Last week I did a post entitled “The A-List Get’s Spiffs, The Longtail Gets Cash”, which garnered feedback from a few notable bloggers including Robert Scoble. The basic premise of my post was that spiffs provided by an advertiser or PR firm in the form of a “loaner” has value, just like a cash incentive has value. Both forms of outreach belong in the paid posting category and should abide by the same standards for transparency, disclosure and neutrality.
Scoble disagrees with this, and below are my responses.
Scoble:
One BIG difference. If I get a loaner and then give that loaner back that value doesn’t end up in my pocket the way it would if I sold a post.
My Response:
I believe that you cloud the issue because my last post was talking about a physical product, in that case a camera. Your argument is basically I give it back I don’t keep the value. I disagree with that statement. The value is consumed and transferred as the product is used, be it photos taken, miles on a car or hours on a computer. Every product has an expected life cycle and when you use a product you are consuming a unit of that life cycle.
Value consumption isn’t just a theory, you need only look to eBay to see this in effect. Once a product is used it is no longer new, and the remaining value of the product is significantly less. That value doesn’t just disappear, it is consumed by whomever first used the product, in this case you.
People get hung up on this concept because the product isn’t consumable in the traditional sense of the word. But what if we switched that camera out for something that was consumable. Let’s say a blogger received free internet service, an oil change, a meal at a restaurant or a vacation to a luxury resort. Pretty easy to say value changes hands there… but it is really no different. Product or service, value is exchanged.
Scoble:
“It is NOT something I asked for (I have four cell phones, three on loan right now — do you really think I get additional value out of having the other three?”
My Response:
At home I have three computers, two jet skiis and a truck. Just because I own these things doesn’t mean there isn’t value in having another (even in multiple). If someone were to send me the latest and greatest version of any of these I would be all over it. It is a status symbol in itself to be sent products, and that creates celebrity.
If you didn’t think there was any value in them why keep them at all? You could have refused them.
Cell phones are actually a great example for my point above because it is a physical product attached to a monthly service. You may be able to send a used cell phone back, but what about the minutes you consumed on those phones?
Scoble:
“Having a Nikon D3 for a month? It let me make better photos when I attended the World Economic Forum. One problem: all my photos are in the public domain, so YOU got the benefits of that value. I didn’t. I already had a professional camera that I paid for with my own money.”
My Response:
So because something is public domain you believe all the value is transferred to the public? Many of my pictures are public domain as well, but I sure do enjoy them myself. I also share them with friends and family.
How about this picture of your son taken with one of your new cell phones? Surely as her father you ascribe more value to this picture than the general public ever could (cute kid by the way). Just because something is public domain doesn’t mean the creator doesn’t receive value.
I am not a tax professional, but I do know that Uncle Sam sure likes to make sure he gets his share of every financial transaction. We can argue about details and exceptions, but at the end of the day the IRS makes the call. Consumables and services must be reported at fair market value. Should a loaner camera, provided by a manufacturer for the purpose of marketing, be reported to the IRS at the going rental rate? I’m not sure, it could probably go either way. What I am sure of is I wouldn’t want to fight that battle. As much as I loved Money Train I wouldn’t want to wakeup as Wesley Snipe’s cell mate for tax evasion.
That’s one of the beauties of SocialSpark, we take care of the tax reporting for the blogger and advertiser, 1099’s and all. Tax issues or not, I still believe these spiffs should be considered paid posts by those advertisers and bloggers participating. WOMMA should mandate that they be fully disclosed, transparent and neutral.
