Before the
Federal Trade Commission
Washington, DC

Children's Online Privacy Protection Rule

Comment, P994504
Supplemental Comments of Time Warner Inc.

July 30, 1999

Time Warner Inc. ("Time Warner") welcomes this opportunity to file supplemental comments in this proceeding. Time Warner previously filed comments on June 11, 1999, and participated as a panelist in the July 20, 1999 workshop. Our supplemental comments focus upon our recent experience with print-and-return consent mechanisms. We also wish to discuss the Commission's proposed use of animation as a factor in determining whether or not sites are directed to children as it would impact verifiable parental consent. Finally, we furnish information for the record to respond to an inaccurate statement made about Time Warner at the workshop.

Print-and-Return Consent Mechanisms as Obstacles

In our comments at page 11, we used the Sport Illustrated for Kids magazine's experience with Web site subscriptions to demonstrate the obstacles that non-interactive methods of obtaining parental consent pose to the interactive experience. In that case, a switch from online registration to a download-and-mail-in approach resulted in a decline of approximately 80% of Web site subscriptions to the magazine.

Unfortunately, we now have another experience that even better illustrates the obstacles that some consent mechanisms pose to interactive, family friendly sites. It concerns "Camp HBO" at HBO4kids.com, which kicked off on July 1 and runs through Labor Day. "Camp HBO" is designed to offer children a healthy and dynamic interactive place online to make positive use of their summer vacation months. Campers at Camp HBO take part in a summer full of games, competitions, activities and interaction. Children and their parents may choose to participate every day or on a less regular basis. The camp features counselors, a mess hall, arts and crafts, cabins, a lake, an athletic field, and a campfire pit.

HBO, which spent $150,000 to set up and maintain the online camp, projected that thousands of children would participate. It chose to use a download-and-mail-in or fax-in approach to obtain parental consent.

Although the interest in participating in the camp has been as high as expected, the use of these offline parental consent mechanisms has severely cut the response rate. For example, from June 1^st through July 20 (the date of the FTC's workshop), an average of 250 persons a day went to the first page of Camp HBO, and nearly half of them proceeded to the camp's registration page. However, for that same time period, consent sheets were received for fewer than 120 children. Consequently, as of last week, HBO was spending more than $1,200 per child to offer children and their parents a free, healthy, and dynamic place online to spend their summer vacation months. The pitiful response rate is directly attributable to HBO's use of print-and-fax and print-and-mail parental consent mechanisms.

Based on the combined negative experiences of Camp HBO and the Sport Illustrated for Kids magazine, Time Warner would not expect to build or operate sites directed to children that rely upon print-and-fax or print-and-mail mechanisms to obtain parental consent. This is magnified by the positive experience that other Time Warner sites have had with e-mail-based parental consent mechanisms. For example, as noted in our June 11 filing, the Cartoon Network (www.cartoonnetwork.com) uses an e-mail based opt-out system for notifying and obtaining the consent of the parents of children under the age of 16 who seek to participate in its online contests. Even though it is an opt-out system, many parents send e-mails expressly to voice their support and appreciation for the measures taken by the Cartoon Network to enable parents to exercise greater control over children's online experience. Indeed, the e-mail messages from parents thanking the Cartoon Network have outnumbered the e-mails it has received withdrawing parental consent. This is echoed by the attached letter from a parent who serves on the parental advisory board to TIME for Kids (www.timeforkids.com), in which she describes "click back" e-mail mechanisms as "the only way to go" for her or her spouse to give their consent. As she notes presciently: "If I need to call an 800 number, or fax or mail something, chances are it won't happen."

We would expect that other sites--commercial and non-commercial--will reach the same conclusion Time Warner has.

Consequently, as we have stated throughout this proceeding, we urge that the Commission's final rule endorse the use of e-mail parental consent mechanisms.

Animation as a Factor in Verifiable Parental Consent

In defining "website or online service directed to children," the text of the proposed rule states that the Commission will consider "whether a site uses animated characters." 64 Fed. Reg. 22750, 22753 (April 27, 1999). In our experience, animation alone is not a reliable indicator for determining whether a site is directed to children. We urge the Commission to proceed very cautiously when using animation as a factor in classifying sites as falling within the scope of COPPA. We simply do not want to have to apply verifiable parental consent to sites under an inaccurate understanding and presumption that they fall within COPPA's requirements, when in fact they do not.

Animated characters and images are used in a wide range of communications directed at adults. In the offline environment, for example, comic strips in newspapers have long used animated characters. "Snoopy" greeting cards are targeted at adult consumers. Comic books aimed at college-age readers use animated characters. Various forms of advertising for 20-year-old and 30-year-old consumers also use animated characters or images.

These same practices continue in cyberspace. For example, the WeB Cards site (www.wbwebcards.com) enables visitors to use animated characters, and animated versions of movie characters, in electronic greeting cards. Users can choose Bugs Bunny, Road Runner and Wile Coyote, or Speedy Gonzalez. They can also pick an animated version of Uma Thurman from her role as Poison Ivy in the movie "Batman and Robin."

Nearly four out of every five visitors to the Cartoon Network site are teenagers or adults, most of them (more than 60% of the total) being 18-years-old or older. Similarly, DC Comics web site (www.dccomics.com) is directed at teenagers and adults, which compose 85% of the DC Comics readership. Visitors to the DC Comics site, for example, can learn when the new issues of specific comic book titles go on sale, the location of the nearest comic book retailer, and guidelines for submissions by writers and artists seeking to be hired. Users can also participate in chat room discussions with other fans about comic book characters or plot lines, and new writers or pencillers, or participate in live chats with some of the artists of specific titles.

Warner Brothers' experience with its pre-registration for Entertainmentdom.com provides additional evidence that sites with animation are not presumptively directed or attractive to children. Entertainmentdom.com is a site that is yet to be launched but markets itself as comprised of four domains, including animation-based and game-based entertainment domains. The site is offering pre-registration, a process in which it asks for age. Less than 5% of those who attempt to pre-register list their age as 13-years-old or under.

The conclusion is inescapable that the fact that sites contain images of animated characters, or discussions about them, does not transform them into sites directed to children. This is confirmed by a review of other, non-Time Warner, electronic-greeting-card sites that rely almost entirely upon animation. For example, Blue Mountain Arts (www2.bluemountain.com ) appears to use animated images for all of its electronic greeting cards, including in its sympathy cards and those for adult milestones such as graduation, wedding, anniversary, and retirement. Surely, this cannot presumptively be deemed to be a site directed to children.

Consequently, we urge the Commission to act very cautiously when using animation as a factor in determining whether or not a site is directed to children.

Center for Media Education's July 1999 Surveys

CME conducted two surveys of web sites and announced on the eve of the July 20 FTC workshop the conclusions it had drawn from them. CME's conclusions differ markedly from our experience. However, we are unable to address these differences at this time because CME has refused to release the data needed for analysis until today. Consequently, we are unable at this time to comment on CME's July 1999 surveys.

Note for the Record Concerning a CME Statement about Time Warner and Schools

Also with respect to CME, during the workshop one of its representatives stated that companies, specifically citing Time Warner, among others, were providing services to schools for commercial gain. At least as to Time Warner, the statement is inaccurate. In fact, as of December, 1998, we had wired 11,504 schools for cable access, providing basic cable service, and 500 hours of commercial-free educational programming per month to each school, all at our expense. We had also begun a program of wiring schools for broadband, cable modem, high-speed Internet access, which includes teacher training in how to integrate that system and its capabilities into instructional programs. As of December, 1998, we had wired 771 schools for this broadband Internet package, again at our expense. In addition, during 1999, we have begun to wire libraries for broadband Internet access, still again at our expense. Unfortunately, we do not yet have even preliminary figures on the number of libraries wired.

Conclusion

For the foregoing reasons, Time Warner requests that the Commission implement COPPA in a flexible manner, offering a variety of ways, including email, to obtain verifiable parental consent. This kind of flexible, multi-optioned approach, should provide the best possibility for protecting the privacy of children, regardless of size of business and resources available. At the same time, it would least alter the spontaneity and interactive nature of children's Internet experience beyond that fundamentally required by the Act. Finally, and quite importantly, it would diminish the "negative incentive" for kids to move on to other sites that may not be appropriate for them, but require considerably less effort to participate.