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I.
Introduction
Mr. Chairman, I am Lee Peeler, Deputy Director of the
Bureau of Consumer Protection at the Federal Trade Commission. I thank you
for this opportunity to discuss the Commission's recent Reports on the marketing
of violent entertainment products to children by the motion picture, music
recording, and electronic game industries.[i]
Each of these industries has in place a self-regulatory system that rates or
labels products and that can help parents seeking to limit their children's
exposure to violent materials.
The Commission has issued four Reports on the marketing
practices of these three industries. In particular, the Reports have
examined voluntary guidelines and industry codes that govern the placement of
advertising for violent Restricted (R)-rated movies, Mature (M)-rated games, and
Explicit-Content Labeled recordings in media popular with teens and require the
disclosure of rating and labeling information in advertising and on product
packaging. The Reports document instances where some industry
members have engaged in marketing practices that undermined the self-regulatory
systems that the industries themselves put into place, as well as instances
where other individual members did more than their industry required.
The Commission's most recent Report, issued in June of this
year, found progress in a number of areas. The Commission found
substantial compliance by movies and games marketers, and, to a far lesser
extent, by marketers of music, with voluntary, self-regulatory standards
requiring the disclosure of rating and labeling information in advertising and
product packaging. The Commission also found encouraging widespread
compliance by the movie and game industries with existing guidelines limiting ad
placements for violent R-and M-rated entertainment products in media with a
large percentage of teens in the audience.
Nonetheless, there are continued areas of concern.
Existing voluntary guidelines for the movie and game industries still permit ad
placements in media which are very popular with large numbers of teens.
All three industries continue to place ads for rated or labeled products on
television programs that are, according to Nielsen rankings, among the most
popular shows watched by teens. And with respect to retail sales of
violent entertainment products, although the motion picture industry has done
the best job, all products remain easily available for purchase by young teens.
Finally, despite a few initiatives during the period
covered by the Commission's last Report, special issues remain in the music
industry, particularly in its ad placement practices. Although the
self-regulatory codes of the movie and game industries place limits on the
marketing of rated products to young people, the guidelines of the music
industry do not. In the music industry's view, unlike the rating systems
of movies and games, its "Parental Advisory" Labeling Program is not
age-based and is not intended to indicate whether labeled music may be
inappropriate for any specific consumer age.
II.
Background
The Federal Trade Commission is the federal government's
principal consumer protection agency. Congress has directed the
Commission, under the FTC Act, to take action against "unfair or deceptive
acts or practices" in almost all sectors of the economy and to promote
vigorous competition in the marketplace.[ii]
With the exception of certain industries and activities, the FTC Act provides
the Commission with broad investigative and enforcement authority over entities
engaged in, or whose business affects, commerce.[iii]
The FTC Act also authorizes the Commission to conduct studies and collect
information, and, in the public interest, to publish Reports on the information
it obtains.[iv]
Revelations that the teen-aged shooters at the 1999
Columbine High School shooting had been infatuated with extremely violent
movies, music and video games led to Congressional and Presidential requests
that the Commission investigate and report back on the practices of the movie,
electronic game, and recording industries with respect to the marketing of
violent entertainment to children.
III.
The Commission's Studies
A.
Scope of the Studies
In response to these requests, the Commission has, to date,
issued four Reports on the self-regulatory and marketing practices concerning
violent entertainment by the movie, music and video game industries.[v]
In the course of preparing these Reports, the Commission staff requested
information from the principal industry trade associations, as well as from
major motion picture studios, music recording companies, and electronic game
companies.[vi]
In addition, the Commission staff contacted interested government agencies,
medical associations, academics, and parent and consumer advocacy groups.[vii]
The Commission collected information from consumers through surveys and polls
and also designed and conducted its own surveys. In addition, the
Commission conducted two mystery-shopper surveys of retail stores and movie
theaters in an attempt to see if unaccompanied children could purchase or gain
access to products labeled as inappropriate or warranting parental guidance.
Lastly, the Commission staff reviewed Internet sites to study how they are
used to market and provide direct access to rated or labeled products.
B.
Findings of the Commission's First Report
In September 2000, the Federal Trade Commission
issued its first Report entitled, Marketing Violent Entertainment to Children: A
Review of Self-Regulation and Industry Practices in the Motion Picture, Music
Recording & Electronic Game Industries.[viii]
That Report found that the three entertainment industries had engaged in
widespread marketing of violent movies, music, and electronic games to children
that was inconsistent with the cautionary messages of their own parental
advisories and that undermined parents' attempts to make informed decisions
about their children's exposure to violent content. In addition, the
Commission found that advertisements for such products frequently failed to
contain rating information. Finally, the Commission reported on the
results of an undercover "mystery" shop by unaccompanied teens, aged
13 - 16, of retailers and movie theaters. The young shoppers were able to
buy M-rated electronic games and parental advisory- labeled music recordings 85%
of the time and purchase tickets for an R-rated movie almost half (46%) of the
time.[ix]
C.
Findings of the Commission's Follow-Up Reports in 2001
In response to Congressional requests, the FTC
released two follow-up Reports in 2001. Both Reports examined the
entertainment industry's practices with regard to marketing violent
entertainment products to children. The April 2001 Report[x]
concentrated primarily on advertising practices by the three industries on
television, in print media and on the Internet. For the December 2001
Report,[xi]
the Commission staff contacted several companies within each of the three
industries and requested marketing documents concerning violent movies, music
and electronic games. In addition, the Commission conducted a second
mystery shopper survey, like the one from the September 2000 Report.
Finally, the Commission staff continued to monitor television, print and
Internet advertising for placement and disclosure of rating and labeling
information.
These Reports noted progress by the movie and video game
industries in providing clear and conspicuous disclosure of rating information
in advertising as well as new efforts by both industries to limit advertising
for R-rated movies and M-rated games in popular teen media venues. The
music industry demonstrated mixed progress. On the plus side, members of
the music industry had begun to comply with new industry guidelines encouraging
the use of the Parental Advisory Label in advertising. But as for ad
placement practices, the music industry continued to place advertisements for
explicit-content recordings labeled with parental advisories in popular teen
media.[xii]
The results of the Commission's second undercover shopper
survey were included in the December 2001 Report. Although
electronic game retailers showed modest improvement from the results in the
Commission's earlier undercover survey, there was no change in sales practices
in the movie theater and music retailer industries.
D.
Findings of the Commission's June 2002 Report
In June of this year,[xiii]
the Commission issued its latest Report which looked at industry advertising
placements and disclosure of rating and labeling information in television and
print media. In addition, the Commission reviewed product packaging to
check whether rating information was being disclosed clearly and conspicuously.
This Report documented further progress by the movie and games industries in ad
placement practices for R-rated movies and M-rated games, and showed continued
improvement by all three industries in disclosing rating and labeling
information in advertising and product packaging.[xiv]
Movies: In the case of movies, the most recent Report noted
significant progress in complying with industry's commitment, issued in response
to the Commission's first Report in September 2000, to not "inappropriately,
specifically target children" in films rated R for violence.[xv]
The June 2002 Report found virtually no ads for violent R-rated movies in
popular teen magazines. In addition, the movie studios widely complied
with industry policies set by several studios not to advertise R-rated movies in
venues with a thirty-five percent or more youth audience share. However,
even while complying with these policies, studios frequently advertised
R‑rated movies in television shows that are very popular with teens.[xvi]
Finally, the Report showed further progress by studios in disclosing a movie's
rating and rating reasons in advertising, although some studios' rating
disclosures were still difficult to read.
Games: The Commission found widespread compliance
with video game industry self-regulatory standards limiting the advertising of
M-rated games in media where children constitute a certain percentage of the
audience (35% for television and 45% for print media). Nonetheless, the
Commission did find that some industry members did place advertisements for
M-rated games on television shows popular with teens, and in youth-oriented
game-enthusiast magazines. As the Commission noted in its December 2001
Report, the industry's anti-targeting standards diminish B but do not eliminate
B placements in programs mainly popular with teens. In addition, the
electronic game industry continued to prominently place rating information in
most forms of game advertising. Although some areas still could be
improved (e.g., adding content descriptors in television advertising),
there is much in the game industry's rating disclosure requirements that merits
duplication by others.
Music: With regard to music, the Commission did find
some progress in placing the Parental Advisory Label in industry advertising.
The Commission's review of explicit-content music ad placements, however, showed
virtually no change in industry practices since the September 2000 Report.
Advertisements continued to be placed on television shows and in print magazines
popular with teens. The industry views its Parental Advisory Labeling
System as not being an age-based system, but rather an indication to parents
that there is explicit content on a certain album. Thus, the
industry's self-regulatory code does not include restrictions on ad placement.
In addition, the music industry's labeling program does not
require that advertisers indicate why the recording contains a parental
advisory. Nonetheless, in June of this year, one industry member, BMG
Entertainment, announced that it will begin to specify on the label whether
violent content, sexual content or strong language led to the decision to apply
the Parental Advisory Label, and include that same information in its
advertising.[xvii]
It is not known whether other industry members will also adopt this positive
step. In the Commission staff's ongoing monitoring of advertising, they
have not yet seen ads by BMG artists that include this new label.
IV.
Conclusion
The Commission's follow-up Reports have documented progress
by the movie and electronic game industries in complying with and improving
their own self- regulatory policies restricting ad placements and requiring
rating information in advertising.
Because of First Amendment and other issues, the Commission
continues to support private sector initiatives by industry and individual
companies to implement these suggestions. To encourage continued
voluntary compliance and to document any changes in self-regulatory efforts, the
Commission will monitor the entertainment industry's marketing practices through
the next year, and will then issue a follow-up report.
This concludes my prepared remarks. I would be
pleased to answer any questions you may have.
Endnotes
[i].
The views expressed in this written statement represent the views of the
Commission. My oral statement and responses to questions you may have
are my own and are not necessarily those of the Commission or any individual
Commissioner.
[iii].
The Commission also has responsibility under 46 additional statutes governing
specific industries and practices. These include, for example, the Truth
in Lending Act, 15 U.S.C. '' 1601 et seq., which mandates disclosures of
credit terms, and the Fair Credit Billing Act, 15 U.S.C. '' 1666 et seq.,
which provides for the correction of billing errors on credit accounts.
The Commission also enforces over 30 rules governing specific industries and
practices, e.g., the Used Car Rule, 16 C.F.R. Part 455, which requires used
car dealers to disclose warranty terms via a window sticker; the Franchise
Rule, 16 C.F.R. Part 436, which requires the provision of information to
prospective franchisees; the Telemarketing Sales Rule, 16 C.F.R. Part 310,
which defines and prohibits deceptive telemarketing practices and other
abusive telemarketing practices; and the Children's Online Privacy Protection
Rule, 16 C.F.R. Part 312.
The Commission does not,
however, have criminal law enforcement authority. Further, under the
FTCA, certain entities, such as banks, savings and loan associations, and
common carriers, as well as the business of insurance, are wholly or partially
exempt from Commission jurisdiction. See Section 5(a)(2) and (6)a of the FTC
Act, 15 U.S.C. ' 45(a)(2) and 46(a). See also The
McCarran‑Ferguson Act, 15 U.S.C. ' 1012(b).
[iv].
15 U.S.C. '' 46(b) and (f). Section 46(f) of the FTC Act provides
that "the Commission shall also have the power . . . to make public from
time to time such portions of the information obtained by it hereunder as are
in the public interest; and to make annual and special reports to Congress. .
. ."
[v].
The Department of Justice provided the FTC with substantial funding and
technical assistance to enable the FTC to collect and analyze public and
non‑public information about the industries' advertising and marketing
policies and procedures, and to prepare the Commission's written Reports.
The analysis and conclusions contained in these Reports are those of the FTC.
[vi].
The Commission received information from numerous individual companies, as
well as the Motion Picture Association of America (MPAA), the National
Association of Theatre Owners (NATO), the Recording Industry Association of
America (RIAA), the National Association of Recording Merchandisers (NARM),
the Entertainment Software Rating Board (ESRB), the Video Software Dealers
Association (VSDA), the Interactive Digital Software Association (IDSA), the
Interactive Entertainment Merchants Association (IEMA), and the American
Amusement Machine Association (AAMA).
[vii].
In addition to industry sources, the Commission received information from a
wide range of consumer, medical, and advocacy organizations. The
American Academy of Pediatrics, American Psychological Association, Center on
Media Education, Center on Media and Public Affairs, Children Now, Commercial
Alert, The Lion & Lamb Project, Mediascope, National Institute on Media
and the Family, National PTA, and Parents' Music Resource Center were among
the organizations that provided information to the Commission.
[viii].
The Commission's September 2000 Report is available online at: http://www.ftc.gov/opa/2000/09/youthviol.htm.
[ix].
See Appendix F (Mystery Shopper Survey and Parent‑Child Survey) of
the Commission's September 2000 Report.
[x].
The Commission's April 2001 Report is available online at: http://www.ftc.gov/opa/2001/04/youthviol.htm.
[xi].
The Commission's December 2001 Report is available online at: http://www.ftc.gov/opa/2001/12/violence.htm.
[xii].
Music industry members continued to place ads on shows that are highly popular
with teens, such as Total Request Live on MTV and 106th & Park on BET.
[xiii].
The Commission's June 2002 Report is available online at: http://www.ftc.gov/opa/2002/06/mvec0602rev.htm.
[xiv].
Commissioner Swindle, in his concurring statement to the Commission's June
2002 Report, noted that Athe music industry continues to target young people
explicitly in its advertising and, for the most part, refuses to provide
content‑based information that could help consumers. The motion
picture and electronic game industries have acted far more responsibly in
improving their self‑regulatory programs, yet continue to allow
advertising of R‑rated movies and M‑rated games in venues that
attract large numbers of teens.@
[xv].
Motion Picture Association of America, Initiatives of MPAA Member Companies,
Sept. 26, 2000.
[xvi].
Movie industry members continue to place ads on shows that are highly popular
with teens, such as Grounded For Life on Fox, Gilmore Girls on WB, WWF
Smackdown on UPN, and MTV's The Real World.
[xvii].
See BMG News Release, BMG Announces Steps to Build On Industry's Parental
Advisory Program, June 3, 2002, available at http://www.bmg.com/news/archive_general/general_frameset.html
(visited September 17, 2002).
The revised sticker appears as follows:
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