I like to think of moral panics this way:
I have a problem. I don't know how to fix it. To make myself feel better, I'm going to make it _your_ problem.
When an individual -- a single I -- does this, it's just Bad Behavior, the kind of thing you give the side eye to, maybe edge away, maybe run away, maybe move out or get a divorce. Possibly call 911. It's a moral panic when it involves a group large enough to disrupt a larger, largely uninvolved group.
There have been a few of these recently online involving authors, notably the LendInk controversy and the NSPHP dustup. They are occurring in the larger context of a major shift in the relationship between authors and people who talk about them and their books, and also in the context of a seismic shift in how authors are compensated.
I think we can expect more.
Currently, we have a relatively small number of bloggers who are drawing attention to the moral panics as they arrive, on both sides. The initial bloggers vary (that is, who first says, OMG LendInk or OMG WTF are you doing to LendInk you idiots), but the amplifiers are relatively consistent. Small-c conservative would be a plausible label to apply to those who are freaked out by the rapid pace of change and small-c progressive would be a plausible label to apply to those who embrace the rapid pace of change, even stomp harder on the accelerator, shall we say. Recognizing, of course, that these do not map to political parties.
It ought to be clear that I don't fall on the small-c conservative side.
On the one hand, it would be easy to dismiss the entire tempest as disproportionate. On the other hand, I really liked some of what Joe Konrath had to say about Writers' Ethics.
In particular, I appreciated that he pointed out that book reviewing has never been completely disinterested, and arguing that it needs to be or should be is foolish and probably mean. (I wouldn't give _my_ mother's book, if she wrote one, a five star review even if it deserved one, which is a sort of and evil book end to Konrath's observation that _of course_ he would give his mother a five star review. Neither review would be disinterested and in neither case should that be considered "unethical".)
On the other side of the debate, the sentence that snagged me at NSPHP:
"These days more and more books are bought, sold, and recommended on-line, and the health of this exciting new ecosystem depends entirely on free and honest conversation among readers."
As a general rule, any sentence which begins "These days" or with a similar turn of phrase, will be small-c conservative. Nobody says, "These days, things are finally good and tomorrow will be even better! Change, yay!" (Please find me a counter example. Ideally several. Please! Put them in the comments. I will edit this paragraph to include them. ETA: ethelmay comments that position in the sentence matters, and sometimes an initial "these days" is followed by something which is framed as an improvement, but is not an Obviously Wonderful Thing like kittens and candy. I will add more if there are further contributions; these is a very difficult phrase to google productively.) When I see, "These days", I brace myself. But that wasn't the problem. The problem was the idea that online book culture "depends entirely on free and honest conversation among readers".
We would be in a lot of trouble if that were actually true. Fortunately, culture _never_ depends upon free and honest conversation, in fact, free and honest conversation, in my extensive experience (NB: family full of people with autism diagnoses and people who should have autism diagnoses), tends to destroy relationships and culture is All About relationships.
Groups rely upon shared myth-making and assigned roles and consensus deception and all kinds of things in order to thrive. I always _think_ we know this and then I remember, d'oh, part of the myth-making involves Thinking We Are Honest.
There are engineering questions to be addressed. Do bogus reviews actually "distort" readers purchase/reading decisions, and do they do so in a way that "matters"?
Konrath argues, at http://jakonrath.blogspot.com/2012/09/writers-code-of-ethics.html, that it can't be fraud because no one is "damaged", people can get refunds, paid reviews aren't even necessarily lies and people buy books for a really wide variety of reasons that "honest" vs. "paid" reviews can't necessarily or at least predictably affect. He also draws parallels to pre-existing practice in the book industry that is easily argued as "paid for" reviewing, and that surely has a bigger impact than anything the victims of the current moral panic might or might not have done.
Eisler, at http://barryeisler.blogspot.com/2012/09/are-you-now-or-have-you-ever-been-sock.html, argues that:
"But what seems more likely is that, customers already know the online review system is hardly populated by nothing other than disinterested, dispassionate, honest people carefully sifting and weighing evidence before delivering wise and inherently trustworthy judgments. Customers realize there are many such people writing reviews, but know, too, that there are plenty of scurrilous ones, as well."
I suspect that Konrath and Eisler are both being a touch over-optimistic about the sophistication of book review consumers. Okay, more than a touch. My strongest piece of evidence to this point is that the authors who are freaking the fuck out seem themselves to be surprised their reviewers might not be "disinterested, dispassionate," etc.
This leaves us with, does it "matter"?
Possibly. I'm interested in proposed solutions. The ones I've seen so far (only allow reviews by people who actually bought the item) obviously won't work (the sock puppet reviews for sale involved the person purchasing the item and then reviewing it and their compensation reflected that), and will almost certainly make things worse. Should you be prevented from reviewing a library book on Amazon? I don't want that.
Absent a decent solution, what we're stuck with is educating readers to be more sophisticated consumers, which is, after all, the most ridiculous aspect of Capitalism: the Rational Man with Perfect Information is risible.
But it's what we've got.