Yesterday, Ars Technica reported on some arguably shady advertising practices taking place between Microsoft and YouTube gaming giant Machinima. You can check out the report for an extended explanation, but the general gist is that Microsoft has been dishing out as much as $3 CPM ($3 per thousand video views, in other words) to popular YouTube personalities. In return, their video must mention or feature Xbox One in a positive (or at least non-negative) light, for a specified amount of time. None of it is immoral or sketchy by default, except for this part from the official agreement between the two parties.
You may not say anything negative or disparaging about Machinima, Xbox One or any of its Games in your Campaign Video.
And, of course, this part.
You agree to keep confidential at all times all matters relating to this Agreement, including, without limitation, the Promotional Requirements, and the CPM Compensation, listed above. You understand that You may not post a copy of this Agreement or any terms thereof online or share them with any third party (other than a legal or financial representative). You agree that You have read the Nondisclosure Agreement (attached hereto and marked as Exhibit “A”) and You understand and agree to all of terms of the Nondisclosure Agreement, which is incorporated as part of this Agreement.
Looks like somebody disregarded that last one. Individually, these stipulations aren’t so bad, but together, they may be in violation of the FTC’s disclosure guidelines for endorsements.
The point is, that happened, and now both Microsoft and Machinima have stepped out to defend themselves. The companies released a joint statement to Polygon, claiming they’ve done nothing illegal and that the deal is simply business as usual.
This partnership between Machinima and Microsoft was a typical marketing partnership to promote Xbox One in December. The Xbox team does not review any specific content or provide feedback on content. Any confidentiality provisions, terms or other guidelines are standard documents provided by Machinima. For clarity, confidentiality relates to the agreements themselves, not the existence of the promotion.
To make matters worse, it now seems as if the Microsoft/Machinima deal may have merely been the outstretched pinky finger on an industry-wide, closeted YouTube skeleton. Documents have turned up on NeoGAF that suggest similar practices put in place by EA, the main difference being that rather than a one-time deal, EA’s Ronku is a program that offers this sort of compensation regularly – up to $10 CPM in most cases.
Of course, EA followed with a statement of their own, this time via The Verge.
Through EA’s Ronku program, some fans are compensated for the YouTube videos they create and share about our games. The program requires that participants comply with FTC guidelines and identify when content is sponsored. User-generated videos are a valuable and unique aspect of how gamers share their experiences playing the games they love, and one that EA supports.
In a followup question on whether content creators have actually been disclosing sponsorship, EA dodged and said simply that the terms and conditions require disclosure. Ugh – hear that awful crunching noise? It’s those YouTubers who were just thrown under the bus.
This is a nasty situation that will probably only get worse (there’s my inner optimist shining through, oh ho ho), and my gut reaction is to climb under a rock somewhere until it’s over. Of course, even if I do so, I’ll need to bring my laptop along so I can write about it. Do you care whether shady YouTube endorsements happen under your nose, or is it all a bunch of overblown malarkey? Let us know.