Much has been written this past week about the Federal Trade Commission's "Guides Concerning the Use of Endorsements and Testimonials in Advertising" which goes into effect December 1st, 2009. These guidelines effect all persons providing commentary (reviews) on products for which they have received any form of material compensation in exchange for their commentary. The FTC seems to be giving a pass to traditional media outlets such as newspaper, television, radio and magazine news outlets and concentrates on "real" individuals who give testimonials in exchange for money or products. Going forward these individuals have to disclose when they are receiving material compensation or face fines for not doing so.Personally I think people should have been doing this all along and some have. Better bloggers will not risk ruining their credibility by endorsing a product which is substandard. Most consumers are smarter than the FTC seems to think. Consumers who are naive enough to grant credibility to a sponsored review on a blog or an infomercial are as likely to believe the same sort of fluff from a "valid" news organization or a magazine which has to print "advertisement" over a rave review for the next big thing.
Since they don't appear to be doing much with these guidelines to protect consumers from themselves, what is the FTC really doing? Are they now in the business of regulating what qualifies as news? Several articles I've read have expressed this concern and I think it is valid. It deserves close scrutiny to examine how that all plays out. When Government gets involved in judging what is legitimate news and insinuating citizen journalism is illegitimate they are walking dangerously close to censorship similar to the Chinese model. I'm not sure that is what they are attempting to do nor do I think, if this were the FTCs motive, they could get away with it long term. There are too many individuals and lawyers to challenge them.
What I have seen curiously absent is any mention of material compensation being monitored as income. At least I find it curious and I am not much of a conspiracy theorist. The United States is in the midst of an economic recession and the United States budget is running a previously incomprehensible deficit. Anyone would be foolish to think the United States Federal Government doesn't need as many tax dollars as it can get its hands on. You're likely thinking bloggers who collect Adsense revenue and the occasional freebie in exchange for a review are making peanuts for their efforts and in many cases you may be right but there is no doubt some freelancers are making a living from web content.
Freelancers are self employed and it is generally easier for the self employed to juggle their books to appear as though they are making less income than they actually are. I can attest to this since part of my profession is to indemnify people for loss of income. The cost of these policies are partially based on the amount of income a person makes which is determined by how much the individual claims on their income taxes. When it comes time to collect on these indemnity policies it is not at all unusual for the policy holder to miraculously present alternate proof their actual income is greater than previously stated.
As the public turns away from traditional media in favour of the internet and advertisers turn from conventional print advertising to viral and guerrilla internet marketing techniques there are increasingly more opportunities for individual freelancers to profit from new media. If PR firms are seeing this, I am seeing this, and freelancers are seeing this wouldn't it be naive to think the United States Federal Government isn't? Rather than wondering whether the FTC is crawling into bed with the FCC why isn't anyone wondering whether they are crawling into bed with the IRS?
