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Blogworld Report: The New Paradigm Gains Momentum

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Legally Social spent this past weekend at Blogworld New Media Expoin Las Vegas, and can safely report (a) that the world of social media remains dynamic, forward thinking and intense; (b) that people in social media still don’t think about the legal ramifications of what they’re doing as much as they ought to, and (c) Las Vegas is profoundly amusing.

I live-tweeted a several panels (you can follow me @legallysocial) but for me the most important aspect of the conference was seeing the interaction between the old social media format (which was highly informal and largely consisted of bloggers talking amongst themselves) and the new paradigm (which is far more focused on commerce, marketing and co-branding).  Once upon a time, bloggers could joke about “taking the Boeing” as shorthand for selling out.  Now, the idea of “selling out” is preposterous, with the word “monetize” thrown around more often than any other word including “and” “the” or “a”.  Social media interaction is no longer thought of as a hobby for pajama-clad folks blogging from their basement; instead it is a sophisticated marketing tool used by the largest companies in the world (and the smallest) to develop dialogue with their customers. To be sure, the number of social media devotees focused on their hobbies and their lives remains large, but what is interesting is that this more informal world is now almost indistinguishable from the land of professional marketers.

This will lead, of course, to all sorts of interesting issues over the next few years, ranging from brand control and privacy to employment law and innovation.  But right now, we should all be pleased to witness the early stages of a new communications paradigm.  Web 2.0 is still less than a decade old (at most).  We have many years (and many more versions) yet to come.  It is an exciting time, indeed, and next year should be even better.


Social media – not a game. Okay, it is a game. But maybe the game is more real than you think…

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The hottest things in social media right now are so-called “social games” like Farmville (Zynga‘s big hit).  78 million people are “active monthly users” of Farmville on Facebook, and (according to a recent article) 235 million people purportedly use Zynga’s games each month on different platforms.  And no, that previous sentence was not filled with typos.  Zynga was recently valued, as part of a private placement, at over $4 billion.  

To give you some perspective, Zynga was founded in 2007

There are already a number of blogs and sites devoted to in-depth discussions of the newest social gaming platforms (Inside Social Games is one of the better ones), despite the fact that the phenomena is a fairly recent one.  Everyone is talking about this — it is the future of gaming.  It is the future of marketing.  It is the future of social connectivity.  Blah, blah, blah.

Marketers have noticed this incredible new development, and it isn’t easy to conclude that putting a social game on your site drives traffic, makes your site stickier, and gives consumers a reason to return.  So, why not put a game on your site to build your brands?  Why not interweave a gigantic, cross-platform promotion with social gaming? Actually, you should consider it — it can be, for many companies, a great idea.  But if you do that, suddenly you’ve gone from being a widget company to a company offering games.  What does that mean for the age of visitors at your site?  Are you offering prizes?  Coupons?  How are you monetizing this new initiative — and are you thus running afoul of the tangle of promotion laws in the United States or other nations? 

But forget about all of that for a moment.  Wired ran a fun article earlier this year that touches on social media game obsessives.  Does this story remind you of anyone?

Kira Greer was sitting in a meeting one afternoon when she suddenly remembered an urgent deadline. The San Francisco instructional designer knew there was no time to waste.

She excused herself, saying she had to go to the bathroom, then rushed back to her desk. Quickly opening Facebook, she began furiously clicking on rows of virtual vegetables, harvesting her FarmVille crops before they withered and died.

“I realized I was hooked when I was planning my day around when I knew crops needed to be harvested,” says Greer, 39.

Now THAT is a sticky site.   On Facebook alone more than 100 different games claim at least 1 million individual users.  And who knows how many of those sites also include parents playing the game for their children while Johnny is in school.  A mystery for many has been how the companies that make these games plan on profiting — after all, the games themselves are free.  But really, there’s no mystery at all, as the story goes on to explain:

Companies like Playfish and Zynga say their free games are profitable “many times over.” How? Through the sale of virtual goods. While the vast majority of users put in the hours to build their own little slices of nature for free, a small percentage pony up real-world cash to buy the best decorations, seeds, fertilizer and farm animals.

And this is where our little story about games starts to touch on the law yet again.  Social games and other virtual platforms such as Second Life involve the sale or exchange of virtual goods or (in the case of Second Life and some large massively multi-player games) virtual money.  So now virtual objects have real value — which means that all of the laws that address things of value in the “real” world begin to apply to cyberspace. 

The terms and conditions for these sites are effectively creating “laws” for this type of virtual world.  Suddenly, there are thefts, there are vandals, there are mischief makers breaking “real” laws through their actions as fake people on these sites. Some companies have placed restrictions on the transferability of “virtual goods” or “virtual currency” used on their systems , leading to problems with counterfeiting and black markets.  Companies hosting these sites (or participating on these sites — a significant number of well-known brands have a presence on Second Life, and others embed themselves in third party games) need to consider the intersection of real laws and terms of use.  When virtual commerce starts adding (or subtracting) from your bottom line, it becomes more than mere “marketing.”

When cyberspace was first imagined by William Gibson in Neuromancer, it was still an abstraction.  The characters were interacting inside a hallucination, but it was still presented as a kind of formless hacker world that sounded suspiciously like the world of TRON.  Later, in the groundbreaking Snow Crash, Neal Stephenson took that one step further, and imagined users living a realistic existence as “avatars” within a computer network.  The games and virtual worlds that exist today are still quite far from the seamless reality of those visions.  You can’t just shift your consciousness into a faux reality.  But each new generation of technology brings us closer to that dream, and as it does it brings the framework of our legal system ever more into contact with your avatar. 

So don’t assume that your efforts in cyberspace are just a game — the laws (and their implications) can be very real, indeed, and your lawyer may have just as much to say about how you play this game as your customers.


Social Media Policies: What Should They Say?

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I have repeatedly warned everyone to consider the value of having a social media policy.   You need to think about what your employees and colleagues are saying in your name.  You have to consider what type of social media engagement they(and you!) are permitted to engage in on the job.  You need to think about your brand, about content.  

Whew — you’re thinking — that’s a lot.  And it is.  But that shouldn’t stop you from doing it, and not because some law or regulation requires it.  Rather, you need to think about how the world engages with you through social media, and how you intend to engage with the world.  It’s a fairly broad proposition, and it has frozen the collective consciousness of folks around the world who have refrained, en masse, from actually creating social media policies (as opposed to talking about them, of course!)

So — taking a page from some of the big players that have taken the big step and crafted a social media policy — let’s think about (a non-exhaustive list!) of some of the things that you should consider when creating a social media policy.

  1. EMPLOYEE USE: YES OR NO? Do you want your employees and colleagues using social media at work?  This is, obviously, quite controversial.  There are some who believe that the only proper approach to social media in the workplace is to ban it.  Others think that companies are shooting themselves in the foot bycutting off their personnel from valuable communication tools.  In truth, the answer is likely to vary from company to company, and perhaps even within companies.  Rather than assume a  “one size fits all” solution, you need to work with counsel to determine what, if any, restrictions are appropriate.  Are you in the securities industry? FINRA may have some guidance for you, and the optimal policy will differ from, say, that of Zynga.
  2. WHAT ARE YOUR EMPLOYEES AND COLLEGUES ALLOWED TO SAY? An obvious follow-up to the question of employee use is what, exactly, they are allowed to say, and whether the company should take a position on what they do on their spare time in their own name.
  3. WHAT SHOULD THE COMPANY “DO” WITH THINGS IT LEARNS THROUGH SOCIAL MEDIA?  This is a bigger problem than it may initially appear — so much so that I will also discuss this at a later date in greater detail.  But think about it: You and your colleagues are going to learn all sorts of things from social media: you may learn about product defects.  You may learn about dangerous drug interactions.  You may learn that one of your colleagues is a racist.  You may learn that one of your colleagues is engaging in price fixing.  You may learn that one of your subordinates is pregnant.  You may discover that one of your products needs to be recalled.  The list is endless — and can create almost endless forms of liability.  Again, there is no universal solution to a complex problem — but the problem calls for some serious soul searching in order to determine how far this should actually be pushed.
  4. WHAT ARE THE RULES FOR USING CONTENT ON YOUR SITE? If your social media presence is worth even a fraction of the time it will take to do it right, there will be content.  Hopefuly, valuable content.  Who owns it?  Do you have the rights to it?  What type of process do you have in place? Do you need?
  5. IS THERE REGULATED ACTIVITY ON MY SITE? Are there sweepstakes or contests as part of my social media strategy? Coupons? Rebates? Financing offers? Am I marketing to minors? Am I marketing to folks in other countries?  Just because you’re on the Internet doesn’t mean that the law stops applying to your activities — and in some cases that regulation becomes more complicated than it would have been if you simply had a store.

Of course, this is just a taste, but should inspire you to consider whether your failure to have a social media policy is also a lost opportunity for valuable self-reflection.  A social media policy is not merely something to have so that some random regulator will be happy.  Instead, it is a critical tool for understanding how you can and should interact with a powerful new medium of expression.


More on the value of content…

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Last week, we briefly discussed how the valuation of content is becoming increasingly difficult in light of the new ways that information can be shared through social media.  But it is worth noting that the phenomena is somewhat broader than that. 

In fact, an argument can be made that the history of intellectual life since the invention of the printing press (and, thus, the history of copyright law itself) has been the development of increasingly “rich” text.  In the beginning, you had no protection over the content of your book; only ownership of the physical item itself.  Each time technology permitted the content to be abstracted further away from its carrier, information moved more quickly, and the value of intellectual property increased.

But have we finally reached a limit, a place on the arc of our development where the value of intellectual property decreases with the speed of information?  Perhaps, and perhaps not.  But the important thing to consider is that whether this is true, or not (and reasonable opinions vary), copyright law has not adjusted.  As far as the law is concerned, content is valuable.  But the speed and ease of content use has increased to such an extent that infringement under the “old” rules (i.e. the law) is commonplace.

In a virtuoso blog posting on this history of “text,” one thinker considers where we are today:

WHEN TEXT IS free to combine in new, surprising ways, new forms of value are created. Value for consumers searching for information, value for advertisers trying to share their messages with consumers searching for related topics, value for content creators who want an audience. And of course, value to the entity that serves as the middleman between all those different groups….

Think about it this way: let’s say it’s 1995, and you are cultivating a page of “hot links” to interesting discoveries on the Web. You find an article about a Columbia journalism lecture and you link to it on your page. The information value you have created is useful exclusively to two groups: people interested in journalism who happen to visit your page, and the people maintaining the Columbia page, who benefit from the increased traffic. Fast forward to 2010, and you check-in at Foursquare for this lecture tonight, and tweet a link to a description of the talk. What happens to that information? For starters, it goes out to friends of yours, and into your twitter feed, and into Google’s index. The geo-data embedded in the link alerts local businesses who can offer your promotions through foursquare; the link to the talk helps Google build its index of the web, which then attracts advertisers interested in your location or the topic of journalism itself. Because that tiny little snippet of information is free to make new connections, by checking in here you are helping your friends figure out what to do tonight; you’re helping the Journalism school in promoting this venue; you’re helping the bar across Broadway attract more customers, you’re helping Google organize the web; you’re helping people searching google for information about journalism; you’re helping journalism schools advertising on Google to attract new students. Not bad for 140 characters.

And that, in short, is the power of social media.  But with great power comes great responsibility, as Uncle Ben tells us, and social media brings with it a unique set of legal burdens. 

The power of text in social media is, in essence, the power to juxtapose the content of others with your own stuff.  It is the power to create new works out of the works that other people created.  But copyright law doesn’t work like that — to the contrary, copyright law presumes that you, as the owner or creator of a work, must be consulted before your work is used in any substantive fashion (we will ignore the fair use exception for the moment).  How can you engage in a the classically post-modern activity of social media engagement when you have to ask permission each time you incorporate the works of others?

This is where legal judgment comes into play — and, to be honest, where fair use comes into play as well.  When constructing your social media empire, it is not enough to assume that everything will simply take care of itself.  Instead, it is critical to understand the nature of the content to be used — what is it, who is creating it, and what rights do you have to use it? 

Only through systematic analysis of what you’re doing and — even more importantly — why each element is actually important in your business plan can you really expect to get a sense of your legal risks.  There are no “right” or “wrong” answers in how to handle content on social media platforms.  There are, however, right and wrong approaches.  The right approach involves a recognition that you need a legal framework before you get started. Without that, you’ll be frantically trying to readjust without a sense of where you want or need to be on risk spectrum.   Taking a little time to consider the legal issues before you get started will save you headaches and money later on.


On the internet, no one knows you’re a dog…

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…or 10 years old.  Given that commercial interaction with both minors and children under the age of 13 is both regulated and difficult to control, that simple fact should give all businesses pause for thought.   “But Legally Social Guy,” you say, a tear running across your downy cheek.  “I sell heavy machinery.  Or consulting services.  Or cars.  I don’t have to worry about such things!”  Oh yes you do! 

I have been fascinated to watch the Internet activities of my son and his friends, curious to see how parents view use of the Internet and whether there are any real controls on their online behavior.  As one might imagine, the situation is somewhat mixed: some parents are quite watchful, and others are shockingly laissez faire.  But regardless of parental involvement, you can be sure that children are looking at your web site.  Why?  It’s because of what I call “search habits.”

The search habits of kids today are quite different than what adults experienced all those years ago.  Because information is presumed to be at your fingertips at all times, questions are meant to be answered, not left for another day.  Today, every time a child thinks a strange thought, or overhears a phrase that he or she does not perfectly understand, the first idea that crosses their mind is “I should go look that up on the Internet!”  On their phone.  Right now. 

Did your child just see a cool car?  She wants to look at every site that talks about that model.  Did your child see a bulldozer or a crane?  That will be his next search term.  Was there a billboard on the highway?  A commercial on television?  A pharmaceutical ad?  Kids look these things up — the idea that your site is “not attractive to children” has been, as they used to say in college theory classes, problemitized

What does that mean?  It means that instead of just considering whether you are intending, explicitly, to sell your wares or services to minors, you need to consider (a) whether there are scenarios that might attract children or minors to your site, and (b) what types of activity might actually take place there.  The details will, of course, vary significantly depending on your site and the manner in which you use it for your own marketing efforts, but do not assume that your site will never be viewed or accessed or used by folks without the ability to contract with you, and without the consent of parents.  Instead, consider the real world, and whether it has any impact on your obligations under the law.


Content – What’s It Worth To You?

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One of the many bromides of the early Internet age was that “information wants to be free.”  As an IP lawyer, it was difficult not to bristle at the idea when I first heard it.  Sure, data wants to be free — we can all agree on that.  But information?  That’s a bit more all encompassing.  Perhaps people want information to be free, because they don’t want to pay for it if they don’t have to, but it seemed strange to imply that the trend for all information (which came to be understood among the cool kids as “all creative content of any kind”) was towards valuelessness seemed, well, troubling.

Then, several years later, I heard the rest of the quote, and I realized that we were having the wrong argument.  It turns out that Stuart Brand (the man behind the counterculture bible, the Whole Earth Catalog, and an icon of the social media world through his creation of the early virtual community The WELL) had a much more sophisticated notion in mind back in 1984 when he was first quoted on this point.

On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

Now that’s more like it.  So what does this mean for copyright law and the value of content?

It means so many things that a single blog post could not possible contain them all — and we will certainly discuss many of these things in the weeks and months to come.  But one thing in particular is worth bringing up now: the value of content deals.  How can you possibly determine the fair value of content when the difference between exceptionally valuable information and commodity information is so difficult to parse?

I was reminded of this by an interesting tale of a content deal that never came to fruition.  Apparently, The Washington Post, seeking content to make its own site stickier, decided to start aggregating independent bloggers.  Fair enough.  But it turns out that they had an interesting suggested deal price: zero:

Every blogger signing the agreement is expected to participate in a blogger “discussion” initiated by Post editors or other bloggers at least once a week. Each blogger is also expected to stick to a “workflow plan” in which he or she will manage the other bloggers and submit extra material for a week on a rotating basis. In return for this commitment, the bloggers receive… absolutely nothing.

Of course, not only was the deal never consumated, but the aggreived blogger then went public.  The Postassumed that bloggers were still so desperate for attention that they would gladly agree to share content for free, and do additional tasks for free.  Apparently, they didn’t hear the other half of Stewart Brand’s quote: information can get more expensive just as it can become free.  Several years ago, most bloggers would have killed their friends to get on The Washington Post’s web site, even for free, and they’d have taken in Sally Quinn’s dry cleaning as well.  But in our social media intensive world, bloggers can now realize independent value of their own, and feel comfortable pricing their efforts.  Their random obsessions and insights are no longer viewed (by the public or by the bloggers themselves) as valueless — and in fact many of them currently have a profitable existence at a variety of publications. 

So what does all of this mean?  It means that content should not be devalued simply because of the fact that it appears in electronic space, and it also means that content should not be seen as overly valuable for the same reason.   Just as folks used to believe that porting any idea from the Bricks and Mortar world to e-commerce would suddenly create a viable business, many folks attach far too much cache to ideas simply because they are “social media” ideas.  Content should be valued on its own merits, rather than subject to preconceived notions of aggregate worth. 

Stuart Brand is a smart guy, and we need to make sure that we listen to the entirety of what he had to say all those years ago.  Underpaying and overpaying for content, after all, are merely symptoms of a failure to pay attention.


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