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Report: Microsoft paying YouTube producers to highlight Xbox One (update)

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Microsoft allegedly made deals with Machinima video partners to pay them extra if they promoted the Xbox One, but only if those video producers kept the agreement confidential, reports Ars Technica.

Under the terms of the promotion — which Machinima's U.K. community manager highlighted in a now-deleted tweet — Microsoft would pay content producers a $3 CPM bonus (an extra $3 per thousand video views) if they posted a video with at least 30 seconds of Xbox One gameplay footage in the first two minutes, and verbally mentioned they were playing on an Xbox One. In order for the creators to get paid, the videos had to be labeled with the tag "XB1M13" and posted between 3 a.m. ET on Jan. 13 and 2:59 a.m. ET on Feb. 10.

However, Microsoft included the following stipulation in its agreement (viewable in full here): "You may not say anything negative or disparaging about Machinima, Xbox One or any of its games in your campaign video." And the campaign was set to end after a total of 1.25 million views across all XB1M13-tagged videos, which puts the maximum combined payout to video producers at $3,750. As of this writing, a search for YouTube videos with that tag posted in the past week turns up more than 400 results.

According to Ars Technica, Microsoft's confidentiality requirement may violate the U.S. Federal Trade Commission's guidelines for advertising that contains endorsements. "When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed," the guidelines state.

A private listing in Machinima's activity feed on Poptent, a site that helps content creators connect with companies like Machinima, indicates that the campaign began Jan. 14 and expired Jan. 16, so it's possible that the 1.25 million-view goal has already been reached. We've reached out to Microsoft and Machinima for comment, and will update this article with any information we receive.

Update: Microsoft clarified its role in the partnership with Machinima and YouTube video producers in a statement provided to Polygon.

"Microsoft was not aware of individual contracts Machinima had with their content providers as part of this promotion and we didn't provide feedback on any of the videos," a spokesperson said via email. "We have asked Machinima to not post any additional Xbox One content as part of this media buy and we have asked them to add disclaimers to the videos that were part of this program indicating they were part of paid advertising."