In 2016, brands spent $570 million on social influencer endorsements on Instagram alone. This recode article takes a looks at how much influencers with certain followings can command, and whether they’re worth the investment.

And don’t overlook the legal issues associated with the use of social media influencers; the FTC just settled its first complaint against social media influencers individually. The case involved two online gamers who posted videos of themselves promoting a gaming site that they failed to disclose they jointly owned.

In a precedent setting opinion, the European Court of Human Rights held that the right to privacy of a Romanian man, Bogdan Bărbulescu, was violated when Bărbulescu’s employer, without explicitly notifying Bărbulescu, read personal messages that Bărbulescu sent from an online account that Bărbulescu had been asked to set up for work purposes.

In other European news, the attorney general for England and Wales, Jeremy Wright, MP, has begun an inquiry into whether that jurisdiction needs to impose restrictions on social media in order to help ensure criminal defendants there get a fair trial.

More than half of Americans 50 or older now get their news from social media sites, Pew Research Center’s 2017 social media survey shows.

Celebrities who promote initial coin offerings (ICOs) on social media risk violating laws that apply to the public promotion of securities.

Facebook developed an artificial intelligence robot that can express emotion by making realistic facial expressions at appropriate times.

A college student has sued Snapchat and the Daily Mail for alleged defamation and invasion of privacy arising from the use of the student’s name and image on Discover, Snapchat’s social news feature, under the headline, “Sex, Drugs and Spring Break—College Students Descent on Miami to Party in Oceans of Booze and Haze of Pot Smoke.”

Is the threat of artificial intelligence disrupting a slew of industries less imminent than we thought?

Google created a website that uses fun illustrations to show which “how to” queries its users entered into the search engine most.

The popularity of online videos that viewers can appreciate with the sound turned off has led to striking similarities between early silent film and modern social video.

Recent challenges to the Federal Trade Commission’s (FTC) authority to police data security practices have criticized the agency’s failure to provide adequate guidance to companies.

In other words, the criticism goes, businesses do not know what they need to do to avoid a charge that their data security programs fall short of the law’s requirements.

A series of blog posts that the FTC began on July 21, 2017, titled “Stick with Security,” follows promises from acting Chair Maureen Ohlhausen to provide more transparency about practices that contribute to reasonable data security. Some of the posts provide insight into specific data security practices that businesses should take, while others merely suggest what, in general, the FTC sees as essential to a comprehensive data security program. Continue Reading More Insight From the FTC on Data Security—or More of the Same?

Searching “millennials killed…” on the Internet returns over 1.5 million results in .65 seconds. Commentators have blamed the generation raised by tablets, smartphones, and apps for killing everything from marriage to brunch, often deriding today’s youth for being too opinionated and too obnoxious. It is a bit ironic, then, that the right to complain was almost a casualty of the technology generation.

Today, ecommerce and social media are ubiquitous and intertwined. For example, any ecommerce site worth its salt will include interactive user comments that enable purchasers to praise or critique products. Moreover, the power of online review sites, such as Yelp and Rotten Tomatoes, to set consumer tastes is only increasing. For example, a study conducted at Harvard Business School concluded that a one-star improvement on Yelp would lead to a roughly 9% increase in revenue for restaurants. Considering how thin profit margins are in the restaurant sector, 9% could make or break a small business.

In response to the growing significance of user reviews, some companies sought to protect their revenue streams by including non-disparagement clauses in form contracts, such as terms of service and other click-through agreements. Retailers, studios, restaurants and even hotels used these gag clauses to suppress bad reviews by levying fines and imposing other penalties on consumers. Continue Reading Get Your Gripe On: The Consumer Review Fairness Act Is Live

A New York State senator has introduced a bill that would make posting footage of a crime to social media with the intention of glorifying violence or becoming famous punishable by up to four years in prison and fines.

Instagram hit the 700-million-user mark.

Brands spent 60% more on social media advertising in the first quarter of 2017 than they did in the same quarter last year, a new report shows.

But savvy brands will do more to leverage social media than just buy advertising, according to a columnist in Entrepreneur. Chatbots that can interact with customers on private messaging networks and in connection with in-app purchasing are the next big things.

And while we’re on the subject of private messaging networks, Tumblr is launching its own version, called Cabana. It encourages six friends to “hang out” and watch YouTube videos together.

Pointing out the inadequacy of many celebrities’ methods of disclosing their status as paid endorsers of the products they promote on Instagram, the FTC sent a letter to 90 high-profile social media users that provides some guidance on how to fulfill the endorsement guides’ requirement that sponsored posts be identified in a “clear and conspicuous” way.

LinkedIn has updated its terms of service and privacy policy, reportedly to make way for new platform features such as identifying when other LinkedIn members are in physical proximity to you, making available “productivity bots” to assist you in interacting with members of your LinkedIn network and allowing third-party services to display your LinkedIn profile to their users.

Facial recognition systems will soon be used to identify visa holders as they leave the United States, raising civil rights questions.

The U.S. population’s political polarization isn’t a result of the rise of social media, a new working paper issued by the National Bureau of Economic Research suggests, because hyper-partisanship is most prevalent among older Americans who are less likely than other Americans to consume media online.

Devices_482856241Well over a year after holding a workshop addressing privacy issues associated with cross-device tracking, Federal Trade Commission (FTC) staff have issued a report. The report sets the stage by describing how cross-device tracking works, noting its “benefits and challenges,” and reviewing (and largely commending) current industry self-regulatory efforts.

The report also makes recommendations, which—while building upon the staff’s traditional themes of transparency and choice—do not introduce any materially new suggestions for compliance.

The staff’s recommendations do not have the force of law, but they do indicate the steps that the staff believes a company should take in order to avoid a charge of unfairness or deception under Section 5 of the FTC Act.

A Quick Review of Cross-Device Tracking

As more consumers utilize multiple devices in their daily lives, more and more companies are using new technologies to attempt to ascertain that multiple devices are connected to the same person. This is generally done through the use of either deterministic information (e.g., by recognizing a user through the log-in credentials he or she uses across different devices) or probabilistic information (i.e., by inferring that multiple devices are used by the same person based on information about the devices, such as IP address, location, and activities on the devices).

Continue Reading FTC Report Reinforces the Rules for Cross-Device Tracking

Google is cracking down on mobile pop-up ads by knocking down the search-result position of websites that use them.

The National Labor Relations Board decided a social media policy that Chipotle had in place for its employees violates federal labor law.

A group of lawmakers plans to introduce legislation that would criminalize revenge porn—explicit images posted to the web without the consent of the subject—at the federal level.

The Truth in Advertising organization sent the Kardashians a letter threatening to report them for violating the FTC’s endorsement guides. This isn’t the first time the legality of the famous family’s social media posts has been called into question. If only Kim would read our influencer marketing blog posts.

According to one study, 68% percent of publishers use editorial staff to create native ads.

Twitter launched a button that a company can place on its website to allow users to send a direct message to the company’s Twitter inbox.

The Center for Democracy & Technology criticized the Department of Homeland Security’s proposal to ask visa-waiver-program applicants to disclose their social media account information.

UK lawmakers issued a report calling on the big social media companies to do more to purge their platforms of hate speech and material that incites violence.

Social media is playing bigger role in jury selection, Arkansas prosecutors and criminal defense lawyers say.

A day in the life of the Economist‘s head of social media.

Seven things smart entrepreneurs do on Instagram.

Four ways to get busy people to read the email you send them.

Want to know how Facebook views your political leanings? Here’s the way to find out.

Social media has upended a number of industries. Is Wall Street next?

Facebook is getting into the video game live-streaming business.

Steven Avery’s defense attorney is keeping her 163,000 Twitter followers abreast of her ongoing defense work on behalf of the “Making a Murderer” documentary subject, and some lawyers think it’s a bad idea.

Five quick and easy ways to double your social media following.

Fake Internet traffic schemes will become the second-largest market for criminal organizations behind cocaine and opiate trafficking.

Bots and fraudsters are feasting on political ad dollars.

People are spending less time on social media apps these days? With Snapchat on pace to have more than 58 million active users this year, we’re skeptical.

The man who created the Internet wants to create a less centralized web with more privacy and less government and corporate control.

Should Twitter limit the number of tweets users can send each day? Other platforms see the value in limiting posts.

In the UK the number of arrests over offensive social media posts is soaring.

Research shows an alarming number of people in the UK can’t distinguish between marketing and non-commercial content on social media, indicating potential breaches of the CAP Code (the UK’s version of the FTC’s Endorsement Guides). Here’s how social media marketers in the UK can stay on the right side of the law.

Google co-founder Larry Page is secretly building flying cars.

Our attention spans are decreasing. Here’s how that should affect your brand’s website and social media strategy.

In a massive recent theft of Twitter usernames and passwords, “123456” was the most commonly used passcode by far. Sigh.

 

lines of binary codes traveling through the virtual tunnel

Deluged with an unprecedented amount of information available for analysis, companies in just about every industry are discovering increasingly sophisticated ways to make market observations, predictions and evaluations. Big Data can help companies make decisions ranging from which candidates to hire to which consumers should receive a special promotional offer. As a powerful tool for social good, Big Data can bring new opportunities for advancement to underserved populations, increase productivity and make markets more efficient.

But if it’s not handled with care, Big Data has the potential to turn into a big problem. Increasingly, regulators like the Federal Trade Commission (FTC) are cautioning that the use of Big Data might perpetuate and even amplify societal biases by screening out certain groups from opportunities for employment, credit or other forms of advancement. To achieve the full potential of Big Data, and mitigate the risks, it is important to address the potential for “disparate impact.”

Disparate impact is a well-established legal theory under which companies can be held liable for discrimination for what might seem like neutral business practices, such as methods of screening candidates or consumers. If these practices have a disproportionate adverse impact on individuals based on race, age, gender or other protected characteristics, a company may find itself liable for unlawful discrimination even if it had no idea that its practices were discriminatory. In cases involving disparate impact, plaintiffs do not have to show that a defendant company intended to discriminate—just that its policies or actions had the discriminatory effect of excluding protected classes of people from key opportunities.

As the era of Big Data progresses, companies could expose themselves to discrimination claims if they are not on high alert for Big Data’s potential pitfalls. More than ever, now is the time for companies to adopt a more rigorous and thoughtful approach to data.

Consider a simple hypothetical: Based on internal research showing that employees who live closer to work stay at the company longer, a company formulates a policy to screen potential employees by their zip code. If the effect of the policy disproportionately excludes classes of people based on, say, their race—and if there is not another means to achieve the same goal with a smaller disparate impact—that policy might trigger claims of discrimination.

Making matters more complex, companies have to be increasingly aware of the implications of using data they buy from third parties. A company that buys data to verify the creditworthiness of consumers, for example, might be held liable if it uses the data in a way that has a disparate impact on protected classes of people.

Expanding Uses of Disparate Impact

For decades, disparate-impact theories have been used to challenge policies that excluded classes of people in high-stakes areas such as employment and credit. The Supreme Court embraced the theory for the first time in a 1971 employment case called Griggs v. Duke Power Co., which challenged the company’s requirement that workers pass intelligence tests and have high school diplomas. The court found that the requirement violated Title VII of the Civil Rights Act of 1964 because it effectively excluded African-Americans and there was not a genuine business need for it. In addition, courts have allowed the disparate-impact theory in cases brought under the Americans with Disabilities Act and the Age Discrimination in Employment Act.

The theory is actively litigated today and has been expanding into new areas. Last year, for example, the Supreme Court held that claims using the disparate-impact theory can be brought under the Fair Housing Act.

In recent years, the FTC has brought several actions under the disparate-impact theory to address inequities in the consumer-credit markets. In 2008, for example, the agency challenged the policies of a home-mortgage lender, Gateway Funding Diversified Mortgage Services, which gave its loan officers autonomy to charge applicants discretionary overages. The policy, according to the FTC, had a disparate impact on African-American and Hispanic applicants, who were charged higher overages than whites, in violation of the Federal Trade Commission Act and the Equal Credit Opportunity Act.

The Good and Bad Impact of Big Data

As the amount of data about individuals continues to increase exponentially, and companies continue to find new ways to use that data, regulators suggest that more claims of disparate impact could arise. In a report issued in January, the FTC expressed concerns about how data is collected and used. Specifically, it warned companies to consider the representativeness of their data and the hidden biases in their data sets and algorithms.

Similarly, the White House has also shown concern about Big Data’s use. In a report issued last year on Big Data and its impact on differential pricing—the practice of selling the same product to different customers at different prices—President Barack Obama’s Council of Economic Advisers warned: “Big Data could lead to disparate impacts by providing sellers with more variables to choose from, some of which will be correlated with membership in a protected class.”

Meanwhile, the European Union’s Article 29 Data Protection Working Party has cautioned that Big Data practices raise important social, legal and ethical questions related to the protection of individual rights.

To be sure, government officials also acknowledge the benefits that Big Data can bring. The FTC in its report noted that companies have used data to bring more credit opportunities to low-income people, to make workforces more diverse and provide specialized health care to underserved communities.

And in its report, the Council of Economic Advisers acknowledged that Big Data “provides new tools for detecting problems, both before and perhaps after a discriminatory algorithm is used on real consumers.”

Indeed, in the FTC’s action brought against the mortgage lending company Gateway Funding Diversified Mortgage Services, the agency said the company had failed to “review, monitor, examine or analyze the loan prices, including overages, charged to African-American and Hispanic applicants compared to non-Hispanic white applicants.” In other words, Big Data could have helped the company spot the problem.

Policy Balancing Act

The policy challenge of Big Data, as many see it, is to root out discriminatory effects without discouraging companies from innovating and finding new and better ways to provide services and make smarter decisions about their business.

Regulators will have to decide which Big Data practices they consider to be harmful. There will inevitably be some gray areas. In its report, the FTC suggested advertising by lenders could be one example. It noted that a credit offer targeted at a specific community that is open to all will not likely trigger violations of the law. But it also observed that advertising campaigns can affect lending patterns, and the Department of Justice in the past has cited a creditor’s advertising choices as evidence of discrimination. As a result, the FTC advised lenders to “proceed with caution.”

As the era of Big Data gets under way, it’s not bad advice for all companies.

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This post originally appeared as an op-ed piece in MarketWatch.

For more on potential legal issues raised by Big Data usage, please see our Socially Aware post, Big Data, Big Challenges: FTC Report Warns of Potential Discriminatory Effects of Big Data.

 

 

The Newspaper Association of America has filed a first-of-its-kind complaint with the FTC over certain ad blocking technologies.

Is it “Internet” or “internet”? The Associated Press is about to change the capitalization rule.

Lots of people criticized Instagram’s new logo, but, according to a design-analysis app, it’s much better than the old logo at doing this.

Twitter has finally realized that people don’t use it to buy things.

Facebook wants to help sell every ad on the web.

A Russian law enforcement agency is investigating controversial groups alleged to have encouraged more than 100 teenage suicides on social media.

A self-proclaimed “badass lawyer” lost a defamation suit against a Twitter account that parodied him.

The Internet of every single thing must be stopped.

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iStock_000034905072_MediumSocial media has allowed aspiring authors, musicians, filmmakers and other artists to publish their works and develop a fan base without having to wait to be discovered by a publishing house, record label or talent agency. And that seems to have made at least modest celebrity easier to achieve. The financial rewards that we usually equate with fame, however, might be just as elusive as they were in the pre-Internet age—perhaps even more so, in an era where content, once posted online, can be exploited by others in ways that typically don’t generate money for the creator of the content.

Sure, some hard-working social media stars are scoring big profits based on their popularity. The YouTube channel CharlisCraftyKitchen, for example, which features videos of a young girl making treats and which boasts 29 million views a month, averages monthly ad revenue close to $130,000.

The Swedish gamer PewDiePie’s net worth is estimated at $61 million—a big sum for a guy who is unknown to most people over 40 years old.

And, having secured a book deal and endorsement contracts with brands like L’Oreal, self-taught makeup artist/vlogger Michelle Phan is now at the center of a true life rags to riches story.

I suspect, however, that a far more common tale is the one told by Gaby Dunn, co-star of the YouTube comedy sketch channel Just Between Us, in a fascinating article entitled “Get Rich or Die Vlogging: The Sad Economics of Internet Fame.”

Dunn reports that, despite her channel’s “more than half a million subscribers” and “hungry fan base,” she’s broke and has to take menial jobs to make ends meet.

Dunn says that she and her vlogging partner, Allison Raskin, make money from the “ads that play before [their] videos,” and by freelance writing and performing, “but it’s not enough to live, and its influx is unpredictable.”

Almost as frustrating as brands not believing that Dunn’s channel is big enough to sponsor are her fans’ reactions when she does score a patron. Dunn’s and Raskin’s third branded video in more than two years resulted in viewer comments such as “Enough with the product placement” and “Gotta get that YouTube money, I guess.” And, as we’ve discussed in past blog posts, if a vlogger or other content producer is being paid to endorse a product or service, he or she is generally required to disclose this material connection to his or her followers.

In any event, Dunn is hardly the only online content creator feeling the pinch. Even writers who’ve enjoyed full-time positions at large journalism outlets are finding themselves out of a regular paycheck. The popular digital media website Mashable, for example, laid off 30 members of its staff—including several high-level editors. The current affairs website Salon recently cut back on the number of people on its payroll, too—20 percent of the publication’s editorial staff lost their jobs in April.

Things are equally discouraging in the music business; one revealing statistic from the RIAA is that, in 2015, record companies received more money from vinyl record sales than from ad-supported online streaming.

A real challenge for social media celebrities and other content creators is that online ad rates have been declining for years; despite the continued growth of online advertising, there are not enough ads to support the ever-expanding pool of Web content seeking advertiser support.

Another threat is the rise of freebooting—that is, the practice where a video specifically created for and posted to YouTube is, without the authorization of the video’s creator, copied and uploaded to Facebook, where it may generated millions of views without compensation to the creator.

And perhaps the greatest concern for content creators is the increasing popularity of ad-blocking technologies. The use of ad blockers has grown by 41 percent over the past 12 months; there are now nearly 200 million active users of such technologies worldwide. In the United States, an estimated 45 million Americans are surfing an ad-free version of the Internet, resulting in an estimated $22 billion in lost ad revenues in 2015.

All of this adds up to form a rather bleak picture for content creators seeking to make a living online; a million social media followers may result in fame, but not fortune. And fame without fortune doesn’t pay the bills.

 

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For more information on potential legal hurdles for social media celebrities, influencers, bloggers, vloggers and other content creators seeking to make a living online, please see these related Socially Aware blog posts:

Innovative Social Media Marketing Cannot Overlook Old-Fashioned Compliance

FTC Continues Enforcing Ad Disclosure Obligations in New Media and Issues a Warning to Advertisers

FTC Enforcement Action Confirms That Ad Disclosure Obligations Extend to Endorsements Made in Social Media

Influencer Marketing: Tips for a Successful (and Legal) Advertising Campaign

An FTC Warning on Native Advertising