[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Notices]
[Pages 63045-63048]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30165]


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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

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(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