Will The FTC Investigate People & Companies Paid By Facebook To Use Facebook Live?

from the seems-to-violate-their-standards dept

In the last few months, Facebook Live has certainly become "a thing." Launched just recently, it was suddenly everywhere -- from the pure (but very viral) joy of Candace Payne and her Chewbacca mask to the live streaming of the tragic aftermath of Philando Castile being shot by a police officer in Minnesota. Of course, it appears that part of the reason why Facebook Live is getting so much usage isn't necessarily that it's a better product than its competitors, but rather that Facebook has been generously throwing around cash to all sorts of people and companies to get them to use the platform. Last month, it was reported that Facebook was paying many millions of dollars to big media players in exchange for them promising to broadcast via Facebook Live:
According to a document recently obtained by the Wall Street Journal, the social networking giant has signed as many as 140 contracts worth a total of $50 million.

The list of media outlets being paid by Facebook includes traditional players such as CNN and the New York Times, the Journal says, as well as digital-only publishers like Vox, Mashable, and BuzzFeed. The celebrities who are being compensated for creating live video include comedian Kevin Hart and chef Gordon Ramsay.

Some contracts are worth smaller amounts, while 17 of the deals Facebook has signed are worth more than $1 million, according to the document obtained by the Journal. Two media outlets are getting paid more than $3 million to create live video—BuzzFeed and the New York Times, and CNN is not far behind, with a reported payment of $2.5 million.
Later in that article, it notes that BuzzFeed is getting $250,000 per month, for 20 Facebook Live videos each month. Good money if you can get it!

Then, a few weeks later, another report came out, noting that Facebook was trying to buy successful YouTubers and Vine users away from those platforms by giving them cash to use the platform as well:

For example, the Journal says it has seen documents that show Facebook is paying Vine star John Paul Piques $119,000 to post at least five videos on its live-streaming service over the next two months. That’s the equivalent of $24,000 per video. And he is just one of about two dozen other Internet celebrities and video stars who have signed similar deals.

The newspaper says the highest-paid independent video performer appears to be Ray William Johnson, who developed a following for a YouTube show called “The Equals Three Show,” in which he makes fun of viral videos. He could make as much as $224,000 over the next six months.

This kind of thing doesn't always work well, for a variety of reasons, but it appears that maybe it's actually succeeding this time. It'll be worth watching to see how well things go after the money runs out.

Still, there's another question that is raised by these stories: are Facebook and all of these other companies and individuals running afoul of the FTC's social media guidelines? And might the FTC crack down? Now, to be clear, I'm skeptical about the FTC's rules because they create free speech questions. So far, the FTC's enforcement over its own guidelines has been, well, haphazard and seemingly arbitrary at best. However, the FTC did update its guidelines last year, and it seems like not disclosing these payments could create some problems, if the FTC decided to step in.

The guidelines themselves seem more focused on "endorsements," but the question here is whether or not merely using the platform to post new videos is considered an "endorsement." Under the current guidelines, the FTC has a fairly loose standard of how the situation impacts the credibility given to the person or company by their audience:
The question you need to ask is whether knowing about that gift or incentive would affect the weight or credibility your readers give to your recommendation. If it could, then it should be disclosed.
They also note that merely using a product could be seen as an endorsement:
Simply posting a picture of a product in social media, such as on Pinterest, or a video of you using it could convey that you like and approve of the product. If it does, it’s an endorsement.

You don’t necessarily have to use words to convey a positive message. If your audience thinks that what you say or otherwise communicate about a product reflects your opinions or beliefs about the product, and you have a relationship with the company marketing the product, it’s an endorsement subject to the FTC Act.
While it's not a direct parallel, you could see how this is pretty close to the situation at hand. People viewing these videos are getting the message that these media companies and individuals approve of Facebook Live -- and yet many have not disclosed that they have a strong financial incentive to use the product. It seems like they may be in trouble if the FTC ever decides to take a look.

The question, then, is whether or not the FTC will bother?

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  • identicon
    Enif, 26 Jul 2016 @ 5:00am

    "free speech questions"

    From the linked article, "And that's because the FTC seems to be viewing blog posts as if they are media, rather than straightforward communication", and "Second, the FTC assumes -- as media people do -- that the internet is a medium. It's not. It's a place where people talk."

    I think many people would consider Facebook Live to be media. Even if it is "on the internet."

    From the same article, "As such, you could make a case that the new rules are an unconstitutional law hindering First Amendment guarantees on freedom of speech."

    The purpose of the rules is to prevent fraud. I think it is well established that freedom of speech does not necessarily extend to fraud.

    Again, from that article "..it seems like these things get sorted out in the marketplace of ideas -- whereby those who do something so stupid as to sell their "views" on things face the potential of a substantial loss in credibility."

    But only if people know about it. Another example of compelled public disclosures are SEC rules requiring publicly traded companies to disclose negative information. Are these rules "free speech" violations, as some have argued? The thing about fair marketplaces, whether of ideas or otherwise, is that disclosure helps to keep them fair and honest.

    The question, then, is whether or not the FTC will bother?

    Good question.

    reply to this | link to this | view in chronology ]

  • identicon
    kallethen, 26 Jul 2016 @ 5:26am

    Is this really any different than TV shows arranging to have special guest stars or a nationally syndicated morning news program arranging for a regular segment by so-and-so celebrity?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 26 Jul 2016 @ 9:07am

      Re:

      There is a difference between voluntary customer reviews, and sponsored reviews etc., and it is important that people know the difference when they are making decisions.

      reply to this | link to this | view in chronology ]

      • identicon
        kallethen, 26 Jul 2016 @ 10:12am

        Re: Re:

        Right, but he's not writing about reviews here. This is about Facebook paying somebody to post their content on Facebook Live instead of using Youtube. Perhaps a better analogy from me would have been a TV network paying for exclusive rights to a show.

        As for reviews, I agree that a sponsored review needs a disclaimer. But as I said, that's not the focused topic.

        reply to this | link to this | view in chronology ]

  • identicon
    David, 26 Jul 2016 @ 5:33am

    A Media outlet has to pay some stars

    For instance, if I want to stream Taylor Swift on my media outlet, I'd have to pay her to do so. If Amazon/Netflix wants to stream a TV series, they pay to do so. Facebook is paying to stream someone elses content. As long as the content isn't "look how great Facebook Live is", I don't see any fraud about it. All they are doing it no different that any other media outlet streaming content people want to watch in order to get peoples eyes on their advertising.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2016 @ 5:46am

    Thanks for reminding me to block facebook ip addresses in my browser.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2016 @ 6:03am

    Sour Google grapes.

    reply to this | link to this | view in chronology ]

  • icon
    Derek Kerton (profile), 26 Jul 2016 @ 8:39am

    Payola

    Payola rears its ugly head yet again.

    It always skirts the grey legal area, but is sleazy nonetheless.

    reply to this | link to this | view in chronology ]

    • icon
      nasch (profile), 26 Jul 2016 @ 11:04am

      Re: Payola

      Payola rears its ugly head yet again.

      This seems like the opposite of payola. Payola is labels paying radio stations to play songs. This would be like the radio station (Facebook) paying the record labels (various content providers).

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2016 @ 11:08am

    Why is Facebook censoring WikiLeaks following the release of Hillary Clinton's emails?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 26 Jul 2016 @ 4:13pm

    Much bigger bag than you think.

    Does NFL *have* to expose the deals it sets with networks? Your favorite national sports league using a specific network surely shows endorsement, right?

    This will absolutely never work. There are a lot of interests outside of the internet that will thwart any attempt at this type of restriction being created.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 27 Jul 2016 @ 7:41am

      Re: Much bigger bag than you think.

      "Your favorite national sports league using a specific network surely shows endorsement, right?"

      No.

      reply to this | link to this | view in chronology ]


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