Looks like round three (or is it round four?) of the “blog payola” debate is upon us, something I expected we would see more of in 2007. Over at The Blog Herald, my friend Tony “I Never Sleep” Hung has the 411 on a new PayPerPost-style blog review service called SponsoredReviews, which is reportedly about to launch in beta.

Tony has the details, and Mike Arrington at TechCrunch brings the outrage, in a post that says the “blog payola virus is spreading.” In a response in the comments, someone says that services like PayPerPost fill a need, and Mike responds that drug dealers fill a need too. The bottom line, he says, is that such services mean “misled readers, search engine pollution and credibility questions around the entire blogosphere. All for a few dollars a post.”

SponsoredReviews, like PayPerPost, appears to require disclosure — although it’s not clear yet whether that will be a general, site-wide disclosure like the one PPP allows, or whether compensation will have to be disclosed on each and every sponsored post, which is the way I think it should be done.

SponsoredReviews is also trying to carve out a variation on the model by allowing bloggers to set their own rates, with a bidding system determining the eventual payola level. And the service says that it will have a rating system, although it’s not clear what that will consist of.

I’ve got a great idea: How about instead of requiring disclosure, SponsoredReviews requires bloggers to post the details of the entire monetary transaction that led to the post in a small box next to the post — complete with all the various bids and the final price that was paid for the review. Transparency is good :-)

In case you hadn’t heard already, the blog-vertising startup called PayPerPost is “officially absurd” — according to Mike Arrington at TechCrunch anyway. In a recent post, he describes how the company (which compensates bloggers who write about PayPerPost clients), has set up a site called DisclosurePolicy.org, and is encouraging bloggers to adopt a disclosure policy for their blogs by either choosing one from the site or crafting their own.

The idea is to disclose as openly as possible the conflicts of interest or compensation that one might receive for blogging, whether it’s free products or ads or whatever. One of the knocks against PayPerPost has been that it doesn’t require bloggers to disclose that they are being paid, something I have been critical of in the past (although not quite as critical as Jason Calacanis, who calls it “stupid and evil”). Other startups doing similar things, such as ReviewMe, do require that bloggers disclose their compensation.

In his post, Mike argues that the setting up of DisclosurePolicy.org is effectively a distraction tactic, a way of throwing a bone to critics while still maintaining PayPerPost’s evil agenda. He also says that DisclosurePolicy deliberately blurs the line between the kind of paid blogging PayPerPost engages in and other, more subtle forms of compensation such as free products, personal relationships with blogging subjects, etc. (something that many critics have accused Mike himself of not disclosing properly).

For what it’s worth, I think Mike is letting his hatred of PayPerPost get the better of him. I actually think something like the DisclosurePolicy website is a pretty good idea, regardless of whether there’s a bit of PR prestidigitation (i.e., sleight of hand) going on. As Dave Taylor points out, one of the difficulties with blogging is that there aren’t really any rules. Things like DisclosurePolicy and the Blog Honor code could theoretically help make things a little more “transparent,” to use an overused term.

TDavid points out that all of Mike’s bluster, ironically, is really just free advertising for PayPerPost — and includes a video commentary from Loren of 1938 Media on Jason Calacanis which I think is hilarious. Drumsnwhistles is similarly unimpressed with Mike, and Minic has more on the issue over at The Blogging Times.

Tony Hung, who blogs at Deep Jive Interests, pointed something out to me via email — and if he hadn’t, I probably never would have heard about it. There has been plenty of news and discussion about it, but none of it has shown up on Techmeme.com or any of the other feed aggregators and meme-trackers I follow. Why? Because no “A-listers” have written about it (as Gabe Rivera of Techmeme points out in my comments, it’s there now).

It’s an issue that strikes right at the heart of the debate the blogosphere has been having lately about PayPerPost and blog “payola,” and whether bloggers should disclose their conflicts of interest.

The issue has to do with Edelman, the PR firm that Steve Rubel works for, and Wal-Mart. Tony’s post lays out it pretty well, as far as I can tell — as well as a story in Business Week, and posts from Shel Holtz and Biz Hack. In a nutshell it has to do with Wal-Mart paying for a couple of bloggers to drive their RV across America and write about how great Wal-Mart is.

Nothing wrong with that, of course. More power to them. Except that the connection to Wal-Mart, and the extensive financial backing the company has provided, is never mentioned anywhere on the blog. In light of comments made by Richard Edelman the last time the whole Wal-Mart/blogger thing blew up, where he said bloggers should “disclose receipt of product samples, membership on advisory boards or any other financial consideration that might affect their impartiality,” you would think Edelman would have made sure to do so in this case.

This doesn’t just cause confusion by blurring the lines between blogging and payola, or blog-vertising, but it arguably does Edelman harm too — and that would be a shame, since they are the PR firm that probably walks the walk the most when it comes to blogging and the conversation (the Wal-Marting Across America blog has a post that puts all the blame on Wal-Mart haters). I’m hoping Richard Edelman responds to this one in some way soon. As Tony points out in an update, the PR blogosphere is unanimously critical of Edelman on this one.

Update:

Scoble has weighed in, as have several others, including John Dowdell, who says that he isn’t sure the story is as cut and dried as it has been described. He argues that the relationship with Wal-Mart was disclosed (although I think Tony and I would argue not well enough) and that it’s not clear Edelman orchestrated the whole thing. All fair points, which it would help to hear from someone at Edelma. If I have rushed to judgment, I will be happy to apologize.

Back when PayPerPost first came along, it got a huge amount of negative publicity from the blogosphere, with some bloggers calling the company outright evil for paying people to write about corporate clients (and not requiring them to disclose that fact on their blogs). At the time, I wondered whether there was any such thing as bad publicity, and whether PayPerPost would suffer for the avalanche of criticism.

As is often the case, all that the criticism did was help get the company’s name in front of a bunch of prospective clients, and attract bloggers who didn’t really care about the disclosure/payola issue. In no time, PayPerPost had raised $3-million, and now there are at least two other competitors looking to do the same thing, including ReviewMe.com and Creamaid.com (a pretty weird name for a Web 2.0 company, although I’m sure it has something to do with cream rising to the top, etc.).

As an aside, it’s interesting to see the flashes of arrogance that Mike Arrington displays in writing about these two newcomers, one of which comes from an advertiser on TechCrunch called Text Link Ads. In addition to calling blog payola a “virus,” Mike says:

Frankly, we’re not happy that one of our sponsors has launched this type of service, and we’ve notified them that we will not allow promotion of ReviewMe through TechCrunch.

That made me shake my head a little. “Will not allow” promotion of the company through TechCrunch? That’s a bit rich, especially when the parent company’s product — Text Link Ads — is just as much of a cancer on the web as PayPerPost is, albeit a more obvious one. And then Mike says this:

It’s clear that simply stating we don’t like these services isn’t going to make them go away.

I’m hoping this was a joke. How could they not close up shop after Mike and the rest of the A-list told them to stop what they were doing? The nerve of some people. Let’s face it — PayPerPost is not going away, and even if it and ReviewMe and Creamaid all go away, others will take their place. From my point of view, at least ReviewMe forces the people it hires to disclose that they are being compensated, which puts it one step closer to advertising and one step away from editorial.

There are all kinds of similar boundaries that get crossed in “traditional” journalism, from the travel section to the various “special” advertorial supplements that newspapers run, and eventually smart readers figure out whom they can trust and whom they can’t. And that’s about all we can hope for.