University of Botswana
Department of Media Studies
BMS 226 ETHICS FOR MEDIA PROFESSIONALS
HANDOUT 29: SELF-REGULATION AND THE MEDIA
This is an extract from the article. Self-regulation and the media by Angela J Campbell, published in the Federal Communications Law Journal, Vol 51, No 3 May, 1999
II. SELF-REGULATION
A. The Definition of Self-Regulation
The term self-regulation means different things to different people. In
introducing a collection of papers analyzing the prospects of self-regulation
for protecting privacy on the Internet, Assistant Secretary of Commerce
Larry Irving observed:
Most basically, we need to define what we mean, as the term “selfregulation”
itself has a range of definitions. At one end of the spectrum,
the term is used quite narrowly, to refer only to those instances
where the government has formally delegated the power to regulate,
as in the delegation of securities industry oversight to the stock exchanges.
At the other end of the spectrum, the term is used when the
private sector perceives the need to regulate itself for whatever reason—
to respond to consumer demand, to carry out its ethical beliefs,
to enhance industry reputation, or to level the market playing field—
and does so.10
To devise a definition for purposes of this Article, it is useful to break
apart the term “self-regulation.” The word “self” refers to the actor. It could
mean a single company. More commonly, however, and for purposes of this
Article, it is used to refer to a group of companies acting collectively, for
example, through a trade association.11 The word “regulation” refers to what
the actor is doing. Regulation has three components: (1) legislation, that is,
9. In analyzing success, the Author primarily considers whether self-regulatory codes
have been successful in achieving their stated purposes. The separate, but important question
of whether the stated purposes are in the public interest is beyond the scope of this
Article.
10. Larry Irving, Introduction to PRIVACY AND SELF-REGULATION IN THE INFORMATION
AGE (NTIA 1997), available at
<http://www.ntia.doc.gov/reports/privacy/privacy_rpt.htm>.
11. Other writers may define self-regulatory activities more broadly. See, e.g., Everette
E. Dennis, Internal Examination: Self-Regulation and the American Media, 13 CARDOZO
ARTS & ENT. L.J. 697 (1995) (including public opinion and media critics in survey of selfregulatory
efforts of print media).
defining appropriate rules; (2) enforcement, such as initiating actions against
violators; and (3) adjudication, that is, deciding whether a violation has
taken place and imposing an appropriate sanction.12
Thus, the term “self-regulation” means that the industry or profession
rather than the government is doing the regulation. However, it is not necessarily
the case that government involvement is entirely lacking.13 Instead of
taking over all three components of regulation, industry may be involved in
only one or two. For example, an industry may be involved at the legislation
stage by developing a code of practice, while leaving enforcement to the
government, or the government may establish regulations, but delegate enforcement
to the private sector. Sometimes government will mandate that an
industry adopt and enforce a code of self-regulation.14 Often times, an industry
will engage in self-regulation in an attempt to stave off government
regulation. Alternatively, self-regulation may be undertaken to implement or
supplement legislation.15
B. Arguments in Favor of Self-Regulation
The claimed advantages of self-regulation over governmental regulation
include efficiency, increased flexibility, increased incentives for compliance,
and reduced cost. For example, it is argued that industry participants
are likely to have “superior knowledge of the subject compared to [a] government
agency.”16 Therefore, it is more efficient for government to rely on
12. Peter P. Swire, Markets, Self-Regulation, and Government Enforcement in the
Protection of Personal Information, in PRIVACY AND SELF-REGULATION IN THE INFORMATION
AGE, supra note 10, at 9.
13. But see Robert Corn-Revere, Self-Regulation and the Public Interest, in DIGITAL
BROADCASTING AND THE PUBLIC INTEREST: REPORTS AND PAPERS OF THE ASPEN INSTITUTE
COMMUNICATIONS AND SOCIETY PROGRAM 63 (Charles M. Firestone & Amy Korzick
Garmer eds., 1998), available at <http://www.aspeninst.org/dir/polpro/CSP/DBPI/dbpi14.
html> (arguing that self-regulation is best promoted by ending all direct and indirect government
content control and that efforts to promote government policies by means of
threat, indirect pressure, or suggested industry codes are not true self-regulation).
14. IAN AYRES & JOHN BRAITHWAITE, RESPONSIVE REGULATION: TRANSCENDING THE
DEREGULATION DEBATE 103 (1992) (viewing self-regulation as a form of subcontracting
regulatory functions to private actors). In some countries, laws require industries to adopt
codes of practice. For example, Australia requires broadcasting industry groups to develop
codes of practice, in consultation with the regulatory authority, concerning such topics as
preventing the broadcast of unsuitable programs, promoting accuracy and fairness in news
and current affairs, and protecting children from harmful program material. Broadcasting
Services Act, 1992, § 123 (Austl.).
15. Frank Kuitenbrouwer, Self-Regulation: Some Dutch Experiences, in PRIVACY AND
SELF-REGULATION IN THE INFORMATION AGE, supra note 10, at 113.
16. Douglas C. Michael, Federal Agency Use of Audited Self-Regulation as a Regulatory
Technique, 47 ADMIN. L. REV. 171, 181-82 (1995); AYRES & BRAITHWAITE, supra
note 14, at 110-12.
the industry’s collective expertise than to reproduce it at the agency level.
This factor may be particularly important where technical knowledge is
needed to develop appropriate rules and determine whether they have been
violated.
Second, it is argued that self-regulation is more flexible than government
regulation.17 It is easier for a trade association to modify rules in response
to changing circumstances than for a government agency to amend
its rules. Not only are government agencies bound to follow the notice and
comment procedures of the Administrative Procedure Act, but it is often difficult
for an agency to obtain the political support and consensus needed to
act. It is argued that industry is better able to determine when a rule may be
changed to result in better compliance. Moreover, self-regulation can be
more tailored to the particular industry than government regulation. While
“command and control” regulation may have worked well in the past when
addressing near monopolies, it does not work well with different types of
market failures.18 Given the sheer magnitude of individual problems, general
rules may lead to absurd results.
Another argument in support of self-regulation is that it provides
greater incentives for compliance.19 It is thought that if rules are developed
by the industry, industry participants are more likely to perceive them as
reasonable. Companies may be more willing to comply with rules developed
by their peers rather than those coming from the outside.20
Fourth, it is argued that self-regulation is less costly to the government
because it shifts the cost of developing and enforcing rules to the industry.21
Of course, the government may still be involved in supervision, but supervision
requires fewer resources than direct regulation. Indeed, Ian Ayres and
John Braithwaite argue that self-regulation is an attractive alternative to direct
government regulation because the state “cannot afford to do an adequate
job on its own.”22 They acknowledge, however, that self-regulation
will only result in a net reduction of cost if the costs to industry are lower
than the government’s cost savings.23
17. Michael, supra note 16, at 181-82; AYRES & BRAITHWAITE, supra note 14, at 110-
12.
18. Michael, supra note 16, at 186-88.
19. Id. at 181, 183-84; AYRES & BRAITHWAITE, supra note 14, at 115.
20. Swire, supra note 12, at 4; AYRES & BRAITHWAITE, supra note 14, at 115-16.
21. See, e.g., Michael, supra note 16, at 184; AYRES & BRAITHWAITE, supra note 14, at
114.
22. AYRES & BRAITHWAITE, supra note 14, at 103.
23. Id. at 120-21. If industry expertise is important, it may be the case that the costs to
industry are lower.
Self-regulation may also be justified where the rules or adjudicatory
procedures differ from the surrounding community or the rules of the surrounding
community are inapplicable. Specifically, the argument is sometimes
made with respect to the Internet, where jurisdictional and sovereignty
issues make it difficult for nations to enforce their laws.24
Finally, self-regulation may be used instead of governmental regulation
to avoid constitutional issues.25 For example, it is doubtful under the First
Amendment whether government can prohibit the advertising of alcoholic
beverages.26 However, no constitutional question arises if a station or group
of stations independently decides not to accept alcohol advertising.
C. Arguments Against Self-Regulation
Critics of self-regulation question the basis for the arguments in favor
of self-regulation. For example, while acknowledging that industry may possess
greater technical expertise than government, Professor Peter Swire
questions whether companies will use that expertise to the benefit of the
public, suggesting instead that they are more likely to employ their expertise
to maximize the industry’s profits.27 Similarly, the idea that industry will
comply more willingly with its own regulations than those imposed from the
outside seems somewhat weak where industry is actively involved in developing
regulations at the agency.28
Other criticisms are directed against self-regulation itself. Leaving
regulation to the industry creates the possibility that industry may subvert
regulatory goals to its own business goals; or as one article put it, “selfregulators
often combine—and sometimes confuse—self-regulation with
self-service.”29 Self-regulatory groups may be more subject to industry pressure
than government agencies. Moreover, the private nature of self-
24. See, e.g., David R. Johnson & David Post, Law and Borders—the Rise of Law in
Cyberspace, 48 STAN. L. REV. 1367, 1370-76 (1996).
25. See generally Duncan A. MacDonald, Privacy, Self-Regulation, and the Contractual
Model: A Report from Citicorp Credit Services, Inc., in PRIVACY AND SELFREGULATION
IN THE INFORMATION AGE, supra note 10, at 133, 134 (arguing that selfregulatory
measures can avoid constitutional issues arising under the First, Fourth, and
Fifth Amendments).
26. See generally 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996).
27. Swire, supra note 12, at 13.
28. In the Author’s experience in rule makings at the FCC, industry tends to dominate
the process. An alternative process that may offer similar opportunities for industry involvement
and commitment to regulations is the negotiated rulemaking process.
29. Donald I. Baker & W. Todd Miller, Privacy, Antitrust and the National Information
Infrastructure: Is Self-Regulation of Telecommunications-Related Personal Information
a Workable Tool?, in PRIVACY AND SELF-REGULATION IN THE INFORMATION AGE, supra
note 10, at 93-94.
regulation may fail to give adequate attention to the needs of the public or
the views of affected parties outside the industry.
Many question the adequacy of enforcement in self-regulatory regimes.
30 Industry may be unwilling to commit the resources needed for vigorous
self-enforcement.31 It is also unclear whether industry has the power
to enforce adequate sanctions. At most, a trade association may punish noncompliance
with expulsion. Whether expulsion is an effective deterrent depends
on whether the benefits of membership are important.32 In many
cases, expulsion or other sanctions, such as denial of the right to display a
seal, are insufficient.33
Without adequate incentives to comply, “bad actors” will be unlikely
to comply, and the “good actors” that do comply will be placed at a competitive
disadvantage.34 Where a company can make greater profit by ignoring
self-regulation than complying, it is likely to do so, especially where
noncompliance is not easily detected by the consumer or likely to harm the
particular company’s reputation.35 Like cartels, self-regulatory frameworks
may unravel because of cheaters.36 On the other hand, when enforcement
actions are taken, concerns are raised about the exercise of unreviewable
discretion.37
Another problem with self-regulation is that it can facilitate anticompetitive
conduct.38 Self-regulation, as that term is used in this Article, involves
competitors getting together to agree on how they will conduct their
30. See, e.g., Michael, supra note 16, at 189; Mark E. Budnitz, Privacy Protection for
Consumer Transactions in Electronic Commerce: Why Self-Regulation Is Inadequate, 49
S.C. L. REV. 847, 874-77 (1998); Deidre K. Mulligan & Janlori Goldman, The Limits and
the Necessity of Self-Regulation: The Case for Both, in PRIVACY AND SELF-REGULATION IN
THE INFORMATION AGE, supra note 10, at 67-68.
31. Stephen Balkam, Content Ratings for the Internet and Recreational Software, in
PRIVACY AND SELF-REGULATION IN THE INFORMATION AGE, supra note 10, at 145 (pointing
out that self-regulation requires considerable effort, time, resources, good judgment, and
honesty).
32. Henry H. Perritt, Jr., Regulatory Models for Protecting Privacy in the Internet, in
PRIVACY AND SELF-REGULATION IN THE INFORMATION AGE, supra note 10, at 110.
33. Such sanctions may be ineffective where consumers lack the knowledge of how a
company is viewed by its peers. Moreover, trade associations generally are reluctant to expel
their members, especially when the members pay dues to support the association’s activities.
34. Electronic Commerce Hearings, supra note 7, at 356 (testimony of Kathryn Montgomery,
President, Center for Media Education).
35. Swire, supra note 12, at 6.
36. Perritt, supra note 32, at 109-10.
37. Michael, supra note 16, at 190; AYRES & BRAITHWAITE, supra note 14, at 124-25.
38. See, e.g., Baker & Miller, supra note 29, at 93; Joseph Kattan & Carl Shapiro,
Privacy, Self-Regulation, and Antitrust, in PRIVACY AND SELF-REGULATION IN THE
INFORMATION AGE, supra note 10, at 99.
business. As one article points out, this type of agreement inherently raises
antitrust issues, and agreements by professional organizations have sometimes
been challenged by the government under antitrust laws.39
D. Conditions for Successful Use of Self-Regulation
Professor Douglas C. Michael has surveyed the use of “audited selfregulation”
by federal agencies.40 This term refers to the delegation of power
to implement laws or agency regulations to a nongovernmental entity where
the federal agency is involved in verifying the soundness of rules, checking
compliance, and spot-checking the accuracy of information supplied to it.
Although audited self-regulation is somewhat more narrow than the
examples of self-regulation discussed below, Michael’s observations about
the conditions for successful self-regulation might have broader application.
Michael reviewed the literature and hypothesized that audited self-regulation
would work best where certain conditions were met:
First, the private entity to which self-regulatory authority is granted
must have both the expertise and motivation to perform the delegated
task. Second, the agency staff must possess the expertise to “audit” the
self-regulatory activity, which includes independent plenary authority
to enforce rules or to review decisions of the delegated authority.
Third, the statute must consist of relatively narrow rules related output-
based standards. . . . Finally, the agency’s and delegated authority’s
decision must observe rules for notice, hearing, impartiality, and
written records of proceedings and decisions.41
Michael examined twelve different self-regulatory programs of seven
different agencies in the areas of financial institutions, services and products,
government benefit programs, nuclear power, and agricultural marketing.
42 His survey confirmed the importance of the industry organization
having both expertise and the incentive to self-regulate.43 Where industry
expertise and incentives were missing, self-regulatory programs were abandoned
or modified.44 However, it was not essential to have a preexisting industry
organization; rather, “successful regulatory organizations [could] be
established contemporaneously with the regulation.”45 The lack of agency
expertise also turned out not to be an obstacle because agencies were able to
develop the required expertise.46 Confirming his third hypothesis, he found
39. Kattan & Shapiro, supra note 38, at 99.
40. Michael, supra note 16.
41. Id. at 192.
42. Id. at 203-41. Some of these programs were successful, while others were not.
43. Id. at 241.
44. Id. at 242.
45. Id. at 241-42.
46. Id. at 242.
that the programs with the most subjective standards experienced the most
difficulty in implementation.47 Finally, he found that self-regulatory programs
failed where procedural fairness, through such means as rule making
on the record with notice and opportunity for comment from all affected
groups, was lacking.48
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