Summary:  The Tribune Company just launched Tribune 365 (www.trb365.com) that claims to provide integrated marketing campaigns—that is, ads across multiple platforms available within the Tribune media—newspapers (e.g., The Chicago Tribune and The Los Angeles Times), other print outlets and television stations.  In fact—and probably more important—it represents integrated ad sales:  one team to sell ad inventory across all of their platforms (and, with hope, others, as well).  We think this is a brilliant step—and long, long overdue.

The Details.

It is pretty straightforward—and both astonishing and understandable (OK, OK, so it’s a contradiction:  Call it a paradox)—that a major, and heavily indebted, media company has finally figured out one of their biggest assets:  multiple platforms.  The Tribune Company’s initiative is called Tribune 365 (www.trb365.com).

Selling ads across these platforms to an advertiser in what the ad industry calls “integrated ad campaigns” becomes a lot more attractive.  More to the point, they overcame one of the biggest obstacles, which is the silo-like ad sales structures of newspaper ad teams selling their ads, TV station ad sales teams selling their inventory, and so on.  Media reports point to a recent campaign for Target, with ads in newspapers, on Tribune TV stations and Tribune websites.

So What?

“Integrated ad campaigns” are not that new but what is new is that they are now available where they count:  where the inventory resides.  This makes it likely that we will see them with more frequency.  Moreover, think about it for a bit:  What the Tribune is doing is a classic case of the model that like very much, which is “audience integration.”  That’s what diversified media companies do best.  They bring audiences to advertisers.  The more diversified they are then the more audiences they can aggregate.

Aggregation recognizes that audiences get their content from multiple sources.  While there may be some overlap (someone who reads “The Trib” and watches a Tribune TV station), there are many people who use one medium and not another.  If those media happen to be owned by one media company, why not place ads across all of them?  That’s audience aggregation.

It’s not always so simple.  We have often seen civil war break out in media companies among the ad sales teams.  The sales team responsible for TV ad sales rebels when the website sales team for the TV station calls on the same clients for their inventory.  It can get ugly.

And it is understandable, because you are dealing with the livelihood of salespeople.  Someone who has cultivated the ad agency (or internal ad buyer) of a large advertiser for years relies upon the sales commission to pay the mortgage .  Why should he or she let a competitor—even someone in the same corporate family—put the salesperson in financial jeopardy?

And (we hope) that’s what the Tribune Company has figured out.  We hope that the integrated sales team means that commissions are not limited to one medium because that is the only way that you can (and should) change the ad sales culture.  After all, ad revenues amount to the lifeblood of most media companies.  And selling ad inventory makes that lifeblood pump.  And earning those commissions is what enables the sale of that inventory.

There is one more thing to add, which is that the ad sales team will be sitting on some of the most lucrative assets–the date from the various media.  User data are what advertisers want.  Multi-platform ad campaigns are what can generate rich data.

Summary:  On September 24^th (the first day of the G-20 Summit in Pittsburgh) the Pennsylvania State Police served a search warrant on a protester (a self-styled anarchist) on the grounds that his use of Twitter to inform other protesters of the location of riot police was a crime.  A criminal complaint was later filed against him.  Subsequently, the FBI conducted a 16 hours search of his New York apartment and carted away a great deal of property.  According to news reports, the information was also available from news reporters, helicopter live-feeds and on the police website at the time.  On the other hand, the person was in a hotel room with an array of equipment, including a police scanner.  So, a serious crime or a chilling (and unconstitutional) effect on free press?  It turns out that, yes, use of communications devices in certain such situations can be a crime.  (Full disclosure:  The author is a lawyer but does not practice in criminal or First Amendment issues.)

The Details.

The details of the arrest are just now coming out (Tuesday, October 6^th) so by the time this blog is posted (or you read it), more details may emerge but this is some of what has been reported.  Eliot Madison and another man were in a hotel room outside of Pittsburgh on the first day of the G-20 Summit, listening to scanners and using PCs, maps and cellphones to alert protesters (who did not have a permit for their protest).  Evidently, the two men were telling the protesters where the police were.  According to the complaint, their crime was assisting the protesters failure to disperse.

A Brief Sidebar.

Note to all readers:  In a First Amendment case (well, in any case) you cannot let your analysis be biased by your inclinations towards or revulsions towards the people claiming that defense.  So, for example, let’s say you are a staunch conservative who hates anyone to the left of Tom DeLay.  Suppose this had been anti-abortionists protesting and Eliot had been giving them the same information?

The Implications.

Now this is interesting at all sorts of levels.  The government will have to show an intent to criminal activity—essentially some activity connecting the intent of the two groups (Madison and friend and the protesters).  One can imagine the complexity of this enterprise.  Did they know the recipients of their Twitter (and cellphone) messages were in fact committing a crime—and in all probability the particular crime of failing to disperse?  Suppose that you receive the tweet and you pass on the information to your girlfriend who is in Pittsburgh and you have no idea if she is with the protesters?  If the two guys were not aware that protesters were failing to disperse—in other words, were not aware of a crime being committed, then just what crime did they commit?  If they were giving the information so that protesters could avoid bodily harm, would that be a crime?  Moreover, if they were telling the protesters where the police were and giving them escape routes, then wouldn’t they have been assisting the protesters to obey the law?  And what about those who sent the tweets onward?  Are they co-conspirators?

Numerous analogies immediately come to mind, and with no surprise.  The news helicopters were providing live video feeds of the location of the riot police, as were reporters on the ground.  OK, so this is news reporting and therefore without criminal intent.  But what if one of the reporters said “Those protesters better get out of there or they are going to get in trouble.”  Is this the same as alerting passing motorists that a police car with radar is just around the next bend?  You’ve probably read a blog that raves about some new gadget.  It may well be that that the blogger has cut a deal with the manufacturer of that gadget—whether payment or simply receipt of one of the gadgets.  And yet, you as the reader had no idea of that connection.

It is true that speech can be criminal.  No court has ever said otherwise.  The new technology now presents more conundrums in drawing reasonable lines.  Watch this case wend its way through the courts.

Summary:  The Federal Trade Commission just issued regulations that, in essence, require bloggers (among others) to disclose any “material connections” between advertisers and endorsers.  No one should be surprised:  Restrictions on endorsements have been around for a very loooong time, consistent with the FTC principles of truth in advertising.    It remains to be seen exactly what will be sufficient disclosure but it should not be a problem.  The regulations also update (the first since 1980) the regulations for other endorsers, including celebrities.  (Read the release at www.ftc.gov/opa/2009/10/endortest.shtm.)

The Details.

You’ve probably read a blog that raves about some new gadget.  It may well be that that the blogger has cut a deal with the manufacturer of that gadget—whether payment or simply receipt of one of the gadgets.  And yet, you as the reader had no idea of that connection.

Well, that part—your lack of knowledge of any link—is about to change.  The FTC now requires a blogger to disclose any material connections.  The FTC went to great lengths in its notice in the Federal Register to discuss public comments and to provide examples (see www.ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf).

So What?

So we read about great gnashing of teeth and rending of hair among bloggers.  It might be that these regulations touch an nerve of libertarianism incipient in the digital world.  Or it could be that more than a few bloggers make at least beer money (and perhaps even a living) from these endorsements.  It turns out that there are sites you can visit and sign up for such endorsements, which makes it easier.

But, putting that aside, perhaps it is as it should be.  Blogging is just another means of communicating—a medium, to use an arcane word.  Shouldn’t users trust opinions that are not based on payment or special favors?

What To Do?

But let’s put aside all of the polemics and just look at what has to be done.  Look at Example #7 on page 79 of the FTC notice we mentioned above (see www.ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf and go to p. 79).  Referring to a video game blogger who received a free game to review, the FTC says:

Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.

Not much help.  But thinking about the FTC’s long tradition, it is helpful.  They hate—and will often pursue—those who bury the disclosure in fine print.  Moreover, they specify that the type of material connection—in this case, receipt of a free copy of the game—must be disclosed.

Soooo, trying something like the following will probably work:

“[Name of Blogger] received a free copy of the Lawyers in Love video game reviewed below”, in the same size font as used throughout the blog and near the introduction or above the fold.  But, truthfully, we don’t know yet (and if you do, then let us know).

Think about it this way:  What would you want to know and where would you want it to be on the website?

Summary:  Online advertising has been self-regulated for some time but the FTC has made it clear that it is not happy with the resulting dense legalese of TOU’s and privacy policies.  They set forth new guidelines that they expect publishers to use during the next year–at which time the FTC will consider new legislation.  (Please note:  Various ad industry associations offered their response, which is discussed in the post below at digitaldumonde.wordpress.com/2009/07/23/new-ideas-for-online-data-collection-use-the-industry-responds-to-the-ftc/.)

Although the guidelines are only just that–guidelines–they should “guide” your revisions to your TOU’s and your privacy policy.  Here is a quick summary.

I.  Introduction.

The staff of the United States Federal Trade Commission (FTC)  recently released a report (February 12, 2009) that will directly affect the documents governing the relationship between an online content provider and viewers/consumers-Terms of Use (TOUs), End-User License Agreements (EULAs) and Privacy Policies.  The report also suggests implications for the use of private information.  Please email us atjcrext@globalcaplaw.com and a copy of the report will be sent to you, or you can find it on the site of the FTC.

The report sets forth principles for self-regulation for the online advertising industry relating to online “behavioral advertising.”  (The report defines behavioral advertising, which is set forth below under “Definition”).  Technically, it is a supplemental report, but it has the effect of finalizing the December 2007 draft “Self-Regulatory Principles for Online Behavioral Advertising.”

It should be emphasized that these are principles for self-regulation for the online advertising industry.  Arguably, this means that they are not binding, and, indeed, the report makes that clear. However (and this is an important caveat), the principles will definitely guide the enforcement actions instituted by the FTC.  Moreover, it seems that the FTC is pre-disposed to initiate legislation in this area, which will probably codify much of what is found in these principles.  And states often look to such reports for guidance on their legislation on privacy.

In reading the footnotes, another point emerges from the report.  The FTC staff appears to believe that those who draft TOUs and privacy policies have not been keeping a close eye on the enforcement actions and decisions that the FTC staff believes to be relevant-and these include decisions that do not involve online matters but do involve clear disclosure for consumers.  In fact, the report footnotes include quotes from FTC commissioners that can be summed up as the following rule:

Policies that bury relevant information and choices for consumers in legalese will do so at the peril of the publisher.

(Please note that the above rule is our language and not that of the FTC or its staff.)

II.  So What?

1.  Clean up These Documents. Dense legalese will probably not “pass muster” with the FTC.  They are keeping a close eye on this area.

2.  Consumers’ Choices Must Be Clear. Just as dense legalese is for the FTC tantamount to unacceptable (and often illegal) “fine print,” obscuring consumers’ choices is frowned upon.  In particular, the report mentions “check boxes” that are already checked–something frowned upon in the report.

3.  Certain Changes to Terms Must Be Affirmatively Accepted. Any material changes or “retroactive” changes (i.e., affecting policies on data already collected) must be affirmatively accepted by the site users.  Prospective changes do not (yet) need such approval but it is pretty clear that the staff leans in that direction.  This possibly means that the common technique of saying “Use of this site means acceptance of the terms” together with the “warning” that changes can be made at any time will not be acceptable by the FTC.

4.   The PII/non-PII Distinction is Diminishing. The US approach has been to try to protect “personally identifiable information” at a higher level than that which is not personally identifiable.  This differs from the European model.  Now, the FTC is moving towards the European model and this is understandable.  The staff understands that PII can often be gleaned from non-PII, which makes the distinction too porous.  In particular, the report wishes to increase the protection of data that can identify an individual machine (PC, mobile phone, etc.), while the earlier approach was to preclude identification of an individual user.

5.   Self Regulation is a Testbed and is on Probation. The FTC simply sidestepped resolving many issues, leaving it to the “industry” to try various methods.  However, one can infer that “industry” has about a year before the FTC moves towards legislation.

III.   The Report.

We have not included the entire (50+ page) Report, but we have quoted almost the entire conclusion, which summarizes the final version of the “Principles” of self-regulation.  The numbering is directly from the Report:

A.  Definition

For purposes of the Principles, online behavioral advertising means the tracking of a consumer’s online activities over time – including the searches the consumer has conducted, the web pages visited, and the content viewed – in order to deliver advertising targeted to the individual consumer’s interests. This definition is not intended to include “first party” advertising, where no data is shared with third parties, or contextual advertising, where an ad is based on a single visit to a web page or single search query.

B.  Principles

1.  Transparency and Consumer Control

Every website where data is collected for behavioral advertising should provide a clear, concise, consumer-friendly, and prominent statement that (1) data about consumers’ activities online is being collected at the site for use in providing advertising about products and services tailored to individual consumers’ interests, and (2) consumers can choose whether or not to have their information collected for such purpose. The website should also provide consumers with a clear, easy-to-use, and accessible method for exercising this option.  Where the data collection occurs outside the traditional website context, companies should develop alternative methods of disclosure and consumer choice that meet the standards described above (i.e., clear, prominent, easy-to-use, etc.)

2.  Reasonable Security, and Limited Data Retention, for Consumer Data

Any company that collects and/or stores consumer data for behavioral advertising should provide reasonable security for that data. Consistent with data security laws and the FTC’s data security enforcement actions, such protections should be based on the sensitivity of the data, the nature of a company’s business operations, the types of risks a company faces, and the reasonable protections available to a company.  Companies should also retain data only as long as is necessary to fulfill a legitimate business or law enforcement need.

3.  Affirmative Express Consent for Material Changes to Existing Privacy Promises

As the FTC has made clear in its enforcement and outreach efforts, a company must keep any promises that it makes with respect to how it will handle or protect consumer data, even if it decides to change its policies at a later date. Therefore, before a company can use previously collected data in a manner materially different from promises the company made when it collected the data, it should obtain affirmative express consent from affected consumers.  This principle would apply in a corporate merger situation to the extent that the merger creates material changes in the way the companies collect, use, and share data.

4.  Affirmative Express Consent to (or Prohibition Against) Using Sensitive Data for Behavioral Advertising

Companies should collect sensitive data for behavioral advertising only after they obtain  affirmative express consent from the consumer to receive such advertising.

Summary:        Now we have a new form of convergence:  social networking and (cable) TV.  Not a bad move.  Verizon announced two new “products” in its “social TV” initiative.  One is a set of widgets that enable viewers to connect with other viewers through various social networks—while watching TV.  The second enables viewers to watch user-generated content from certain websites.  One more step in convergence.  Of course, it is a bit like the Zeno’s Paradox of digital convergence.  You could also say:  It’s about time. (Full disclosure:  We also posted this at globalstrategic.wordpress.com)

Through its FIOS TV service Verizon is taking a few bold steps towards digital convergence.  First, Verizon will create an application store with widgets developed together with some notable social networks—Twitter, Facebook, Veoh and a few others.  So, a FIOS subscriber can follow tweets they select from a list—including the programming they are watching.  They can log into Facebook (but not yet Twitter) to update their profile as to what they are watching at that moment.  An SDK will be launched soon.

The second new product permits a subset of subscribers to start searching and viewing UGC from certain video sites, including Veoh and Blip.TV.

So What?

Well, it is another step closer to digital convergence.  Using TV programs to tweet is an obvious stimulus to that convergence, when you consider how often TV shows are the subject of tweets.  Tweeting about these programs is of course nothing new and these widgets do not (yet) enable tweeting through the TV.  What it doespermit is to enable a viewer to see whose twitting what and when.

So that’s why it’s like Zeno’s Paradox.  Remember:  Walk halfway across the room, the half the remaining distance, then half the remaining distance—and so forth.  This is a little like that:  closer, closer, closer, but not quite there.

But the move is just the first and we can expect more.  The application store will propel developers to pay attention to crossing the chasm between the TV, the PC and the mobile phone.  Think about it:  Twitter is (largely) phone-based and Facebook is (largely) PC-based-platform.  This appeals to the developers.  FIOS competitors will figure out their own way to merge social networks with TV programming.

OK, now the gears are churning.  Think of characters using Twitter in the programs—and they are matched by Twitters available to FIOS users.  And so forth.

Stay tuned.

Summary:  In response to the FTC Staff Report (on which we blogged earlier), online advertising industry associations joined together and came out with their own principles to improve the data collection and use principles of the online experience.  In essence, it is a last-ditch effort by the industry to keep its role of self-regulation.  You can read the entire report atwww.iab.net/behavioral-advertisingprinciples.

The online advertising industry has responded to the February 2009 FTC Staff Report on the topic (which is called “behavioral advertising”).  Here is a summary of the main principles in our words (not theirs):

• The Education Principle—an 18-month campaign to educate consumers.
• The Transparency Principle—which mandates clear and easily accessible data collection and use practices and changes to websites.
• The Consumer Control Principle—enhanced options for determining which and how data are collected.  It is expected that a “data consent” toolbar will be created for a broad range of online providers (ISPs, browsers, publishers) that will enable consumers to consent to data collection.  There will also be steps to “de-identify” the data.
• The Data Security Principle—essentially a data security and retention policy to improve security of the data and limit the period such data are retained.
• The Material Changes Principle—requiring consumer consent to any material changes to privacy and use policies.  If successful, this will address one of the principal concerns of the FTC, which is the now-current practice of empowering online providers (e.g., publishers) to change their TOUs, etc., with retroactive application.  This is something courts have now found invalid in such online agreements, too.
• The Sensitive Data Principle—addresses concerns for data from sensitive groups—e.g., children—and sensitive data—e.g., health and financial records.
• The Accountability Principle—should be the implementing programs for these principles and disciplinary procedures.

So What?

One thing is clear:  the online agreements that govern the use of websites are now in the crosshairs—meaning that those agreements should be revised now.  The FTC Staff Report provides pretty good guidance on what to include and what to exclude.

The industry report is something more abstract but it also has some gems that can provide some great innovations for new practices.  Among them, the “data consent” toolbar is a good idea.

In addition to that idea, we really like the idea of steps to “de-identify” the data.  In fact, we think that this is probably the most important step forward.  Those data can be tremendously powerful in that form.  That is the fulcrum point—and where fortunes will be made.   And some lost, too.

(See some TOUs, etc., we have drafted:  www.npbn.com and www.photospin.com for some examples.)

Summary:  Taking a page from websites, networks and cable channels have introduced “TV in Context,” with ads that are “contextual” in the sense that they are tailored to a particular moment or scene in a given show.

Cable channels and networks have expanded their program, “TV in Context,” of placing ads in TV shows and movies that play off a particular scene in a scripted series of a movie.  For example, just after a crash scene in the Bourne Supremacy, an ad for the in-car service OnStar said “Are you counting on your cellphone to be your lifeline in a car crash?”  (See the New York Times article http://www.nytimes.com/2009/05/20/business/media/20adco.html?fta=y.

What is surprising is that it has taken networks (and cable channels) so long to get here.  For decades, advertisers have made sure that their ads are not placed in the wrong place—e.g., an ad for a Chevrolet just after a fatal car accident occurs in a TV series in which a GM car is involved.  And this is innovation?

Summary:  CW will launch an ad campaign that encourages viewers to communicate with each other through social networking—texting, Twitter, Facebook and the like. 

Among the more interesting approaches to respond to advertisers’ demands on networks, CW will launch an ad campaign that acknowledges and embraces the viewers’ use of other platforms.  Called “TV to talk about,” the tagline will change with each ad to things like “TV to text about,” “blog about,” “chat about” and “tweet about.”  The New York Times published an interesting article on this point at:

http://www.nytimes.com/2009/05/21/business/media/21adco.html?emc=eta1

CW is probably better positioned than other networks because its programming attracts younger audiences who already interact across digital programs.  What was interesting (according to the NYT article) was that CW had to send researchers to the homes of viewers to find out that viewers do this.  Now that’s funny.  What are they reading?

So here’s an idea:  Let viewers opt in to a scroller that shows the most popular Tweets (or other feeds of comments of other viewers) during the show.  Of course, the scroller will be sponsored by an advertiser. . . .

Summary:  You might not have read it here first but you have read it here often:  Courts are taking on—and deciding against—what they consider to be unfair terms in EULAs or TOUs.  In this case, it was the federal district court for Northern Texas, finding that the arbitration clause was illusory.  It is important to note that this case, in our opinion, does not stand alone but adds more case law attacking the terms of these online agreements.  These cases are—and in particular this case is—consistent with one of the principal points central to the new FTC staff guidelines.  The message:  Complicated TOUs put the client at greater risk.

In Harris v. Blockbuster, the court for the Northern District of Texas held that the arbitration provision of the online agreement for the use of Blockbuster was illusory.  Dicta suggest even broader implications for the decision, but that alone was enough to cause some concern (we do not yet know if there will be an appeal, though it is probable).

As far as the court was concerned the main problem with Blockbuster’s online agreement was sort of a double-whammy.  The agreement stated that Blockbuster could change the provisions at any time—which would, of course, mean that changes with retroactive effect would, in the opinion of Blockbuster, be enforceable.  In this case, some disputes arose and Blockbuster then added an arbitration provision, which was to apply retroactively and thus eliminate much of the risk (from a trial).

So What?

So, online agreements (what we call EULAs and TOUs) with retroactive changes inserting (or affecting) arbitration provisions will run afoul of this opinion—of course, in that district.  Moreover, the opinion carries some weight with other claims about online agreements.  Many online agreements—perhaps a majority, perhaps many more—have such provisions enabling the publisher (in this case Blockbuster) the right to make retroactive changes to the terms.  Suddenly, then (if you believe in Chicken Little), these provisions are at risk.

Ammunition & Guidance. Really, though, the opinion builds on a string of previous opinions that, taken together, provide both substantial ammunition for plaintiffs’ assaults on these agreements and, if you think about it, guidance on what to include—and exclude—from online agreements.

It is not necessarily a bad thing.  The FTC staff report gives pretty clear guidance on what can be done:  If a party wants a right to changes, then they should not be retroactive and the user must have some kind of right to agree (or not) to those changes going forward.

This is not some rogue court.  The cases cited include some in the Fifth Circuit and some in Texas itself.  With some serious contortions and impressive legal reasoning, one could distinguish this case from the facts and holdings of those precedents.  But it is not so simple.

In just the last several years, quite a few courts have taken on the online agreements.  They include courts in the Ninth Circuit and in Pennsylvania.  The reasoning can be distinguished but not here.  They all come to a smell test:  Does this really smell like a contract?

These cases fall within an even longer line of opinions regarding the nature of agreements between corporations and consumers.  As the FTC staff report pointed out (with copious footnotes), “fine print” cases have a long history.  And it is a history where the “victor” has swung from the consumer to corporations and back.  Now, with the new administration, with the FTC’s stiffer attitude about consumer rights (rightly or wrongly), and with these cases, we can expect history’s pendulum to swing the other way.

Conclusion

Write “Gooder.” These agreements do not have to be so dense and they do not have to have such onerous terms.  The right of retroactive modification was a term just waiting to be shot down.  Too often, lawyers just copy and paste a TOU from another site.  Or, perhaps they have to justify their legal fees on a topic that is perceived by clients as unimportant boilerplate.  Whatever the reason, this case should be a shot across the bow that attorneys put their clients at greater risk with such legal intricacies as we now see in EULAs.

Perhaps we’ll get some online agreements that are actually well-drafted;  that do not read like fine print;  and that provide better terms.  But then, we believe in the Easter Bunny, too.

Summary:  T-Mobile USA has hooked up with Echelon, a provider of smart meters, to make those meters wireless.  Smart meters are a key to upgrading the power grid and the wireless feature will simplify connection to the utility companies.

Echelon and T-Mobile recently announced that Echelon will embed a wireless SIM into its smart meters.  T-Mobile’s value-add is also that the chips will be more durable than current deployments.

The wireless connection will improve the link into the utilities, providing them with real-time information on power usage, as well as problems with their networks.

So What?

This is a “shovel-ready” project to upgrade the grid that also seems to have a knock-on, or multiplier effect, not to mention improving efficiency of the power network.  Apparently, the embedding has already begun.  Echelon has already delivered some 100,000 of its smart meters in the US (to Duke Energy) and more than 1.6m around the world—though without the wireless connection.

The Knock-on Effect

The knock-on effect suggests that companies can provide data management applications for the utilities.  The obvious starting point is the incoming data on power usage and network reliability.  However, data miners could work with the utilities to monetize those data—with obvious and very careful attention to privacy matters.

Finally, imagine an app on your smartphone and/or your laptop, telling you your immediate usage.  One the data are available on a wireless basis, then they can be delivered to any number of platforms (taking into account that the data are initially broadcast in cellular radio format).