Aug 11th, 2007 | Blogging Legal Issues, Corporate Blogging, Research | 1 Comment
I’ve just finished reading a quite enlightening article by Robert Sprague, who is an Assistant Professor at the Department of Management and Marketing, University of Wyoming. Here’s the complete reference:
Robert Sprague (2007). Business Blogs and Commercial Speech: A New Analytical Framework for the 21st Century. American Business Law Journal 44 (1), 127–159. PDF from Blackwell
As the title already suggests, the article is concerned with the legal implications of business blogging in the U.S., specifically with the question of whether company blogs always qualify as commercial speech and should thus receive only limited constitutional protection. Sprague argues that the nature of how companies communicate with the public has been broadened significantly through blogs:
A substantial amount of business-related dialogue is beginning to occur on blogs and the number of blogs sponsored by businesses is growing. This increase raises questions about the level of constitutional protection afforded to information contained in the blogs. Speech by businesses has generally been regarded as commercial speech because it has traditionally taken the form of directly promoting a product or service by providing information about that product or service. Modern marketing strategies and recent technological developments, such as blogs, are transforming the nature of commercial speech. Businesses now often communicate with their customers without providing any specific information regarding their products or services. Although commercial speech has received limited constitutional protection since 1975, the commercial speech doctrine has not effectively evolved beyond the notion that speech by businesses is advertising subject to regulation. […] Modern businesses are using Internet technologies, particularly blogs, to engage in dialogues with the public. The key issue is whether all speech by a business should continue to be relegated to the commercial speech doctrine.
p. 127
In other words, there isn’t really a legal precedent for the kind of communication that companies are conducting via blogs, as it becomes increasingly clear that blogs are used for more than just advertising.
The growth of business blogs, coupled with the unique cultural aspects of the blogosphere, raises a number of legal issues. Specifically, is the dialogue in which a company participates on a blog always commercial speech? Should some business blogs enjoy First Amendment protection or should most business blogs be subject to laws prohibiting false or deceptive advertising or other government regulation? The deceptive trade practices standards are quite low, generally requiring only a material representation or omission that is likely to mislead the customer. The critical issue is whether all speech on a blog that is in any way associated with a business will be considered commercial speech, subject to the commercial speech doctrine in its present incarnation.
p. 134
Even if you aren’t a legal expert it isn’t hard to interpret a material representation or omission that is likely to mislead the customer as a fairly broad category. Perhaps your CEO’s blog is triple-checked by the legal department, but what if you run a few thousand employee blogs? And does documentation, knowledge blogging and communication with stakeholders (say, if you’re a tech company) really constitute commercial speech?
The critical issue for businesses is whether the content in its blogs should be characterized as commercial speech. Companies may express support for efforts to minimize global warming; employees may post messages on a company-sponsored blog about the company’s sponsorship of sweatshop labor; ‘‘product evangelists’’ for a company may comment on various blogs regarding Internet security; corporate counsel for an Internet communication company may post comments about the Chinese government’s censorship of blogs. Whether any of these blog postings would constitute commercial speech merely because they originate or are related to corporate sponsorship is unresolved.
Should the regulated marketplace of products and services, rather than the unregulated marketplace of ideas, be the arbiter of the truth of these blog comments? If the examples listed above are considered commercial speech, then the companies may be subject to scrutiny under laws relating to false advertising or deceptive trade practices, as well as other government regulations.
p. 136
Sprague continues with a detailed analysis of what constitutes commercial speech (the definition is, as one might have guessed, quite fuzzy). Things get complicated quickly, as a case involving Nike shows:
Specifically, the California Supreme Court held that Nike’s statements constituted commercial speech because: (1) Nike, because it is engaged in commerce, is a commercial speaker; (2) Nike’s statements were addressed directly to actual and potential purchasers of its products (a commercial audience); and (3) Nike’s representations of fact were of a commercial nature because it described its own labor policies and the practices and working conditions in factories where its products are made. […] The case was settled by the parties. As a result, an opportunity was missed to address a critical issue related to commercial speech whether statements made by commercial enterprises which do not directly promote a product or service, but instead comment on social issues and general business practices, are commercial speech.
p. 147
Nike ran an image campaign to meet criticism that was the result of their production practices overseas. The question that remained unresolved was whether such a campaign constituted commercial speech, since one aspect (a product being advertised) was missing from the picture.
The complexity of classification lies in the fact that commercial speech is most often a form of mixed or hybrid speech, including both commercial and noncommercial elements. The commercial element, the primary purpose of which is to persuade consumers to buy goods, may be regulated, while the method by which such speech is communicated is usually considered protected. As one commentator has explained, ‘‘[t]he Supreme Court’s inability to encase commercial speech within unwavering definitional boundaries is not the product of ineptitude, but rather the unavoidable incident of commercial speech’s position at the blurry crossroads of expressive and economic activity.’’ Legal issues regarding the protection of speech in blogs sit squarely within these crossroads. Blogs are a prime example of how new methods of communication have transformed the commercial environment, thereby increasing the difficulty of distinguishing commercial from noncommercial speech. Businesses increasingly combine entertainment, advertising, and public elations efforts in their overall marketing strategies. Advertising the availability or characteristics of a product or service and its price is a method that has been replaced with ‘‘a movement toward viewing communications as the management of the customer buying process over time, during the preselling, selling, consuming, and postconsuming stages.’’ Public relations, promoting a company’s image, is recognized as just one element in the mix of marketing communications companies should utilize. While advertising is designed to be repetitive, persuasive, and focused on specific products or services, public relations efforts generally have a higher level of credibility, as the message may reach potential customers as news rather than as advertisements. Blogs fit the trend toward a broader view of marketing. They are being viewed as an ideal ‘‘forum for conveying the company’s values, attitude, positions and additional content that other communications vehicles don’t.’’ Blogs also have the ability to simulate advantages of word-of-mouth marketing, a form of advertising that many companies find articularly appealing as it simulates the influence of recommendations by a friend or social contact.
p. 149-150
As Sprague observes, if blogging always constitutes commercial speech (and thus has only limited or no constitutional protection), the legal situation in an exchange between the public blogosphere and a company is asymetrical:
Under the current commercial speech doctrine, individuals who criticize a business’ products or services or business practices enjoy a much higher level of speech protection than the businesses they discuss. With the growth of blogs, customers and noncustomers alike have an ever-expanding universe, both in size and influence, in which to publish their messages with near immunity. The U.S. Supreme Court stated in Gertz v. Welch, ‘‘Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas.’’ Thus, while false statements of fact do not necessarily deserve full constitutional protection, the Supreme Court recognizes they are nevertheless ‘‘inevitable in free debate.’’ In Gertz, the Court stated, ‘‘The First Amendment requires that we protect some falsehood in order to protect speech that matters.’’ […]
Under the current commercial speech doctrine, there is no clear classification scheme that effectively delineates commercial speech from noncommercial speech. In effect, any time a business communicates through a blog, it risks being sued on the basis that the public is likely to be deceived.
p. 154
Sprague continues by developing a three-tier system to classify blogs. He divides contributions in corporate blogs into three functional categories:
- Marketing
- PR
- Social Commentary
(if you want a comparison, have a look at my own proposed classification scheme here and here)
In his view the first two types of writing should be labeled as commercial speech, with the limitations in regards to constitutional protection that this entails. The last category, social commentary, should be interpreted as more than commercial speech and thus be covered by the First Amendment. As is always the problem with such frameworks - especially with genres of writing and how to classify them - the million-dollar question is: how do we distinguish between the different types?
Firstly, there’s the question of whether there is such a thing as disinterested, general-purpose social commentary in a company’s official communication. A corporation exists primarily to serve the interests of it’s owners and the core interest is usually to make a profit. If the criterion for Sprague’s social commentary category is the absence of any benefit for the company, it will be very hard to find a corporate blog that neatly fits the category. Any employee blog is potentially beneficial for the company’s image (if it says something nice) and potentially damaging (if it says something bad). And since Robert Scoble we know that it can even be beneficial if it says something bad - the fact that Scoble was free to criticize Microsoft in an official company blog made his employer look more open, responsive and modest. So benefit can clearly not be a criterion on its own, because how exactly a positive effect is achieved when it comes to how a company is publicly regarded is difficult to predict.
Perhaps intent is the key. If there is a conscious, visible intent to sell a product (marketing) or make a company look good (PR) that could arguably be described as commercial speech and treated accordingly. If there is no visible intent and beneficial effects for the company are indirect - say, an employee blogs about his work mixed with personal thoughts and opinions in a way that raises the profile of the company and attracts customers - the social commentary classification would perhaps work.
Sprague suggests that the emphasis should shift from who writes something to what it is they are writing about. That sounds good in theory, but I believe that the best approach is to pinpoint who is writing together with intended audience and communicative purpose in a sort of matrix. The fact that something was written by someone from the marketing department is clearly an argument for commercial speech, no matter the text itself looks like. Following that logic, a sales pitch (1) from a marketer (2) that is clearly targeting pharma companies (3) exemplifies commercial speech, while the review of a TV show (1) coming from a staffing manager (2) that could potentially be relevant to anyone interested in that show (3) does not.
But then again, at least for now, the question of how we classify blogs in a corporate context may just boil down to a known paradigm in law.
Jul 19th, 2007 | Blogging Legal Issues, CEO Blogging, Corporate Blogging, Fake Blogs, John Mackey, Whole Foods Inc | 3 Comments
Whole Foods CEO John Mackey must have been thinking something along those lines when he invented an on-line alter ego that praised him and his company and bashed rival Wild Oats. BusinessWeek, CNNMoney and the PRSA have read-worthy commentary and Valleywag’s Owen Thomas shares an entertaining tidbit related to the fiasco.
Mackey’s actions are now the subject of an SEC investigation and after it was announced that the Whole Foods Board is also looking at it, he today reacted by publishing an apology - interestingly enough not through his blog (which is “temporarily closed”) but through the PR section of the company site (link).
The way the apology is worded demonstrates that there is pressure mounting. Some are calling for Mackey’s head and there is a considerable amount of confusion as to why he chose to anonymously bad-mouth the competition on a Yahoo! finance forum in the first place.
I’m still looking both at the entries in Mackey’s blog and at the Yahoo! board - it seems like a fascinating case, certainly worth a little linguistic investigation. Here is a list of all postings Mackey wrote under his pseudonym, if you care to do a little detective work. What’s strange is that the responses to his final post in August 2006 suggest that the other board users were quite aware of his identity (one participant responds with “Goodbye JM!” to his farewell message). Has this incident taken almost a year to show up on the media’s radar? It seems so, which makes me wonder who or what made it show up right now…
A close reading of some of the Yahoo! postings provides an interesting insight into the psyche of an executive who is truly “mission-driven” (see below) and has apparent trouble dealing with criticism.
Here’s a sample:
unibomber999, radmok is interested in neither facts nor logic. He or she, like so many other shorts on this Board, love to spin their fantasies about the future while completely ignoring the facts of both the past and the present. radmok (hubris, liberfar and many other shorts & bashers) choose to focus on Whole Foods competition improving, while completely ignoring the reality that Whole Foods is improving & evolving far faster. They don’t seem to realize that Whole Foods isn’t sitting still, but learning and growing as an organization at a very rapid rate. They wrongly believe that Whole Foods competitive advantage is all about organic foods and that once Whole Foods competitors are all selling it (which has already been the case for nearly a decade now) Whole Foods will fade into the sunset. They refuse to recognize that Whole Foods is a mission driven retailer that has evolved numerous competitive advantages including a superior business model of optimizing stakeholder relationships, a unique company culture based on empowerment, service and innovation that cannot be duplicated by a command and control supermarket company, a happy and motivated work force, and highly motivated, skilled, and knowledgable leadership throughout the company. The shorts and bashers keep waiting for the whole thing to collapse, not understanding that Whole Foods has been continuously growing and evolving for 26 years now. This ain’t no overnight success story. One thing I’ve enjoyed about this Board is watching the shorts come and go every year. They come on to this Board making highly arrogant and “original” proclamations that this is just a stupid grocery store which is ridiculously overvalued and is going to get its comeuppance very, very soon. How many shorts have the long-term participants on this Board watched disappear every year with large losses on their shorts? Several hundreds now. Surely we must be getting close to a thousand or so by now. This current batch of shorts (with one or two exceptions) won’t be here a year from now. They will have disappeared. However, new shorts will take their place (for the shorts we will always have with us) and they will say the same stupid and unoriginal things that their predecessors said before them, believing themselves to be both original and brilliant. There is nothing we can do, but regularly flush out the old shorts from the ignore button and replace them with the current crop. Meanwhile, Whole Foods will keep doing its thing–producing unmatched same store sales growth and continue its irresistable growth, driving the stock price up and the shorts off of the Board.
(link)
This, I believe is not what happens when you drink your own Kool-Aid. It’s what happens when you bathe in it, drink it and then bake a cake with it.
I’ll be posting more on the matter as it “evolves and grows”.
Edit: Eddy Elfenbein also has some nice Mackey quotes.
Jul 3rd, 2007 | Blogging Legal Issues, Corporate Blogging, Microsoft | No Comments
Oh, I admit the title sounds a tad dramatic, but in effect what I’m blogging here concerns revealing internal information, so if you add a mental wink the title is fairly appropriate. The object of controversy (or at least, a lot of interest) is this blog post by an anonymous Microsoft employee (via Heather). In it, a Microsoft recruiter interviews someone who previously worked for Google and asks about his experiences there. While the interviewer chose to share the text with other Microsofties through internal channels, the (anonymous) blogger decided go a step further and publicly post it in Just Say No To Google, which is apparently a one-shot blog.
As several of the many commentators have noted, the blogger is critical (or even hostile) of Google in a way that isn’t really reflected by the interview. Even his assertion that Google is not transparent is hardly supported by the interview - instead it effectively says that Google may be more attractive to some people and Microsoft more attractive to others, depending on your priorities and lifestyle (Heather echoes this in the last paragraph of her very interesting and detailed commentary).
While it is tempting for companies to file this under “how blogging can reveal your trade secrets”, that would be inaccurate, because this isn’t really blogging in the strictest sense. The anonymous Microsoftie has used the one-shot blog as a platform to publish something that someone else has written, though this may not be immediately transparent to readers. He could have published it using a different tool, but the simplicity and anonymity of a hosted blog made it the natural choice. It is exceedingly likely that in the future many earth-shattering revelations (which the “insider” information about Google’s cafeteria is surely not) will be made via blogs in this way, since there is hardly an easier way to reveal something you want to see revealed while remaining anonymous.
Mar 18th, 2007 | Blogging Legal Issues, CEO Blogging, Corporate Blogging, IBM, Jonathan Schwartz, PR | 2 Comments
That’s essentially the brave question that Phil Hall asks over at Strumpette (found via Blog Campaigning) in a very interesting post. He summarizes his own attitude as follows.
I would like to make a statement that many PR people will view as apostasy: I think corporate blogs are, on the whole, a waste of time.
Well, he isn’t the first to make such an outrageous claim, though it could be that he’s the first person in PR. He continues by arguing that even those company blogs that perpetrate it aren’t really written for consumers but target the media crowd.
People like me are looking for quality goods at reasonable prices. Reading the blog posting of some CEO ruminating on this-and-that is of no value to folks like me.
[Just a quick stylistic observation: it’s genuinely cute (and clever) to start a sentence with the phrase people like me and then end the next one with folks like me if you’re the former president of Open City Communications, a New York PR agency, and former editor of PR News. I imagine that PR executives with book deals are not entirely en par with the majority of people shopping at Wal-Mart in terms of income. But perhaps that’s just my dirty mind. It doesn’t hurt his argument either - I just assume that somewhere in PR school you learn that it’s always better to phrase personal opinions in the “folks-like-me-plural”.]
Hall then raises several familiar points: consumers don’t care about company blogs, blogging is risky because of litigation, a comment-enabled blog gives trolls and haters a platform, etc. He closes asking for examples of interesting corporate blogs.
But beyond those examples – sorry, but I am not aware of corporate blogs being used as anything more than a poorly-disguised sales vehicle. If you know of some genuinely clever examples of the format, please share them here – I would love to learn about them and have a reason to change my negative opinion.
I think there are quite a few counter-examples, though his criticism that many company blogs are boring and manipulative is certainly legitimate. My impression is that many smart implementations of blogging exist to improve company-internal communication. I’ve commented on the MSDN and Oracle blog hubs before - they represent knowledge management resources which enable tech experts to exchange ideas and improve products. I’m pretty sure Joe User doesn’t care about ASP.NET errors, but to people writing code for a living it’s clearly a relevant issue. Internal blogs have become a fixture in the tech sector and it seems they have potential in other areas as well. For a rare and valuable piece of empirical research on internal corporate blogging at IBM see Kolari et al (thanks to Pranam for pointing me to it).
Let’s look at other applications of corporate blogging as well. Apart from marketing there’s PR, customer relations management, recruiting, communication, lobbying and strategy blogging, plus countless hybrids. All of these functions target different groups of people (look here for a -certainly incomplete- list and more thoughts on the issue). Thus it is quite possible, nay, likely that Joe Consumer is not the target audience for XYZ Corp’s CEO blog. The target audience are partners, investors, competitors and of course journalists, who can be counted on to follow such a blog quite closely.
In that context it is interesting that Hall brings up the SEC.
And what about the investment community? Yeah, can you imagine the SEC giving the thumbs up for publicly-traded companies using blogs to communicate with investors?
Yes, I can. While no decision has been made yet (to my knowledge), I think Cox’s comment serves as an indicator that blogs may soon be used for exactly that purpose.
With such an audience, the idea that posts are edited and reviewed carefully before publication is perfectly plausible - and then again, why not? The idea that blogs must be unedited and highly personal confuses the historical origin of blogs as web-based diaries with their status today. In other words: you can use blogs purely as a means of publishing content on-line, or you can adopt a “bloggy” style of writing. There are no rules when it comes to how you write - you can rehash ad copy or explain your corporate strategy, write about annoying business trips or how to make cranberry walnut bread. All that is corporate blogging and all of it, presumably, somehow serves a purpose for the companies that sponsor it.
So corporate blogs can potentially serve a number of purposes, many of which are outside the scope of marketing or PR. Huge global players such as IBM need sophisticated tools to communicate and coordinate their efforts internally - most people will agree that email is no longer the appropriate tool for that. Beyond internal communication corporate blogs are relevant where they address specific people with some kind of stake in the company’s actions: disgruntled consumers, activists, potential employees, competitors, shareholders, journalists, bloggers. The only thing that won’t work is starting a blog about toilet paper because that’s what you happen to sell. If you can’t make it relevant to anyone, don’t start a corporate blog. The chic of blogging alone won’t do.
But in the end this is less about how companies (or institutions in general) can use blogging as an effective tool and more about how employee blogging will change companies in the long run. Corporate hierarchies partly exist to manage the flow of information inside an organization. Executives are supposed to know and understand internal processes and manage them effectively. But once everyone in an organization is more or less connected with everyone else the overall need for a strict hierarchy is at least somewhat diminished.
Now, I’m no utopian suggesting that organizations will somehow be crowd-governed in the future, but it seems plausible to assume that the monopoly of a few (management, PR, communications dept) to exclusively represent a company to “the outside world” and to control the flow of information internally is fading. Of course nobody is going to care about anything you have to say just because they buy your products. But that doesn’t mean that there aren’t a lot of people listening quite closely - for other reasons. My impression is that “the long tail of corporate blogging” - i.e. employee blogging - will matter more than glitzy PR texts or marketing copy in the long run. I believe this because our conception of public vs. personal communication is in the process of changing radically and in that light it seems illogical to assume that institutions will somehow be spared from the effects.
Perhaps the whole question of who drives the changes vs. who is driven by them follows the inverted logic of the classic Slashdot meme: in Soviet Russia, corporate blog writes you.
Oct 7th, 2006 | Blogging Legal Issues, CEO Blogging, Corporate Blogging, Jonathan Schwartz, Sun Microsystems | No Comments
Law professor Allison Garrett (scroll down for her bio) has a post on her blog discussing the letter recently sent by Sun’s Jonathan Schwarz to SEC chairman Christopher Cox (see my earlier entry, Jonathan’s letter). Being a law expert, her perspective is different (read: more sober and realistic) than that of most bloggers, including myself:
I can see a few problems with allowing blogs to be considered compliant with Reg FD, but there may be ways around the problems. Here are some of the issues the come to mind:
1. How will investors know whether a blog is legitimately the CEO’s blog?
2. How can the CEO’s blog (which would perhaps be deemed Reg FD compliant) be distinguished from the software engineer’s personal blog that also addresses company issues?
3. Are RSS feeds reliable enough for journalists and serious investors?
4. What is the security of the blog? Could others access the CEO’s blog in some way and post messages there?
5. What if “false and misleading information” is posted in a blog? Who, besides the CEO, would have liability for the information? The audit committee might review 10-Qs prior to filing; it would have neither the time nor the inclination to review blog postings.
6. If the information is truly material, it seems that one way for the company to flag this is to make a filing on a Form 8-K. Otherwise, investors just have to guess about whether the information is material.
7. If CEOs take to blogging, they may have to give up one of the most attractive features of blogging — the ability to sort of think outloud in a candid manner. After all, an unguarded comment of the type that we bloggers make from time to time, could be career limiting.
All of these problems are either of a technical nature or related to how trustworthy blogging is as a new form of publishing. Of course, if you ask bloggers none of this is an issue, but from the perspective of the non-blogging part of the population - which still makes up the majority - things look different. Still, I can come up with a few arguments, even if it’s just from a layman’s point of view:
1. The security and verifiability of a blog is no different from that of a corporate web site in general.
2. The authorship of a blog can be verified by embedding it accordingly in the overall web site structure - if it’s located under “Company” - “Blogs” - “CEO’s blog” it is hardly plausible to assume it belongs to someone other than the CEO.
3. “False and misleading information” in a blog entry is no different from “false and misleading information” published in an interview or newspaper article (this doesn’t rule out the possibility that they might by treated differently in a legal context though).
4. Propagating information through RSS is arguably more effective than any other form of distribution. No, I don’t think that one sticks.
5. “Unguarded comments”, when made by politicians or corporate leaders, have the potential to be “career-limiting” whether they’re made at fund raisers, in interviews or posted in a blog.
Anyone with legal expertise (or without) want to pitch in?
Sep 12th, 2006 | Blogging Legal Issues, Corporate Blogging | 2 Comments
I came across an interesting article by Jacqueline Klosek, an associate at Goodwin Procter, on the legal risks of blogging in corporate contexts. Here’s one interesting quote:
New blogs tend to build on the work of existing blogs or other content through linking and copying. This can create legal concerns regarding copyright infringement if not conducted within the confines of the law.
Not being a legal expert, I can hardly delineate the confines of the law as clearly as I would like, but has there ever been a legal dispute over linking or quoting in a corporate blog? Is this problematic only when the sources are not clearly noted (one could argue that they always are when linking), or generally?
