Web 3.0: The Government Strikes Back, Part One

In Affiliate Marketing by Daniel M. Clark4 Comments

The Federal Trade Commission wants to more tightly regulate what bloggers and website owners say on their sites about products and services. They even want to regulate how we link to other websites. Is this consumer protection or over-the-top government intervention where little is needed?

Look up in the title bar of your browser – see that? Apparently, I'm an affiliate marketer. Just in case you're unfamiliar, an affiliate marketer simply links to products or services using a special link, and when someone buys that product or service, the affiliate marketer earns a commission. That's the boil-it-down bottom line, although the billion-dollar industry surrounding this simple concept has evolved significantly over time by introducing variations of this basic premise.

Brian Clark of Copyblogger has written an excellent piece about the Federal Trade Commission's new position regarding bloggers and how affiliates and other online marketers can roll with the new. While I agree with Brian's thoughts regarding methods of disclosure, I have some conflicting thoughts and opinions regarding disclosure in general. Maybe you, dear reader, can help me sort through it.

Old Media vs. New Media

We are told that we must disclose compensation for everything on our sites. If a site runs a banner ad, it must be stated that the banner is an advertisement. If a site owner links to a product using an affiliate link, that must be disclosed. Anything that a blogger or site owner receives from any company must be disclosed if the blogger or site owner is seen to be endorsing, reviewing or affiliate linking to it.

Nowhere else in the media do you see this – not really. Go to your local bookstore. Pick up a magazine. Turn to any random advertisement. Does it say in or near the ad that the magazine has been compensated for running that ad? In the vast majority of cases, no. Turn on your television, if you still use one. Every 7 or 8 minutes, you'll get a few minutes of advertisements – roughly 8 minutes of ad per half hour of programming. Do any of those ads specify that the network you're watching was paid to run those ads? To the best of my knowledge, that never happens (late night infomercials excepted). Radio is the same way.

The FTC is holding internet sites to a different standard than other media if it is insisting that everything from the loftiest full-page in-depth review to the lowliest Amazon text link needs to have full disclosure. That, in and of itself, is not the problem, though. As a rule, I'm perfectly okay with having different rules for different situations.


The problem is that the main argument seems to be that people are too dumb to recognize that running an advertisement does not equal endorsement. When I listen to the radio and hear an ad for a service or product, I never think that the radio station endorses the product or service. When I see an ad in a magazine, it never even crosses my mind that the magazine is endorsing the product. The only thing that I, or any other rational person, should think is that the advertiser paid the appropriate sum of money to the publisher and that the ad passed the review process (to make sure the ad wasn't inappropriate for the audience). If people don't think of websites or blogs in the same way, that's their problem.

What about Reviews?

What about them? On my desk, as I write this, is a copy of Mac|Life magazine – the July 2009 issue. On page 56 is a review of FileMaker Pro 10, a database application that retails for $299. The reviewer, Zack Stern, gave the software 4 out of 5 marks, or “Great”, on the Mac|Life scale.

Were this review to appear online, the FTC would require disclosure – no such disclosure is required in-article in print form. We are not told whether or not Zack Stern was given the software for free, whether he was paid to write the review (I know, that's kind of a “duh” thing, but that's kinda the whole point of all this) or whether he has ever been compensated by the makers of FileMaker Pro in the past. The FTC rules could require all of that, for every article online, because relationships with different companies will vary.

It may not be enough to simply put on your About page, “Sometimes we use affiliate links and sometimes we get paid to run ads, and sometimes companies give us free software to evaluate”. If it were as simple as that, people wouldn't be freaking out over the future of the affiliate marketing industry right now. Even if having a dedicated Disclaimers and Disclosures page were good enough to satisfy the new FTC rules, would it solve anything? Would having yet another mile-long page full of legal mumbo-jumbo attached to our sites really improve matters? When was the last time you read a company's Privacy Policy? The Terms of Service? No? Not lately?

Zack Stern wrote a review of an article for a magazine that I enjoy and trust. I could not care less if he – or more likely, the magazine – were given the software for free for the purposes of writing the review. I hope that he was compensated for his time and effort in writing the review – nobody wants to work for free, after all. What else matters?

New Media, Millions of Sources

But what about people that actually do take money in exchange for favorable reviews? Sure, there are those that will take bribes. Let's call these things what they are – they're bribes. They're not “paid reviews” or “compensated posts”. They're bribes. The problem is that it is impossible to tell when someone has taken payment for an honest favorable review or payment for a dishonest favorable review. This is where new media saves the day. With billions of blogs, social networking pages and Twitter updates that a review might appear on, it is nearly impossible for a company to control all the reviews of a product. If a blogger takes money to write a favorable review, but every other website on the planet is trashing the product… what's the problem?

The FTC should not exist to ease the burden on the consumer to do due diligence and research when considering the purchase of a product or service.

Consumers should not assume that the first – or the tenth – thing they read about a product is the final word. People should be specifically seeking out both good and bad reviews before making a decision.

Random Linkage

I've been focusing on reviews because those have a far greater potential for abuse – but the FTC wants to regulate simple links in any context. Consider this: I mentioned Mac|Life magazine a little while ago. The only reason I haven't linked out to it with an affiliate link is that I've got a three-year-old fighting for my attention and I'm not part of any affiliate programs that include that magazine. It's a time and effort issue. If I had linked to it with an affiliate link, though, it wouldn't have been part of any review. It wouldn't have been part of any commentary about the magazine itself – in fact, I could have randomly picked any magazine that I happen to have laying around in order to make my point. There would be no endorsement other than the implied endorsement that comes with the fact that I own it – but that's a bit of a stretch. According to the rationale behind the FTC rules though, I would be scrutinized.

Maybe the problem is with me.

Maybe my assumption that everything has been bought and paid for in some way is the problem. One of the earliest lessons I learned about affiliate marketing (one that has relaxed considerably in recent years) is that every outgoing link should be an affiliate link whenever possible. I fully expect that any link I click on any site will result in a commission – tangible or otherwise – for someone. I linked to Copyblogger at the top of this article, and while there are no monetary commissions in such a link, Brian benefits (um, a little… I guess…) from my link to his article, and I benefit from having my trackback listed at the end of his comments section.

There is a value of some sort in almost every link, but for some reason, the government wants us to disclose that value. I don't see the point, in most cases.

The worst part about all this though, is that it's not just linking practices that will arouse the suspecion of the FTC. Simply writing an article about a product or service is all it takes. If the FTC feels that something was inaccurately written about, you can be on the hook for severe penalties.

Welcome to Web 3.0.

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