Why There HAS to Be a Liquor Fairy—UPDATED

The-Liquor-Fairy-ThumbPlease note, I’m not talking about why I decided to have the Liquor Fairy, I’m saying why I and bloggers like me, have to have such a device.
The FTC has decided to come out and issue regulations regarding commercial speech in the modern age. Among other new rules, the American government has decided that they need to require disclosure from bloggers who receive product samples or payments for writing about products. I’ll get to my thoughts on how this directly affects me, other bloggers, and American citizens in general in a moment, but I want to highlight just a few points that Hot Air blogger Ed Morrissey makes in his post which don’t have to do with my kind of blogging.
First, the regulations also apply to celebrities talking about products they’ve been given or loaned outside of clearly accepted advertising environments.

That is going to make the Red Carpet Show before the Academy Awards pretty hilarious.

Exactly, I’m going to tune in to watch just to hear Jennifer Aniston channel her inner Dick Trickle:
Jennifer Anniston Red CarpetJoan Rivers: ” Jen, you look gorgeous today! Tell us about your dress.”
Aniston: “Well, thanks Joan. It’s been a hard fought effort for the Yves St. Laurent team getting me ready for tonight’s walk up this carpet. I want to thank all the good folks at Goldberg’s of Beverly Hills for providing us this gorgeous necklace. And of course, none of this would work at all without the excellent work on my hair by my crew at the Jacob Nash Salon….”

Also, the regulations somewhat opaquely refer to not only bloggers, but “other ‘word-of-mouth’ marketers” as well. Here’s Ed’s question:

Where does the FTC’s jurisdiction end? If I get a free tube of toothpaste in the mail and say nice things about it on Twitter, Facebook, or in a PTA meeting, do I have to disclose it as a freebie or pay the $11,000 fine the FTC imposes? What kind of disclosure can one fit into a 140-character Twitter message, anyway?

Anyway, what does this mean for the Pegu Blog and other blogs of all sorts?
First, let me say that this is an issue of merit. We bloggers should disclose when we have received an inducement to write about a product. It should build trust between us and our audiences, and that is important to me, at least. What is more important, of course, is that we should remain independent in our writing. And that’s where the regulations won’t help, and may actually hurt. They could hurt for other reasons as well.
First off, the reasoning behind these regs seems to be that reviews and promotional writing are powerful market forces and capable of skewing consumers’ information stream. While I wish this were true, I doubt it, at least so far. Also, much more powerful media venues, such as newspapers, seem not to be covered by these new regs. (Apparently they have lobbyists to schmooze the rules writers into not including them. Do the regulators have to disclose this? Just asking….)
At any rate, a consumer looking for help in choosing a new bottle of gin, or a new video game, who just Googles the name, hits a random blog they’ve never seen before, and buys the product based on a review there deserves whatever they get, good or bad. I think it is reasonable for a consumer to establish a chain of experience with any source they look to for advice, before they follow it. And I’d say that it is the consumer’s responsibility, and not the state’s, to do that. And if the consumer get too complacent that Big Brother is looking out for him, then he’s likely to trust too much what he reads. Not good.
Also, the disclaimer requirement are murky, so many of us may feel we need to plaster everything we write with disclaimers to the point that no one reads them any more, and what the hell good is that?
Finally, enforcing regs like this will be expensive. It will cost the government a lot to enforce, and it will cost companies a lot to comply with. You will pay for every red cent, and more, that is spend on this. As I point out above, the benefits are small, possibly illusionary, and likely undermine people’s ability to think for themselves.
As to why I went to the lengths I did to establish my own disclaimer policy, which I hope will satisfy the feds, it goes back to the trust thing I wrote about before. I want and need you to trust me, or you won’t come back to read my stuff, in which case you won’t be assaulted by my advertisements for my real business. I need you to break down and hire me to arrange the death of your friends….
Long update below the fold.
I’ve read and thought about this issue much more and I’d like to expand my thoughts and link a bunch of thoughtful people (and the FTC) whose writing can help explain this Gordian Knot by which we find ourselves suddenly bound.
First off, here is the link to the FTC’s announcement of the new rule. And here’s the 81 page document, (not) detailing the proposed changes.
One of the wine bloggers I’ve started following lately, Alder Yarrow of Vinography, wrote about this, and his take is what I think most people would probably accept as reasonable:

While the execution of these rules was slightly flawed, leaving much ambiguity and unanswered questions, rules like this aren’t necessarily a bad idea. The devil is in the details, but in general, I am supportive of this move.

Just as I did earlier in this post, Alder and most everyone else agrees with the principle that transparency is a good thing. So why should the FTC not require it, so people can read with confidence? The answer is the same with many, many examples of government regulation of private behavior, communication, and commerce. Are the effects of the regulation more damaging than the behavior being regulated? In this case, I think they are. Work with me here, because this is complicated. And that’s the reason regs like this get passed and most people don’t object as they should. The subject is simple and direct: Payola. How serious that subject is, and how damaging the cure, is neither clear nor immediately intuitive.
Most bloggers focus on the onerous and ambiguous nature of the FTC’s rules. How are we supposed to disclose promotional products? If Brand X sends me a bottle of gin that I like, I have to (and do anyway) disclose that it was sent to me free of charge. Fine. But if I then come up with a good cocktail that uses more of that bottle of Brand X, and I put it in the recipe, do I have to disclose again? How about after I finish that bottle and buy a new one? Do I still have to disclose that I once got a sample, a year ago? And what about if Bombay Sapphire sends me a bottle in a promotion? I’ve been using and featuring it for years already, do I now have to disclose every time I specify it?
(Ann Althouse adds a particularly cogent summation of the more general dangers of this crappily written regulation. H/T: Instapundit)
And you Twitterers out there are not immune. Here’s what cnet found on the subject of FaceBook and Twitter: As for Twitter, the FTC isn’t letting you get a pass with the excuse that 140 characters–Twitter’s famous text limit–is simply too short. ‘There are ways to abbreviate a disclosure that fit within 140 characters,’ (Richard) Cleland said.
These serious issues are not addressed competently by the FTC. This fact reveals a lack of understanding of the scope of what is being regulated. Regulating a behavior without understanding it is a bad idea.
Imagine a completely car-ignorant person discovers acid leaking from an odd, box-shaped thingy under the hood. Slapping enough epoxy on the crack to stop the leak might seem to fix the problem, but is that really a good idea?
In my discussions with other bloggers, the focus initially has been on our potential exposure to these fines. A single violation would (at least) silence an editorial voice forever. This is likely not to be a serious concern for anyone who actually blogs responsibly. The FTC’s Rich Cleland had this to say on the subject:

To placate such fears, Cleland noted that the FTC’s enforcement priorities make it more likely an advertiser would be targeted for disclosure or testimonial violations than a blogger. The exception would be a blogger who runs a “substantial” operation that violates FTC rules and already received a warning, he said.

But that is the problem. The real threat is to the companies out there, be they distillers, publishers, or video game manufacturers, who are trying to find new ways to do business, generate profits, and, oh I dunno, create jobs. For large brands, promoting through blogs may simply be squashed by the risk-management types. Though a few fines would be non-material to them, public companies don’t take these risks. The exposure is theoretically unlimited, and government fines are at best embarrassing. They’ll keep on with traditional marketing, losing a small but cumulative increase in sales. They won’t feel the pinch initially, but eventually, some may be damaged by withdrawing from the 21st Century’s increasing dependence on distributed information sources.
Small brands will be hurt immediately. Blogs are a force multiplier for small brands, in any industry. A few samples, and some outreach, can do wonders for your product’s profile and sales. Bloggers are by nature flaky critters, and the FTC has just promulgated regulations that place a large burden on a company, holding them responsible for the actions of people they cannot control. A small distiller, or a boutique publisher now has to choose between languishing in obscurity, or being exposed to crippling government action. Such an invidious choice could, indeed it will, mean the death or stagnation of numerous American companies. Just what we need.
I alluded above to the fact that traditional media are not covered by these new, stricter guidelines. Syp, a game blogger at Bio Break, encapsulates a lot of what I hear on this subject:

But where this chafes is that, up to this point, bloggers have been relegated to some weird sort of minor league status in terms of journalism. As in, we’re not or we’re wannabes. But suddenly, when there’s money to be made with fines, our opinion is now very, very important and worthy of monitoring for false endorsements or what have you.

And it REALLY chafes because “traditional media” doesn’t have to disclose whether they purchased the product or were given it by the company, just because:

In general, under usual circumstances, the Commission does not consider reviews published in traditional media (i.e., where a newspaper, magazine, or television or radio station with independent editorial responsibility assigns an employee to review various products or services as part of his or her official duties, and then publishes those reviews) to be sponsored advertising messages. Accordingly, such reviews are not “endorsements” within the meaning of the Guides. Under these circumstances, the Commission believes, knowing whether the media entity that published the review paid for the item in question would not affect the weight consumers give to the reviewer’s statements.

So in summation: traditional games journalism is the bastion of stalwart honesty, and all bloggers who receive a freebie once in a while are filthy liars who need to be bled dry by fines. Awesome!

Freelance journalist Richard Champion, who blogs Reluctant Habits, also interviewed Richard Cleland on the dichotomy in the rules between newspapers and blogs. Poor Richard Cleleand sure has gotten around this week, hasn’t he? Perhaps that’s why he came off as so incoherent when talking to Champion. Here, for instance is the prize:

“If a blogger received enough books,” said Cleland, “he could open up a used bookstore.”

A main subject of the interview was the FTC’s justification for only applying the disclosure requirements to blogs, while letting newspapers, etc. off the hook. The essence of their position is that paid media are paid media, who make their money elsewhere, whereas bloggers’ compensation (if any—ed.) comes in the form of free product or advertising for the product reviewed.
First, have these chuckleheads even read a magazine in the last, oh twenty years? Apparently they think it is simply coincidence that three quarters of articles published about any given product are accompanied by a full-page advertisement for the same product.
Most of Champion’s interview centers on books. And in this context Cleland contends that a blogger owns the book himself, so is obligated to write about it, and to do so positively. But newspapers apparently technically own the review copy, so the FTC thinks that this makes the reviewer some kind of free-agent who can pan or promote as his own true heart leads.

But why shouldn’t a newspaper have to disclose about the many free books that it receives? According to Cleland, it was because a newspaper, as an institution, retains the ownership of a book. The newspaper then decides to assign the book to somebody on staff and therefore maintains the “ownership” of the book until the reviewer dispenses with it.

As to how hands off an editor is likely to be toward a reviewer who doesn’t like the product of an advertiser, I refer you to that link embedded in the quote from Bio Break above.
So am I whining about how unfair this all is to us bloggers?
No.
I’m a conservative libertarian. I hate any and all whining about individual fairness outside of sporting events. I care about what betters us all in the long run.
The problem here is that these rules are damaging to new media, and unproductively protective of traditional media. Why is the FTC doing things this way? As I alluded to before, traditional media has lobbyists, who can sell rubes like Mr. Cleland and his staff on claptrap like this. Bloggers are private citizens, and can’t afford lobbyists. We can afford bandwidth, however, and thus this article. And that is a good thing, folks. We need, as a nation and as a matter of public policy, to be strengthening the ability for new media to compete with traditional media. The best protection for consumers from unscrupulous marketing is not greater government regulation, but an increase in the number and diversity of voices researching and discussing products.
Yes, disclosure is a necessary thing. Yes, this is a useful subject for discussion. But blogs do something that newspapers used to do a hundred years ago, and no longer do: Police each other. Dana Loesch (The Conservative Alternative to Old Dudes) makes this point about the blogosphere:

The blogosphere polices itself rather well and those who lack transparency in marketing lose their audiences and the community isn’t above cannibalizing one of their own for the sake of keeping the practice pure.

Dana also pulls this WTF gem from the FTC’s new guidance:

And although industry self-regulation certainly can play an important role in protecting consumers as these new forms of marketing continue to evolve and new ones are developed, self-regulation works best when it is backed up by a strong law enforcement presence. [(Dana's) emphasis]

So self-regulation works best when the government regulates it? Since I’ve already called Mr. Cleland a chucklehead and a rube, I doubt I’ll be granted an interview to ask him how that’s supposed to work….
So the costs of this regulation-fest so far are stifling of (commercial) free speech, jobs lost or not created, a reduction in informed voices educating consumers on available products, barriers to entry for new media outlets, coddling of old media that needs to adapt to be viable, and general confusion and uncertainty in a regulatory arena (the definition of a hostile business environment).
But wait, there’s more!
Let’s talk the mechanics of enforcement. For regulations to be meaningful, rather than capricious, they have to be enforced with some measure of vigor. That costs taxpayer money. It does mean jobs, of course. Government jobs. Jobs whose existence means a throttling back on real jobs. Do we really need more excuses for bureaucrats to go hire more bureaucrats right now? The U.S. Government has doubled in the last nine years. Wars haven’t helped, but from a war-increased high, it has enjoyed another 19% increase just this year.
I have read a lot of discussion of this in comments all over the place, such as here and here, that suggest that the FTC is not going to hire an Army of Goliaths to police the blogosphere, but will instead rely mostly on complaints to start enforcement.
Uh huh.
This is the blogosphere we are talking about here. Flamewars, even about such trivialities as video game reviews, are common. Godwin’s Law will soon be amended to add something about FTC complaints about the disputant’s blog, his sponsors, etc.
There is one law even the federal government has to follow: The Law of Unintended Consequences. As such, we ought to take as few actions as we can, lest we become subject to the near-universal enforcement of that law.

About the author

Doug

I am 48 years old, married with two young daughters. My interests are tennis, reading, computers, politics, and of course cocktails. I run a murder mystery party business that caters to both corporate and private events, Killing Time, murder consultants.

7 Comments

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  • Bravo!

    While the idea the FTC is promoting is a good one in theory, it is a perfect example of those in charge being completely out of touch with those they supposedly are in charge of.

    This will most assuredly become a case of the cure being worse than the sickness.

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  • Dear Doug!
    Greetings!
    Well said!
    I have little to add, except that like Chip and Andy said, some people are just out here either to take advantage of other people’s hard (hobby) work or sc..w them!
    Please notify me when you post your next articles!
    Best regards,
    Robert-Gilles

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  • Here is my almost immediate response that I wrote up about disclosure after I read about the new rule :DISCLOSURE STATEMENT:

    As noted in Samples (below) we solicit samples for review. Otherwise we could not afford to do this. Unless otherwise noted assume that someone, somewhere, sent us whatever it is in the hopes we would review it – and hopefully like it. Just because someone sends us something does not mean we will show any mercy. We will do a fair review of whatever is sent but the mere fact it was free does not buy us or even rent us. We review products with objectivity and professionalism wherever and however they were acquired.

    We do not currently accept advertising but when we do it will only be for items we feel are of excellent quality and something we are not embarrassed to accept advertising from, endorse , or otherwise be identified with,and nothing we feel would be compromising to our integrity, tastes, or values. Again, we are open to offers in the future but will only accept those of products we liked in the first place. We will not change ratings or enhance them in any way in exchange for money or product. Likewise our endorsements are not paid or for sale – we review a product for free and you can quote us for free – the only condition we do ask is you cite us and/or hyperlink to our page as the source.

    We will also happily accept travel expenses to visit a distillery, tasting, or whatever else to cover it for the webpage, blogs or other forms of media and will disclose who paid us if/when that ever happens (hasn’t happened yet – but see above on our conditions to accept offers).

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