The U.S. Securities and Exchange Commission this week said companies can use social networks to disclose financial data -- a move that’s only going to accelerate the trend toward corporations covering themselves and publishing their own cleverly packaged news.
The SEC said it was OK that Netflix CEO Reed Hastings used Facebook to disclose, in a post this past July, that Netflix was streaming video at a rate of more than 1 billion hours per month. The only thing Hastings should have done differently, the SEC added, was warn investors to keep an eye on his Facebook account. “Companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information,” the SEC wrote.
Tweeting or sharing “in compliance with Regulation FD” sounds incredibly dull. But the SEC’s ruling actually paves the way for tech-savvy corporations to extend a disruption of the financial press that’s been under way for years; to build their own audiences, to tell their own stories, and to shape their own public narrative. This week’s ruling means that corporations don’t just have to disclose material new financial data on some investor-relations corner of their websites, but can break news in locations where they actually have a shot at building an audience, like Facebook, Twitter, Tumblr, Pinterest -- you name it.
Companies have already been taking news directly to consumers via blogs, e-mail blasts and YouTube. The savviest, like Facebook itself, use these platforms to speak carefully to controversies, like Facebook’s privacy policy changes, or to communicate intricate product details, as with Facebook Graph Search. In 2009, Amazon CEO Jeff Bezos released a YouTube video to reassure Zappos customers that Amazon wouldn’t tamper with Zappos’ customer service after buying the shoe-seller, while Zappos CEO Tony Hsieh made his comments about the deal on the Zappos blog.
Netflix’s Hastings knows from personal experience that this direct-to-consumer model has its downside. In July 2011, he used the Netflix blog to announce big price hikes on the company’s most popular plans, but the story quickly moved back to the financial press Hastings had spurned as consumers defected, the stock plummeted, and Netflix was forced to cut its numbers (none of those aftershocks made it onto the Netflix blog, somehow). Hastings then issued another blog post, apologizing for “the way we announced” the price hike even as he made a new disastrous announcement, that Netflix would spin off its DVD division into something called Qwikster. A month later, Hastings issued yet another blog retraction canceling Qwikster.
On social platforms, where users can easily talk back, “like” or share news items with their own commentary, the stakes get even higher. Corporations are now empowered to build larger audiences on these sites by using them, per the SEC ruling, to disseminate new information formerly parceled out to the business press as scoops. They can augment this fresh data with rich media like short embedded video, a relatively new format where established news media have no real production edge.
Of course, just because companies can now tell their owns stories directly on powerful social networks doesn’t mean they always should. The team that picked up the acclaimed series House of Cards for Netflix could probably assemble a nifty, sharable news video for the company. The team that vetted Hastings’ 2011 blog posts, not so much. But the point for truly PR- and tech-savvy companies is that they now have the potential to craft their own narrative, and inspire or manipulate their own customers, as never before.
