Microsoft's claim of the huge share of the games consoles market has been a hard-fought battle and YouTube has proved a fertile marketing space for them, particularly against rivals Sony. However, a leaked report suggests that the company struck a deal with gaming MCN Machinima to promote the Xbox on YouTube with the proviso that creators do not disclose details of any payments received. The partnership deal between Machinima and Microsoft is a pretty standard one often seen between brands and networks, and means that earned media content can be structured to the benefit of all parties involved. It's the non-disclosure portion of the deal that is an issue.
Ars Technica are reporting that Microsoft and Machinima offered creators a bonus $3 CPM (that's $3 for every thousand views) if they created a video promoting either the Xbox One, or games made for the console. Creators were encouraged to include around 30 seconds of walk-through footage that reflected the Xbox One, Microsoft, Machinima and the games themselves in a positive light, and tag those videos accordingly. In order to receive payment, the creators were forbidden to disclose that their video was part of this specific marketing promotion.
Creators get paid for promoting products on YouTube all the time, but the FTC guidelines stipulate that they should agree with the endorsement and not advertise purely for financial compensation. The Microsoft/Machinima deal potentially violates these rules. A copy of the Microsoft agreement is now online over at Pastebin and it clearly states that:
You agree to keep confidential at all times all matters relating to this Agreement, including, without limitation, the Promotional Requirements, and the CPM Compensation, listed above.
A tweet from Machinima's UK community manager first highlighted the promotion to the outside world, although that tweet, and the Twitter account, have since been deleted (and replaced with this seemingly anti-Machinima one).
The Microsoft promotion only applied to the first 1.25 million views combined, meaning that no more than $3,750 would have been paid out. If 20 creators would have eligible, than they would have received $187.50 each. There's been no official statement from either Machinima or Microsoft on the issue to date.