backtop


Print 109 comment(s) - last by Pythias.. on Jun 8 at 3:42 PM


Fig. 1: Payola and Editorial Sales Breakout -- We noted a strong corelation between sites that used editorial staff as sales, and sites that were willing to take cash in exchange for editorial content.

Fig. 2: Online Payola against Publication Age -- Older and younger sites tended to refuse advertising and cash in exchange for editorial content.

Fig. 3: Online Payola against Region: The only English-speaking country that did not report any Payola was Australia. Payola was fairly uniformly spread across the rest of worldwide English publications.

Fig. 4: Online Payola against Size: Larger, professional websites didn't accept payola. Smaller, hobby websites showed no interest in payola. Sites in the 5 million to 10 million pagehits per month range were the most suspect.
A three-month study of the online technology publication industry uncovers pay-to-review tactics, viral marketing and a few beacons of light

During the 1960s a new term was born into the music industry: Payola. A combination of the words "pay" and "Victrola," payola represented an increasingly large problem in the music industry: record companies paid radio stations to play and promote new records.

The immorality of paying radio station disc jockeys to air music did not become apparent until investigations by Federal Trade and Federal Communication Commission. Several deejays from the era were eventually found guilty of commercial bribery charges and deliberate legislation was eventually proposed, and sanctioned, that specifically banned the practice of payola in the U.S., with stiff consequences.

Title 47 of the United States Code details specific federal legislation for radio, telegraphs, communication satellites, and cable TV, but it does not address similar payola schemes with regard to internet publications. There are no legal ramifications for online publications that accept profits in exchange for pay: online payola.

Jasper Schneider, owner of enthusiast hobby site Sudhian.com and a practicing attorney at Schneider Law Firm, reflected on his experience in dealing with advertisers and his legal background.  "Without any uniform ethical standards or statutory law governing the online publications, online payola certainly exists.”  He continues, “If it doesn’t exist expressly, it is often implied when dealing with certain advertisers.”

Over the past three months, DailyTech put together a series of faux companies, product portfolios and trademarks.  In a combination of phone and email correspondences, our team of journalists set out to find illicit and unethical review behavior in the English-print, computer hardware review industry. 

Specifically, these journalists looked for publications that were:
  • Willing to sell advertisements (receive funds) in exchange for publishing content.
  • Willing to sell advertisements (receive funds) in exchange editor's choice awards.
  • Willing to offer viral marketing in exchange for cash and resale hardware.
Manufacturers pressure publications from all sides when attempting to secure headlines and positive reviews.  No money actually exchanged hands during this analysis, and the working relationships lasted less than a week.

There are approximately 150 circulated English-print technology websites; our team specifically targeted the 35 largest publications.  We determined the size of these publications via Alexa’s online index and publication-supplied web statistics.  DailyTech was included among this list.

Of 35 online computer-related publications, 23 (66 percent) refused editorial influence in exchange for advertising. Of remaining 12, seven publications (20 percent, Fig. 1) agreed to editorial service in exchange for advertising or cash.

To the credit of all publications surveyed, no website would accept additional funds in exchange for award.  However, it should be noted that our team discovered several instances of questionable ethics in a very short time span, without even supplying the publications product or payout.

The following response from an editor who also acts as the sales representative is an excerpt from a publication that represented the typical response of all border-line publications:
"The people who do sponsor the site, who advertise and keep good relationships with us, they will get priority on reviews. So if we get a motherboard in from you guys and one from company X, and you advertise and company X does not, we'll review your product first or more in-depth or at the launch time, which ever would get the most exposure. It doesn't really affect the content of the review exactly, but it definitely affects whether or not we'll spend the extra time with it."
14 of the 35 sites polled used independent sales teams: editorial staff is not responsible for advertising content at these publications (Fig. 1).  All sites that used separate sales staff would not influence editorial content even when tempted with several thousands of dollars of advertising perks and free hardware.

Adam Eiberger, a non-editorial sales representative from The Tech Report, parlayed the most succinct argument.  After an offering of several thousand dollars worth of advertising, in exchange for a news post and review, Eiberger responded:
"We have a real strong policy at The Tech Report of what we like to call separation of church and state, where essentially the editorial content is separate from the marketing and the advertising ... you are not going to be able to buy a review or an article.”
Four external sales teams represented 11 of the 35 sites polled.  Each sales team refused our requests for additional content and illicit reviews. 

Website age demonstrated significant impact for payola (Fig. 2).  None of the five publications founded before 1998 would accept any form of compensation in exchange of content. Granted, it should also be noted that these older publications all used non-editorial sales representatives.

Geographical region showed little to no impact for online payola (Fig. 3).  By volume, the highest number of online payola came from North America, though it should be noted that the majority of English-print publications are also found in this region.

European websites also had its own examples of online payola. The following is a conversation between DailyTech intern Gabriel Ikram, posing as a sales agent for a motherboard company, and an editorial contact for a publication:
Ikram: "We'd be willing to pay a little more for ads if you can get us some articles on ******"
******: "Ok, I can help arrange that."

Ikram: "If we could spend a little more money [on ads] could you get us maybe a couple more articles?"
******: "Yeah, that's fine, that's fine."
An executive from Kreative Wave, Inc., a third-party public relations firm, emphasizes the baleful business of soliciting press. “These companies, they’re always looking for exposure,” she states.  “And the websites take advantage of that.  They do reviews; they want something nice.  That something nice is advertisements or hardware.”

Website size also showed some impact on payola trends (Fig. 4).  When divided into fifths, payola only occurred in the middle three-fifths.  The media size of these publications was approximately 5 million to 10 million page hits per month.

The following is an email response from an editorial sales contact representing another website:
"Also let me know about the $1,500-$3,000 per site as that money does go a long way for us! We'd be more than happy to give you 2 to 3 months of advertising and the review in exchange for that!"
It’s easy to see why payola can damage the industry as a whole, as well as enable a slippery slope of downward ethical spiral.  During the investigation, three publications – all of which had already agreed to some level of online payola – were willing to pose as non-staff forum members and hype the upcoming product at the publication’s Internet forums.

Once presented with the data for this article, Schnieder paused before responding. “I think if you look back even five years, you would have seen this type of thing be much more common than it is today.”  He concludes, “Like most things, the marketplace will eventually weed out the businesses and websites who choose to operate in this manner.”


Comments     Threshold


This article is over a month old, voting and posting comments is disabled

First Amendment Limitations - Good or Bad?
By dever on 6/4/2007 1:59:32 PM , Rating: 2
I'm surprised no one has addressed the issue of First Amendment rights. You might consider it to be "immoral" for a reviewer to receive an MP3 player for review. But we as the consumer should always take into consideration these possibilities. Reviewers that hold higher standards can say as much, and journalists, such as DailyTech will be sure to uncover those who are less than honest over time (especially the most prominent ones).

Some companies hold a standard that they won't even allow advertising if they don't support the manufacturer's practices.

Other companies won't accept any advertising revenue at all... such as Consumer Reports.

In fact, it may be, that those who explicitly allow additional content coverage are simply being more open with their policy than those who don't explicitly. It would be foolish for us to think that a reviewer, whether he is in a separate department or not, is at least aware that the company who's product he's reviewing may cover 15% of revenue for his paycheck. I would say all reviews that have advertisers are indirectly affected by their advertisers in some small way (just by the fact that the reviewer knows this is an advertiser has an effect which we'll never be able to measure). This is why there are independent reviewers such as Consumer Reports that have sprouted up to fill the gap and accept no advertising revenue whatsoever.

However, just because it is not in your moral code to receive payment for content doesn't mean that we should ban additional segments of free speech. Freedom allows for bad judgment, and most would agree that some degree of this behavior would ultimately be bad business judgment, putting the reviewer at risk of losing all credibility and possibly losing all income whatsoever. The market takes care of these decisions in the end.

It should be our responsibility as consumer to treat all information as suspect and act accordingly. The radio laws, right or not, were created because of a limited frequency bandwidth. So, it was reasoned, that the limited availability of frequencies required regulation. The internet has no such limitations. The radio laws are outdated, and I don't believe we should create more bureaucracy, that ultimately infringes on our most fundamental freedoms of speech and further expands outdated legislation.

That being said, I applaud DailyTech's article insomuch as it benefits we as consumers.




RE: First Amendment Limitations - Good or Bad?
By haelduksf on 6/4/2007 2:31:06 PM , Rating: 2
Actually, the Mises Institute posted an article about this just the other day.

http://www.mises.org/story/2578


By dever on 6/4/2007 4:02:06 PM , Rating: 2
Very interesting, thanks for the link. They pick it apart much better than I. The most interesting point being that we have entered no contractual relationship with the one receiving the payola, and therefore have no rights or room for criticism.

I'll definitely agree with this. I am all for giving individuals (including individuals that run or work for companies that review a product) the liberty to make decisions. These decisions will be judged by the market at large for their merit and the individual will be compensated or punished much more effectively than any regulation could hope to achieve (and without the need to enact and enforce legislation that forcibly takes the earnings of those who have no interests in said prodcut).


"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch











botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki