"When it comes to user-generated content on the Internet, the rules and norms regarding sponsorship are usually vague at best. " - Ars Technica.

This has not been the case for a while. FTC regulations were updated to clarify last year, but even before that covered instances such as so-called "mommy bloggers". (see articles like this from 2010 - http://michaelhyatt.com/five-ways-to-comply-with-the-new-ftc-guidelines-for-bloggers.html - though the FTC since clarified that the $11,000 fine was not correct in this FAQ http://www.business.ftc.gov/documents/bus71-ftcs-revised-endorsement-guideswhat-people-are-asking) - There were plenty of FTC regulations that require disclosure of any and all sponsored user-generated content on sites such as Youtube.

The rules are certainly not vague, they are indeed quite specific. After the XB1M13 incident and investigation by various sites, FTC spokesman and associated director for advertising practices at the FTC Mary Engle stated that "disclosure should be clear and conspicuous, and shoudl be upfront and easy to see where the viewer won't miss it".

"What we say is that it should be easily seen or viewed (or heard in the case of audio) by the consumer or by the viewer. It should be made within the endorsement message, and within the review. We don't prescribe particular words or phrases that need to be used, but some people might say 'this is a compensated review,' or 'I got this free to try.'" "It should basically be unavoidable by the viewer," Engle adds (source - http://www.gamasutra.com/view/news/220851/Heres_what_the_feds_have_to_say_about_paid_YouTube_content.php)

This stuff was clearly in place beforehand and was certainly not vague. It even applies to receiving a review copy (indeed, FTC 16 CFR Part 255 - Guides Concerning the Use of Endorsements and Testimonials in Advertising references an example of reviewing a blogger reviewing a videogame system - source - http://bit.ly/1BHpmmc ) and in fact several traditional gaming websites seem to fall afoul of this (IGN for example as far as I can see does not disclose in their reviews that they received a review copy, Kotakus disclosure appears spotty, their recent Trap Team review does not mention receiving it from the publisher, though its possible that they bought it themselves and did not, their Alien Isolation review mentions it in passing by saying "the version that SEGA sent us was the Nostramo edition" whereas Polygon does disclose at the bottom of the page with a link to their list of ethical standards). It's possible that I'm misinterpreting exactly who these rules apply to however.

The FTC regulation clarifications were aimed primarily at "consumer generated media", ie. Youtube and blogs, enthusiast press if you will, though many traditional gaming websites straddle that line, bloggers at times, journalists at others. What is certainly clear however, are the rules and regulations in place that cover both Youtube and Twitch streams. The onus of compliance is on the content creator, not the content host. Twitch has stepped forward with clarifications, likely in the wake of a heightened awareness of these deals going on and because Twitch also arranges some of these deals themselves for their partners, thereby they would also at that point have to play ball with FTC regulations. This is also the reason that any contract you see regarding a brand deal will feature a clause requiring said disclosure in compliance with FTC regulations. I've seen many of these agreements and the only one that didn't seem to require disclosure was the infamous XB1M13 contract, which is why it blew up in the way that it did last year. It also seems likely that Multi Channel Networks hold some responsibility for ensuring the enforcement of disclosure, particularly since they too facilitate some of these deals and profit from them both directly (with a cut of the budget/finders fee) and indirectly (through their revenue share agreements with channel partners).

Regardless of all of this, I'd just like to dispel the notion that Youtube and Twitch are the wild west and have no regulation. They absolutely do and have for a long time. I'd also argue that the personality-driven nature of these channels puts further pressure on content creators to be transparent with their audience, or risk losing their trust and with it their careers. There's nothing to fall back on when it comes to Youtube, you aren't paid a salary, your success is directly linked to the happiness of your audience. Lose them and lose your job.

Needless to say I am fully in favour of as much sunlight as possible being shone on business practices perceived as shady. Native advertising is not going away and with the popularity of ad blocking software, it's growing as traditional ad-supported business models lose potency. It should be kept in the sunlight lest it crawls underground where you will no longer be able to see it. Remember, the only reason you guys know about it, is because it's disclosed ;)

Thanks for reading.