Tag Archives: FTC

A news business with a future after all

Week of Dec. 7, 2009

Because I don’t have enough misery in my life, I decided last week to see how much I could take of the two-day Federal Trade Commission symposium in Washington with the somber title, “How will journalism survive the Internet Age?” The media circuit offers a generous number of such open-casket affairs, but the turnout for this one looked stellar, so I settled down at my desktop and clicked in to the video feed, ready for the wailing to begin.
And it wasn’t like that at all. On the contrary, although the 70-some journalists, academics, analysts, financiers, flacks and entrepreneurs didn’t agree on much, they had in common a quality of thought and depth of commitment that couldn’t fail to impress.
Headliners included Rupert Murdoch, multinational news mogul; Arianna Huffington, online diva; Leonard Downie, ex-editorial chief of the Washington Post; Jeff Jarvis, prophet of entrepreneurial journalism; Paul Steiger, head of Pro Publica, the investigative reporting startup; Steven Brill, who’s about to launch an innovative payment system; Robert Picard, an eminent media economist, and Josh Marshall, whose Talking Points Memo is one of the rare online news sites that’s both solid and solvent.
To be sure, there was the familiar litany of woes that have pushed the legacy news industry down a steep slope toward financial ruin and civic obsolescence: its ravaged advertising base, reader melt, staff and coverage cutbacks, extravagant acquisitions that crippled profitable operations with debt, a ready availability of free online alternatives.
Still, there was recognition that the winds of change that are blowing their roofs off are, to a great degree, modernizing ones. Those cloudless days of bottomless profitability were the product of industrial privilege that nobody would applaud as socially optimal: Traditional newspapers and local TV network affiliates owed their larcenous profit margins—and their teeming newsrooms—to the monopolies and near-monopolies they wielded, and to the reality that their audiences, and their advertisers, were starved of choice.
Suddenly, thanks to the Internet and the explosion of digital technologies, barriers to entry have been leveled and distribution costs slashed to zero. Anyone with a laptop and a WiFi has instantaneous access to more information than the entire Washington Post newsroom back when Nixon was facing impeachment—and can reach a vastly larger audience too.
The upshot: As one speaker noted, all those enormous fixed costs (printing presses, delivery fleets, broadcast transmitters) that once kept rivals out of the water are now, for legacy news organizations, little more than an anchor around their neck.
So now what? Paradoxically, the person at the workshop with the greatest business success in the online world was also the one with the most conventional answers. That was Rupert Murdoch, chief of News Corp., whose Wall Street Journal online operation has more than a million paying subscribers. His solutions: Invest in journalism, then invest some more; charge readers what your content is worth; keep government at bay (that, a rebuke to calls for media-friendly changes in tax laws and antitrust rules.)
And move aggressively against those who help themselves to your content, the reviled news aggregators. By that he meant both the mammoth search engines like Google and Yahoo and the purpose-built news sites that post digests and steer readers to where the news originated, such as his papers. What the aggregators do, he says, is “theft.”
This is key. Contemporary thinking about the future of journalism divides fundamentally over the question of whether online news is, or can be, owned and sold. And I’ve come to conclude that although in some cases it can—when the information is unique, time-bound or especially valuable—the overall reality is that technology has kicked down the door of the proprietary model. News will be publicly available, either in original or derivative forms, even to a public that doesn’t pay for it.
As Arianna Huffington, whose Huffpost.com relies on unpaid contributors, put it, “Free content is not without problems. But it’s here to stay, and publishers need to come to terms with that…”
And that, it seemed clear, is where the fun starts in the new news industry—in coming up with allied informational offshoots that are worth top dollar (ask newsletter publishers); in building fresh sources of cross-subsidy by creating affiliated profit centers to replace ad revenues which, even with robust online growth, will never match the treasures of the lost kingdom; in collaborating with the emerging generation of journalism irregulars who hunger to carry on traditions of civic engagement through public reporting and commentary.
So it wasn’t quite the funeral I expected.

Striking a blow against online deception

Oct. 12, 2009

Online communicators of all stripes, whether they blog or tweet or befriend on social networking sites, are now supposed to tell you when they’ve received any money or freebies in connection with recommendations they post about products they’ve tried out.

That’s what the Federal Trade Commission decided last week, after months of gathering public input and stroking its chin. And the response from the online commentariat—true, never a placid bunch–is an unusually powerful wave of indignation, splutter, fury and bile, including fierce denunciations from some of the most influential and most respected voices on the Internet.

“A dangerous federal intervention in social media” and “an attack on markets and free speech,” says Dan Gillmor, author of “We the Media” and a major force for new-age citizen journalism. “Truly terrible,” Jeff Bercovici says on his widely followed Daily Finance blog on AOL.  “A monument to unintended consequence, hidden dangers and dangerous assumptions,” says Jeff Jarvis of CCNY’s journalism grad school and a prominent shaper of online practices.  Blogger Ron Hogan on AlleyCat suggests the FTC will now have to monitor 27.9 million Americans. Ryan Singel’s posting on Wired is headlined, “FTC tells amateur bloggers to disclose freebies or be fined,” and even Slate’s Jack Shafer, who is normally right about most everything, denounced “the FTC’s mad power grab” and declared:

“Allowing these guidelines to take effect would be like giving the government a no-knock warrant to investigate hundreds of thousands of blogs and hundreds of millions of Facebook, MySpace, and Twitter users for … saying nice things about goods and services.”

I don’t know what’s wrong with me, but I don’t agree with these people at all.

Let’s back up. The FTC is the principal regulator of the advertising industry, which is some comfort to those of you who didn’t know the ad industry had a regulator. Accordingly, it promotes standards of truthfulness in commercial speech.

The commission was revising, for the first time since 1980, its general policies on product endorsements—endorsements from celebrities, “experts,” outside organizations and seemingly ordinary civilians—any advice to buy something from someone who appears to be standing apart from the people who produce it.

One problem the FTC was addressing is the bountiful supply of tempting marketing opportunities via online venues where people talk about things they buy and stuff they try. Marketers are aflutter over the possibilities of furtively seeding this cloud of independent and trustworthy commentators with payments and perks, so that they use their independence in trustworthy ways—meaning, to gush about the things they’re paid to gush about, just like any other self-respecting shills.

Fine. But when an Internet-chat tech maven praises a gadget, should she also have to mention that it was provided to her free of charge or, by the way, that she was given a free trip to a Vegas trade show so she could road-test it in a suitable setting?

You bet, said the FTC. Any time we’re led to believe that the opinion somebody expresses is truly theirs and the credibility we attach to that person’s words would be altered if we knew that he had gotten the product for free (or gotten something else of value from its producer), that’s something we should know.

What’s wrong with that? To be fair, the critics don’t quarrel with the desirability of disclosure; they revere transparency. But they’re annoyed that the FTC treats, say, a book reviewer for a newspaper differently from a freelance blogger. The newspaper employee wouldn’t have to say she got books for free while the blogger would. The commission reasons that employees in an organization with a culture of editorial independence deserve different treatment, but I think the critics are right. There’s no principled reason for the distinction.

And they object to the sweeping oversight powers the commission seems to be claiming: How on earth is anybody going to police hundreds of thousands of possibly corrupt voices?

For its part, the FTC has made it clear its focus is not on bloggers but on advertisers, who are responsible for telling online commentators about these disclosure obligations. That puts the burden where it belongs—on the people who seek to gain from what is, essentially, deception.

True, enforcement will be spotty. But then, we support speed limits even though we know that only a tiny fraction of the people who exceed them will ever be ticketed.

The challenge is much the same. To make sure that standards are posted and understood. In this case, the FTC has taken a reasonable step toward safeguarding the future of honest communication online.