constitution/constitution.billofrights.html#amendmenti

  2. lperdue

    Yes, it would never stand up to a law suit.

  3. Unfortunately, it would probably be enforceable, as federal regulatory bodies imposing oversight on industries despite no Constitutional authority to do so are common.

    Such regulations do violate the 1st Amendment, but the courts have allowed many “exceptions” despite their illogic: They assert the authority to regulate “commercial” speech and licensed broadcast, and they exercise that authority in the teeth of the 1st Amendment’s flat statement to the contrary, and the lack of authority elsewhere in the Constitution.

    Notice that the FTC has been waving away all the hubbub with the assurance that they won’t *actually* be enforcing this new ruling against bloggers – but against the businesses providing the goods. The phrase “case-by-case basis” comes up on occasion; “case-by-case” is another way of saying “arbitrarily,” which creates uncertainty in the market, which is useful to the regulators when you never quite know if you’re crossing the line.

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