Tuesday, January 02, 2007


On December 11, 2006, the Federal Trade Commission issued a statement that said companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.

From the article:

"The FTC said it would investigate cases where there is a relationship between the endorser of a product and the seller that is not disclosed and could affect the endorsement. The FTC staff said it would go after violators on a case-by-case basis. Consequences could include a cease-and-desist order, fines and civil penalties ranging from thousands of dollars to millions of dollars."

Sobering stuff.

Many of you already know this, but for the benefit of those who don't, I never accept any form of compensation for what I write here at PBW. I don't participate in any online bookseller associate programs. I purchase every book that I give away with my own funds, or give away the free author copies of my novels that are provided to me under contract by my publisher. I pay for all packaging and shipping out of my own funds as well.

When authors, agents or publishers send me unsolicited manuscripts, ARCs or books, I either ship them back at my cost, send them to reviewers at my cost, or donate them to my local public library. I never sell or otherwise profit from them.

I've never been compensated for any quote I have provided for another author here or elsewhere, and I don't ask for or accept reciprocal quotes. I never pay other authors for promoting my novels on their web sites and weblogs, giving quotes for my novels, or otherwise endorsing my work. Anyone who does promote my novels does so freely by choice.

Many of you do go out and buy my novels because of what you read here, and I do receive royalties from the sales of those novels. This is the only form of profit I make that can be connected to my weblog. After the publisher, agent and Uncle Sam take their cuts, my share of the profits for my novels works out to about twenty cents per paperback and seventy-eight cents per hardcover. I appreciate anyone who invests in my novels, but I don't expect or demand it, and I have no control over those purchases.

So basically if the FTC comes knocking at my door, I have nothing to worry about.

Any blogger who is receiving any form of compensation for what they blog should post full disclosure policies as soon as possible. Even if the FTC never investigates you, your readers deserve to know, and it's the ethical thing to do. For more information on creating a disclosure policy for your weblog or web site, check out DisclosurePolicy.org.


  1. Anonymous12:41 AM

    I'm right there with you. A few months ago I got into a bit of a discussion with a blog reader over this topic when they thought I was paid for the little bit of plugging I do for other writers - one in particular. Absolutely not. My blog, (let alone my life) is not, and never will be, financed by kickbacks. I'm happy to help my friends and other authors, no compensation necessary. The only money I make from my site comes indirectly from book sale royalties, should someone go out and buy a book.

    I am, however, delighted to give away books from time to time, especially to folks who want to talk about them (good or bad). Does that count as a kickback under the guidelines? When friends send me books (like you, Stuart, etc) and I mention them on the blog is that now illegal? From the gist of the article, it doesn't seem so, but I suppose the safe thing to do is to mention that "AUTHOR NAME gave me a copy of BOOK TITLE and I found it to be..."

    FWIW, I like to help people, especially my friends. Corporations can take a flying leap.

  2. Anonymous1:40 AM

    Tam wrote: When friends send me books (like you, Stuart, etc) and I mention them on the blog is that now illegal?

    I never thought books exchanged as gifts between writers who are friends could be construed as compensation, but at this point anything is possible.

    With our security issues, I haven't been able to accept gift books or any sort of packages from most of my writer and reader friends since 2004. Now this makes me wonder if I should issue some sort of gift book statement every year: "Tam sent me signed book on such-and-such a date. I already read a copy I bought on earlier date. Bought copies to giveaway before gift book arrived. Was not influenced by gift. See attached receopt, blog posts, etc. for proof."

  3. Anonymous2:02 AM

    Hmm...disturbing stuff. I plug authors I read all the time, and don't receive compensation. I also plug movies and video games and whatever else I happen to like. It's just the way I am, if I like something, I want to get it out so other people know about it, to give someone else a chance to try it out, but I guess I'll post saying that receive no compensation from anybody.

    Do they really expect a high school kid to be receiving compensation from Dean Koontz because I said that the Odd Thomas novels are good? He's got enough publicity he doesn't need to pay anybody off to get readers.

    Thanks for posting that though.


  4. You should all send your free stuff to me; I'll endorse the lot; the FCC has no jurisdiction over here.

  5. Interesting, but I wonder who will to be held liable - the company that's compensating the marketer or the individual who's doing the marketing? Or both?

    If a writer sends a free copy of his/her book to someone who then writes a glowing review of it without disclosing that the book was a gift, will that be illegal and will the writer (of the book) get in trouble? Sounds tricky to me...after all, if you give out several copies of your book, how could you possibly ensure they will not be 'improperly promoted'?

  6. WOW.WOW.WOW. Thanks for posting this article! That is some truly freaky news. Are they striving to make us paranoid or what?

    I imagine that a lot of the FCC's decision to do this is in regards to certain review sites and magazines that require you to pay big dollars for banners and page ads to be guaranteed a review. This could easily be looked at as a form of compensation. Too, I have heard a few tales in the past year where this sort of relationship didn't deliver as promised, so I could see why the FCC would jump in to investigate the whole "endorsement factor".

    For the most part, I don't think the majority of us have anything to worry about. Blogging about books we've read, even if we received them as a gift, is protected under the First Amendment. And giving books out as ARCs for either friendly, gift, or review purposes would be terribly difficult for the FCC to police - the numbers alone would be daunting.

    I would imagine the case-by-case they mention would focus on those in positions to arrange such exchanges within larger "pay for use" organizations. Still, I have to admit, the idea is creepy that someone could be watching who we give our books to!

  7. Anonymous11:05 AM

    I'm not sure I understand this. So if a writer gives me a book, and I read it and wrote a glowing review of it on the internet somewhere, saying that everyone should go and read this book, I have to state that this book was a gift somewhere in the review, otherwise it is illegal?

    I don't really see the point of it. Maybe my understanding of it is flawed or something. But it's not as if the book is money or something financially beneficial or something like that.

    *completely confused*

    I'm just glad that I don't have this FTC where I live... ... Not that I would know the policies here either.

  8. An odd bit of legislation, although the more I write about legislation (typically in Medicare, Medicaid, etc) the odder legislation gets.

    Anyway, I took a hop off this post on my blog and referred it over to here.

  9. Anonymous12:59 PM

    I suspect this won't apply to people getting free books and liking them -- it's not about the giveaway industry.

    Being paid a salary to go pretend you're just a person on the street or online who loves something, is very different from getting a gift and deciding to say you like it.

    They're going after those companies that routinely put people on a payroll or a freelance salary, and those people go out and pretend to be consumers that love whatever the product is. I think it's in the cellphone industry that this got out of hand (where people go to big tourist places and ask others to take pictures of them with some cool cellphone camera, as a way of demonstrating the camera -- meantime, pretending to be an ordinary family).

    There are companies that do this all the time, and it dupes the general public. This is not a problem of the book industry as far as I can tell.

    Being a fan of a writer or a book is not a paid position. Being a friend is not a paid position. Reading a novel you got for free and liking it is no different than trying a free sample at the local grocery store and deciding you like it enough to tell someone else how good it is.

    This is not meant to stop word of mouth marketing, where people talk something up that they like because they want to -- it's to stop the practice of corporate hiring of people to intentionally dupe others into believing that at item is immensely popular.

    These are essentially paid street teams -- people given money (specifically) to pretend they like something.

    Most genuine street teams are fans who are volunteering their time to promote a product, artist, writer, movie, etc., that they like. Getting a free poster or ARC because you are a fan and talk about the book or movie is not the same as getting paid to pretend you're a fan.

  10. I think this is more aimed at blogs that are set up to be money makers, with content created specifically for marketing purposes and the blogger paid for it. I don't think us "real" bloggers who enthusiastically recommend books we've read just because we enjoyed them are at risk. Still, I removed the link I had on my blog page to Amazon just to be safe.

  11. I believe the intent is as Doug suggests; however, I know how these things can get out of hand and the burden of proof rests upon the accused.

    It's pretty freaky. I need to remember to be more clear in my recommendations what the nature of my relationship (if any) with the author might be.

    But, frankly, if I don't particularly care for a friend's work, I'm not likely to plug it enthusiastically. And I have mentioned shortcomings which I felt would detract from a reader's experience of a book I otherwise believed was excellent. I saw it as an integrity thing, but that's just me.

    As for being paid to be a fan? Not gonna happen -- and certainly not for the price of a book.

    I suppose I should disclose that I recommended tahini to the deli clerk who was making my sandwich at Publix today as a result of her mentioning she liked tomato sandwiches. I have in no way been compensated by the tahini industry. It just happens to go well with tomato sandwiches (I like my bread toasted first).

  12. Douglas Clegg says: "Being a friend is not a paid position."

    What???!!! My friends make me pay them! (whine)

  13. Anonymous4:18 PM

    I know exactly where this FTC statement came from... it's because of the PayPerPost.com site. The bloggers who register there were paid for posting reviews (generally glowing ones) about products or services. Some consumer advocatcy groups saw this as a deceptive trade practice, as they had previously with 'street teams' and sent in a petition of clarification. This statement is the result of it.

    While I don't participate in those money-making schemes (and the FTC considers the payments from Amazon.com or Google to be the same), I'd rather do a CYA and post a policy statement. Just in case, you know, I'm not really paranoid... really... :)


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