UPDATED 16:06 EDT / JUNE 23 2009

Inside the Beltway: Why the FTC is Absolutely, 100 Percent Right on ‘Sponsored Blogging’ [Dissenting Opinion]

[Editor’s Note: In the US judiciary, the term ‘dissenting opinion’ refers to legal cases where an opinion of one or more judges expressing disagreement with the majority opinion of the court. It’s somewhat appropriate then that our DC Beltway contributor Andrew Feinberg has a vastly differing opinion from the rest of us at SiliconANGLE. -mrh]

image WASHINGTON, June 22, 2009 – This topic has been addressed on this site and across the blogosphere (that sound you hear is me groaning after having used that word in a sentence). It’s true that online punditocracy has been more than willing to attack the government for "regulating the internet" — or corporations who "bribe" well-meaning, "innocent" bloggers into a seedy underbelly we once knew as Pay Per Post.

But we should be celebrating.

Media is changing. Independent authors are able to compete with some of the most established brands out there by creating content, reporting news, and entertaining consumers with unique, innovative voices.

Corporations, be they start-ups or Fortune 100 brands, have been able to notice this change and take advantage of it by giving those lone voices the same opportunities that someone writing on the same topic at a major newspaper would have — the chance to review new products and offer readers their impressions.

But "Old Media," for all its faults (and there are many, I admit), does have some standards and practices. As a telecommunications reporter by trade, I have always been forbidden from owning stock in the companies that I cover. The rules of the House and Senate press galleries prevent me from using any information I might obtain in my work for personal financial gain (and the SEC calls it insider trading). Major media companies have codes of ethics. "Old Media" has rules.

And the rules have been adapted. Kara Swisher, who writes for AllThingsD (a Dow image Jones property) has one of the best, most complete disclosure policies out there — which goes above and beyond Dow Jones’ own policies. Just go find any article Kara has written that even mentions the word "Google." New media star, old media ethics.

Rob Pegararo, who has reviewed technology products for The Washington Post (my hometown paper) for as long as I can remember (as has Kara’s colleague Walt Mossberg) gets to play with things for free. But Rob gives them back (as does Walt, I am certain).  There are rules to the game. Even restaurant reviewers pay for their own means (well, they expense them eventually — but you get the idea).

But "New Media"  has no such rules, nor any code of ethics other than the fear of being "called out" by the crowd. And if you’re big enough, that may not even matter.

For example, TechCrunch’s "About" page has no kind of disclosure or code of ethics that comes close to the one at Dow Jones. It’s generally known that founder Michael Arrington has invested in some companies TechCrunch reviews. And while they do make note of it somewhere in the review, the irony is that at The Washington Post — which syndicates selected TechCrunch stories — this would be strictly verboten.

This isn’t limited to Arrington. TechCrunch just hired wunderkind teen blogger Daniel Brusilovsky part time. Mr. Brusilovsky, who I have never met but am sure is a smart young man, made a name for himself (among other things) by filming "unboxing" videos and reviewing gadgets — that he gets for free. Does this influence him? I hope not. But you never know, because there are no rules. Influence is increasingly defined by readership. But readership doesn’t guarantee integrity.

And even when someone influential may simply really enjoy a product, the absence of standards, practices, and enforcement leads to innuendo, mistrust, and false accusations. Take Robert Scoble, for instance. Robert is a vorcaious consumer of the FriendFeed service. Trust me. I’ve seen him spend hours doing image nothing but playing with FriendFeed. On his iPhone and a laptop. At the same time.

But Robert is regularly accused of having some sort of stake in FriendFeed’s success because a) he’s popular and b) he talks about it at every opportunity. Do I believe he’s being bought off? No. I know Robert. I guided him around Washington just about a year ago, and know him to be ethical to a fault. But because there’s no standard to which we know he’s adhering, there are whispers. In the absence of sunlight, there is doubt. In the absence of rules, there is disorder. The waters are muddy.

And while we complain about how government doesn’t adapt to technology, the government is adapting to technology!

The Federal Trade Commission wants to keep an eye out for unscrupulous behavior by corporations and media. This is their job. They could leave well enough alone for fear of being accused of meddling with the internet, but they recognize that as technology changes, the rules that govern the relationship between marketers and consumers must be made to fit those changes.

This is not always easy. The Federal Communications Commission has had a rulemaking open on embedded advertising (product placement) in children’s programming for some time now. It is well know that it’s unlawful to market directly to children during certain times, and on certain programs. But FCC efforts to adapt the rules have been stymied by a cumbersome process and a lack of authority (the FCC may only regulate content on broadcast television).

On the other hand, the Federal Trade Commission has much broader authority. And their job is to keep things fair.

We trust people like Walt Mossberg to give unbiased opinions. That we don’t give the same weight to Robert Scoble’s words because of innuendo and rumor — and we don’t rightfully criticize Michael Arrington’s for his lack of transparency (if not for holding his site out as an authority on par with newspapers while failing to adhere to the standards that let us trust newspapers) — is exactly why the FTC should step in and remind everyone: There are rules to this game.


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