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America's memo to bloggers: don't lie, or we'll fine you

US regulators say they will fine bloggers who fail to disclose their relationships with advertisers. Can the scheme possibly work?

This blogger was not paid to feature in this photograph. Or was he?

Update: For some reason in the original version of this post, I said the new guidelines were from the Federal Communications Commission, rather than the Federal Trade Commission. My mistake, now corrected.

The long-running debate over freedom of speech on the internet took a new twist yesterday, when America's most important regulators - the Federal Trade Commission - decided to approve new rules to stop independent bloggers from hiding their links to advertisers.

More accurately, the FTC has put forward a new series of guidelines designed to encourage fair and transparent product reviews online - including an attempt to regulate "payola" on websites and blogs. The possible consequence of breaking those rules? A fine of up to $11,000 (more than £6,800 in real money).

Payola schemes - where web users are offered money or gifts to write about certain services or products - have increased in recent years, as marketers realise that there's a lot of hay to be made by using freebies and cash incentives to encourage bloggers, web users and forum contributors to produce reviews or testimonials. At its worst, it is a form of astroturfing, the pernicious practice of trying to trick people into thinking that has widespread support from ordinary members of the public.

However, the FTC's guidelines - which are detailed in this press release- could also stretch to sites like Facebook and Twitter, according to this CNet report. It says that FTC bigwig Richard Cleland said he "plans to keep tabs on social networks as well as blogs".

The rules also look at celebrity endorsements and generic testimonials, and were voted in unanimously by FTC commissioners. That means they aren't strictly law - nor do they specify exactly how bloggers must provide disclosure of their relationships with companies. But they do make a few things clear:

The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement.

Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

The idea has, unsurprisingly, enraged those who don't believe that the government has the right to start regulating what people say (even if it's misleading). That includes Guardian columnist Jeff Jarvis, who - despite his hatred of payola - calls it a "monument to unintended consequence, hidden dangers and dangerous assumptions".

One thing I am pretty sure about: this will be used by some journalists as a way to beat bloggers up. Payola is, after all, one area that journalism (stuck in its tedious and everlasting love-hate spiral with blogging) has often taken the sniffy high ground. Without a code of ethics and transparency, journalists often point out, bloggers are simply targets for unethical marketers. And while there's certainly truth in that - marketers have certainly latched onto the concept, not least the controversial company PayPerPost - it's also a bit rich to assume that every journalist or publication in America is a paragon of ethical virtue (or indeed unaffected by outside influences).

Anyway. Right now, I'm not entirely sure whether I think this is a good thing or not. The intention is clearly honourable, but I'm not sure what they mean in practice - the guidelines are 81 pages long and I haven't finished reading them yet. Is it possible to regulate the internet in this way? And even if it possible, would it potentially restrict other areas of online life? Any thoughts?