Agency Information Collection Activities; Submission for OMB Review; Comment Request

FEDERAL TRADE COMMISSION

Agency Information Collection Activities; Submission for OMB

Review; Comment Request

AGENCY: Federal Trade Commission (FTC).

ACTION: Notice.

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SUMMARY: The FTC has submitted to the Office of Management and Budget

[[Page 63046]]

(OMB) for review and clearance under the Paperwork Reduction Act (PRA)

information collection requests contained in its study of the marketing

practices of the entertainment industry. The FTC proposes to seek

information from members of the following industries: (1) Motion

picture; (2) recording; and (3) video, personal computer, and coin

operated games. To do this, the FTC first seeks OMB clearance and

additional public comment regarding this notice, which is the second of

two notices required by the PRA for information collection requests.

The FTC will also seek to obtain information through proposed

consumer research. The FTC will forward a separate submission to OMB

regarding that research, and publish a related notice in the Federal

Register at that time.

DATES: Comments on the proposed information requests must be submitted

on or before December 20, 1999.

ADDRESSES: Send comments regarding the burden estimate, or any other

aspect of the information collection, including suggestions for

reducing the burden, to the following addresses: Edward Clarke, Senior

Economist, Office of Information and Regulatory Affairs, Office of

Management and Budget, New Executive Office Building, Room 10202,

Washington, D.C. 20503, and to Secretary, Federal Trade Commission,

Room H-159, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, or

by e-mail to [email protected]>. The submissions should include the

submitter's name, address, telephone number, and, if available, FAX

number and e-mail address. All submissions should be captioned

``Entertainment Industry Study''--FTC File No. P994511.''

FOR FURTHER INFORMATION CONTACT: Requests for additional information,

such as requests for copies of the proposed collection of information

(Supporting Statement and related attachments), should be addressed to

Sally Forman Pitofsky, Attorney, Division of Financial Practices,

Bureau of Consumer Protection, Federal Trade Commission, 600

Pennsylvania Avenue, N.W., Washington, D.C. 20580. Telephone: (202)

326-3318, E-mail: [email protected]>.

SUPPLEMENTARY INFORMATION: On August 25, 1999, the FTC published a

Federal Register notice with a 60-day comment period soliciting

comments from the public concerning the information collection

requirements under the proposed study. See 64 FR 46392.

Comments Received

The FTC received three comments raising questions about the impact

of the study on First Amendment rights, from Professor Erwin

Chemerinsky of the University of Southern California, Philip D. Harvey

of the Liberty Project, and Robert M. O'Neil, Director of the Thomas

Jefferson Center for the Protection of Free Expression. In addition,

the Interactive Digital Software Association (IDSA) filed a comment

raising several other issues and concerns regarding the proposed study.

1. Comments Raising First Amendment Concerns

Professor Chemerinsky ``suggest[ed] that the FTC inquiry raises

grave First Amendment concerns and * * * makes it highly unlikely that

there is any practical utility to this inquiry.'' In this view, it is

``highly unlikely'' that ``restrictions on advertising of First

Amendment protected material can be devised'' that would meet the

standards set out in Constitutional jurisprudence. Mr. O'Neil stated

that there is ``grave risk'' that the Commission's inquiry ``may chill

entirely lawful non-deceptive marketing of lawful products--

entertainment materials which (unlike most objects of marketing) enjoy

First Amendment protection of their own'' and that ``the current study

does not avoid potential free speech concerns by focusing on `marketing

practices' rather than on entertainment material which is the occasion

or focus of marketing programs.'' Mr. Harvey stated that ``[a]lthough

the current proceeding is merely an inquiry, the threat it undoubtedly

poses of future governmental restrictions on both commercial and non-

commercial speech will not only directly restrain protected commercial

speech but also will begin to influence what underlying core expression

is produced.''

From the outset in the study, the Commission has made clear that

the purpose of the study is to evaluate whether and how members of the

entertainment industry are marketing violent material to children and

to assess the extent to which industry members adhere to the applicable

self-regulatory systems that they have set for that marketing and

advertising. The study of the ways that companies advertise and market

their products falls squarely within the FTC's fact-finding authority

under Section 6 of the Federal Trade Commission Act. See 15 U.S.C.

46(a). In addition, the Commission can readily assess the workings of

the industries' self-regulatory systems without independently

evaluating the content of the entertainment products involved, using

only the ratings previously assigned to the products by the industry.

Moreover, the purpose of the study is not to enforce existing

statutes or regulations. As noted by Chairman Robert Pitofsky in

announcing the study, ``we are not embarking on a campaign of law

enforcement. Our role is to study issues and report our findings to the

President, Congress, and the American public. We expect that our end

product will be a report, not a cluster of charges alleging law

violations.'' \1\ A Commission study of the way that companies

advertise and market First Amendment-protected material can and will be

conducted without implicating First Amendment concerns. See generally

Penthouse v. Meese, 939 F.2d 1011, 1016 (D.C. Cir. 1991), cert, denied,

503 U.S. 950 (1992) (footnote omitted).

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\1\ Chairman Robert Pitofsky, ``The Influence of Violent

Entertainment Material on Kids: What is to be Done?,'' speech before

the National Association of Attorneys General, June 25, 1999,

Nashville, Tennessee.

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Finally, the report is expected to be useful for policymakers and

the public, including parents, and may provide a basis for the industry

to improve its self-regulatory efforts.

2. IDSA Comment

The Interactive Digital Software Association (IDSA) filed a comment

raising several issues and concerns regarding the proposed study.

Formed in 1994, the IDSA serves the business and public affairs needs

of companies that publish video and computer games for consoles,

personal computers, and the Internet. According to the IDSA, its member

companies collectively account for approximately ninety per cent of the

$5.5 billion in entertainment software sold in the U.S. in 1998.

First, IDSA describes several ``proactive steps'' the video and

personal computer game industry has taken to ``address concerns about

violent video games,'' including IDSA's Advertising Code of Conduct;

IDSA's Entertainment Software Rating Board's (ESRB) program that rates

websites promoting video games; ESRB programs with industry members to

educate the public, particularly parents, about its rating systems;

IDSA's current effort to encourage retailers not to rent or sell

Mature-rated video games to children under 17 without parental

permission; and ESRB's recent development of a new Advertising Review

Council to

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review content of advertisements for games.

The Commission welcomes these actions. As noted above, the purpose

of the study is to examine how industry implements its own self-

regulatory systems, such as those described in the IDSA comment. The

report will highlight any significant changes or enhancements that any

of the studied industries make in their self-regulatory systems.

Second, IDSA asks how the FTC will decide which video or computer

games with violent content will be included in the review. The

Commission will use the existing ratings systems to make that

determination. Namely, the Commission will examine the advertising and

marketing of electronic games that, due to their violent content, were:

Rated Teen, Mature, or Adults Only under the ESRB system; rated with a

violence level of ``2'' or above using the Recreational Software

Advisory Council rating system; or, given a red label under the

American Amusement Machine Association coin operated system.

Third, IDSA asks that the FTC not comment on the existing research

on the impact of violence depicted in games on game players. While this

request does not relate to the information that the Commission will

seek from industry members, the Commission will consider IDSA's views

in preparing the final report.

Fourth, IDSA states that neither the IDSA nor its members have the

power to control the sales policies of retail establishments, and thus

do not have the ability to restrict access to their games at the retail

level. The Commission recognizes that there are limits on the ability

of IDSA or individual game publishers to control retailers' sales

policies. On their own, however, individual retailers have adopted

policies to limit or restrict access, and IDSA and other industry

groups are actively encouraging retailers to adopt such policies. The

Commission intends to report on the existence and effectiveness of

those efforts.

Fifth, IDSA asks that the Commission put out for public comment any

survey instrument used to assess consumer attitudes toward and

awareness of the ESRB, and that any such research only survey those who

actually buy or play video games. Consistent with the requirements of

the Paperwork Reduction Act, the survey instrument used to study

consumer attitudes toward and awareness of the various rating systems

will be made available to interested third parties upon request to

Commission staff. Because the survey is intended to assess parents'

views of the ratings systems, it will not be limited to those who play

or buy video games, but will also include those whose children buy or

play video games (as well as movies and music recordings).

Sixth, IDSA is concerned that the 450 person-hours estimated for

compliance with the Commission's document requests will be too

burdensome for some of IDSA's members. The Commission will carefully

consider the burden its requests place on industry members, and will

work with individual companies responding to those requests to minimize

that burden wherever possible. Moreover, this burden figure constitutes

the outer range of staff's burden estimate (i.e., 225-450 hours per

industry member), and will likely be less for smaller companies.

Description of the collection of information and proposed use: The

FTC proposes to send information requests to approximately 60 to 75

members of the motion picture industry, the recording industry, and the

video, personal computer, and coin operated game industry (``industry

members'') to examine: (1) The voluntary systems used by industry

members to rate or designate violent content in movies, recordings, and

video or computer games; (2) how industry members market or advertise

movies, recordings, and video or computer games rated or designated by

industry as having violent content; and (3) whether industry members

have policies or procedures to restrict access by children or teenagers

under 18 to movies, recordings, and video or computer games rated or

designated by industry as having violent content. The information

sought will be obtained through interviews and document requests. The

information will be sought on a voluntary basis, although the FTC has

authority to compel production of this information under Section 6(b)

of the FTC Act, 15 U.S.C. 46(b).

Estimated hours burden: Staff will conduct initial and follow-up

interviews with individual industry members. The interviews should

total no more than 8 hours for each industry member, for a maximum

total of approximately 600 hours. In addition, staff will also ask each

industry member to submit documents relating to the above subject

areas. Because the members within each of the industries will

necessarily vary in size, staff has provided a range of the estimated

hours burden. This range is between 225 hours and 450 hours per member

depending on the size of each. The total estimated burden of producing

such documents per member is based on the following:

Organize document retrieval--25-50 hours

Identify requested information--100-200 hours

Retrieve responsive inforamtion--50-100 hours

Copy requested information--50-100 hours

Thus, the cumulative hours burden to produce documents sought will be

between: 16,875 hours (225 hours x 75 members) to 33,750 hours (450

x 75 members).

Estimated cost burden: Staff has assumed that mid-management level

personnel will handle the responses to interviews and has applied an

average hourly wage of $150/hour for their labor. Thus, the total cost

per member for the interviews should not exceed of $1,200 or $90,000

for the 75 respondents. The interviews are unlikely to require any

capital expenditures.

It is not possible to calculate precisely the labor costs

associated with this document production as they entail varying

compensation levels of management and/or support staff among many

companies of different sizes and in different industries. Individuals

among some or all of those labor categories may be involved in the

information collection process. Nonetheless, staff has assumed that

mid-management level personnel will handle most of the tasks involved

in gathering and producing responsive information, and has applied an

average hourly wage of $150/hour for their labor. Staff also has

applied an average hourly wage of $10 for the labor of clerical

employees who will copy the responsive materials. Thus, the total labor

cost per member should range between $26,750 and $53,500 per member

depending on the size of each:

$26,750 (175 hours to assemble and review the production x $150 per

hour + 50 hours for copying x $10 per hour) to $53,500 (350 hours to

assemble and review the production x $150 per hour + 100 hours for

copying x $10 per hour).

Accordingly the total labor costs for the 75 members should range

between approximately $2 million to $4 million.

Staff estimates that the capital or other non-labor costs

associated with the document requests are minimal. While the document

requests may necessitate that industry members store copies of the

requested information provided to the Commission, industry members

should already have in place the means to do so. Industry members may

have to purchase office supplies such as file folders, computer

diskettes,

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photocopier toner, or paper in order to comply with the Commission's

information requests. Staff estimates that each industry member would

spend $500 for such costs regarding the information requests, for a

total additional non-labor cost burden of $37,500 ($500 x 75

members).

By direction of the Commission.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 99-30165 Filed 11-17-99; 8:45 am]

BILLING CODE 6750-01-M