Friday, October 5, 2012

Warner-Owned Artist Arena Fined $1 Million By FTC

Warner Music Group-owned company has settled with the Federal Trade Commission for $1 million over charges that it violated the Children's Online Privacy Protection Act related to websites it operates for Justin Bieber, Rihanna, Demi Lovato and Selena Gomez. 

The FTC had charged Artist Arena with violating the COPPA rule, which requires that website operators notify parents and obtain their consent before collecting and using personal information gathered from children under 13. 

An Artist Arena spokesperson declined to comment on the settlement. The company's settlement with the FTC does not constitute an admission of a law violation. 

According to the FTC's complaint, Artist Arena collected names, addresses, email addresses, birthdates and other information without obtaining the proper parental consent. The FTC claims Artist Arena registered 25,000 children under 13 and collected information from an additional 75,000 children who did not complete the registration process. 

Artist Arena will pay a $1 million civil penalty and will be required to delete information collected in violation of the COPPA rule, among other requirements not disclosed. 

"Marketers need to know that even a bad case of Bieber Fever doesn¹t excuse their legal obligation to get parental consent before collecting personal information from children," said FTC Chairman Jon Leibowitz in a statement issued Thursday. "The FTC is in the process of updating the COPPA Rule to ensure that it continues to protect kids growing up in the digital age." 
The FTC's allegations cover a time period when Warner was only an investor in Artist Arena. Warner originally made an investment in Artist Arena in 2007 and purchased the company outright in December 2010. An Artist Arena spokesperson confirmed to that all four sites involved in the settlement were launched from 2009 or June 2010, at least six months before Warner Music acquired Artist Arena. 

Artist Arena provides a variety of online services for artists. According to the company's website, these services include fan club management and marketing, members-only ticketing, VIP sales, merchandise fulfillment, and website development, management and marketing. 

"These fan-clubs create powerful connections between artists and their fans, laying the foundation for further monetizing that relationship," then-Warner CEO and chairman Edgar Bronfman Jr. said when he mentioned Warner's investment in Artist Arena in the February 6, 2008 earnings call.

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