Pay for play is not in any way a phenomenon which has first surfaced in the social media podcast age. Payola was common in the vaudeville era of the Roaring Twenties and in 1959 Alan Freed, the DJ who popularized the term rock and roll, faced trial for accepting money to play specific records on the air. When it comes to the Wild Wild Web, podcasters are just as responsible for adhering to rules which prohibit pay for play as anyone working in the more traditional forms of media such as radio and television… and the Federal Trade Commission (FTC) wields the legislative sword to ensure that everyone complies.

Yes, podcasts are regulated by the FTC

The FTC is well aware that endorsements from all types of influential sources are an important factor which assists consumers in making purchasing decisions. That is the primary reason why the Commission mandates that whenever anyone (and that includes podcasters) are sharing content with any audience in the United States which a “reasonable consumer” could interpret as an influence, a disclosure of the relationship with the promoted party will be “clearly and conspicuously” included.

There are various definitions of terms included in the FTC regulations which must be clearly understood by all podcasters but these are the five most significant:

    1. Material relationships. Also known as material connections, they are the existing connections between a podcaster engaged in endorsements and the marketer of a specified product or service.
    2. Deception. The FTC regulations specify that a statement made on a podcast is deceptive if it can be deemed to mislead a “significant minority” of consumers. That is a very critical statement as even if one out of five of your podcast listeners could be seen as being deceived by your podcast you could be in some very hot legal waters.
    3. Clear and conspicuous. The placement of the disclosure in your podcast about your endorsement has to be “discernable and understood” by an average consumer. Therefore, whispering your disclosure at 15 dB over the speaker-blasting screaming guitars of your intro doesn’t cut it with the FTC.
    4. Endorsers. Podcasters are classified as endorsers as they fall into the legal definitions of “advocates,” “influencers,” or “ambassadors.” Podcasters who receive products at no charge or even at a discount, as well as those who are paid outright are legally endorsers.
    5. Endorsement. The FTC assumes that any podcast statement dealing with testimonials or reviews of a product or service fall under the term of endorsement.

An extended definition of endorsement

The extended definition of what is an endorsement in podcast terms is essentially commercial speech, and the borders between what is free speech and what is commercial speech are extremely tenuous. An individual posting on their Facebook page that they just bought an XYZ-Tech tablet and they absolutely love it is definitely on the side of free speech. However, an individual who is engaged in a profit-making operation through the production of podcasts and who has received either a cash payment or the “gift” of the tablet itself from XYZ-Tech who makes an equivalent statement falls on the side of commercial speech.

Could a consumer be reasonably deceived?

There is a very fine legalistic distinction in what effectively constitutes an endorsement as the FTC does not necessarily consider endorsements as being specific to their content. Therefore the Commission does not consider a disclaimer statement by the podcaster that “the content of this podcast is not intended to be a review or testimonial” as valid in any way. The FTC determines whether or not an endorsement was actually included in your podcast according to the actual content message which is received by the consumer. If the Commission believes that a consumer could reasonably be deceived by a podcast’s content into believing it was an “honest and uncompensated” review when indeed valuable compensation did exchange hands favoring the podcaster, then the law has been violated.

You don’t have to be an infomercial pitchman like Kevin Trudeau to face 10 year jail terms as the FTC considers podcasts equivalent to TV broadcasts, so obey the laws!