Since its creation in 2005, YouTube has evolved from a once-obscure video-sharing platform, used exclusively by particularly eager tech enthusiasts, into a multi-billion dollar media monolith. In 2020, YouTube has become a ubiquitous part of our culture; it is the primary source of media consumption between 18 - 35 year olds and has seen near exponential growth in all seven of the Earth’s continents. With revenue exceeding 15.15 Billion in 2019 (a 39% increase in 2018), it appears more than certain that YouTube will continue to cement its position as the world’s predominant media platform.
However, despite the undeniable corporate vastness of YouTube, it has retained a sort of avant-garde charm. Those creating content and uploading videos scarcely do it in the knowledge that they are interacting with a corporation larger and more expansive than the BBC, ITV, and Channel 4 combined, twice over. Nor do they have in mind that they may be inadvertently creating a business and a brand. This may have a lot to do with the unorthodox career progression that many successful YouTubers experience. It starts as a hobby, becomes a side-project, and evolves into a fully-fledged online enterprise. It is in this growth that the importance of good legal representation is made clear. Successful YouTube channels lack all the traditional indicators of being a business, but in every possible sense, they are. Take Ryan’s World, for example, a channel whose primary content creator is a 9-year-old child. In 2019, the channel made an estimated $26 million in revenue. A traditional business of this size would have direct and expert legal counsel, and they would have a team that helps strategize, plan corporate partnerships, roadmap, explore potential sponsorships, protect intellectual property, and pursue copyright violations. it is this legal counsel that will not only protect the business as is but will also ensure that it is laying a foundation from which it can continue to scale.
As a YouTube channel begins to grow, and a brand starts to develop, so does the potential for opportunity. Content creators are often faced with a series of future-defining decisions early in their careers. Do they take a sponsorship? Should they join an MCN? Sell merchandise? Diversify platforms? The answer to all of these questions profoundly shapes the direction a YouTube channel goes in. With this also comes a wave of responsibility unique to YouTube, filing and protecting against DMCA's, considering defamation, vetting sponsorship deals, the list goes on. All of these scenarios are complex, and each presents an issue that requires expertise to navigate.
Below we will explore some of the unique challenges and opportunities that YouTubers face when looking to become successful online.
Copyright - Protection, Infringement, and Policy.
To say that YouTube has had a difficult past when it comes to Copyright would be a vast understatement. In fact, it has served as the battleground on which much of the law surrounding digital copyright has been fought. Throughout its history, YouTube has been involved in a series of landmark cases that have sought to define the struggle between the rights of content creators to create, and copyright holders to retain control over their property. YouTube has invested an enormous amount of resources In attempting to mediate the relationship between these two parties, spawning a complex series of policies, and even leveraging technologies such as machine learning in its Content ID system. However, to fully appreciate the current landscape on YouTube as it relates to copyright, we should first take a look at how we got here.
Since its inception, YouTube has always had a complicated relationship with copyright, but 2007 was a watershed moment. On March 13th, 2007, media giant Viacom filed a lawsuit against Youtube and its parent company Google for ‘brazen disregard of intellectual property laws’. In Viacom International Inc. v. YouTube, Inc. Viacom, seeking over $1,000,000,000 in damages, claimed that users on YouTube had uploaded over 150,000 unauthorized video clips of Viacom’s. However, in 2010 the District Court, citing the ‘safe harbour’ provisions found in the Digital Millennium Copyright Act (DMCA) sided with YouTube and granted the motion for summary judgment. This was immediately appealed, and the case was ultimately settled in March of 2014. At the same time that YouTube was coming under fire for its handling of copyright, so too were its users. In the same year, we saw the case of Lenz v. Universal Music Corp in which YouTuber Stephanie Lenz took action against Universal Music after they had ordered that she remove a video she had created because it contained music by one of their Artists. After nine years, and appealing up to the Supreme Court, Lenz ultimately secured essential protections for content creators, in that, those who now wish to make a DMCA claim against a video must now consider whether the content could be regarded as ‘fair use’ or not.
While in both of the above examples, YouTube and it’s users ultimately ‘won’, - these cases were followed by a litany of similar claims, all seeking to dispute YouTubes apparent indemnity from copyright violation. The critical and ultimately defining moment came in 2010, in the case of GEMA v YouTube. In this case, GEMA, a German organization that serves to protect the rights of performing artists, filed a lawsuit against YouTube following a conflict over royalty payments. Interestingly, and contrary to the previous decisions handed down in U.S courts, the Hamburg District Court sided with GEMA, and found that YouTube was indeed responsible for the content its users generate. Following this case, the state of copyright on YouTube became confusing for all involved. In the uncertainty, YouTube began to enforce its policies arbitrarily, and in an attempt to pre-empt any potential liability, began almost exclusively to side against the content creator. This then leads to the exploitation of YouTubes’ DMCA process, in which malicious actors could essentially disrupt a creator’s revenue, and as well as their ability to submit content without repercussion. It was with all of this, and likely in the understanding that it was impossible to continue to fight these battles both domestically and abroad, that the Content ID system as we know it today, was born.
The Content ID system is one of the single most important elements of YouTube that all content creators must understand. It is the primary mechanism by which you can protect your content from others, and it will be the instrument through which others seek to protect their content from you. Content ID is a system intended to help copyright owners with the initial identification, management, and, ultimately, protection of their content. In essence, the Content ID system enables users to upload their content to a database; in doing so, this content will be tagged with an identifiable fingerprint. This tagging allows YouTube to automatically detect whether the content that is being uploaded by users has any copyrighted content contained within it, prior to that video going live. When it detects a piece of copyright content, it will issue the channel with a ‘Copyright Strike.’
It is essential as a YouTuber to understand the difference between DMCA claims and a copyright strike, as they have different consequences on your channel. A DMCA claim is governed by U.S Law (although sanctioned in the USA, it covers the World Intellectual Property Organisation treaties so all hosting and online companies must adhere to it.) Whereas, copyright strikes are an internal warning that is communicated to YouTubers in an effort to educate and help the creator understand they may be engaging in potentially unlawful activity. It is blind to jurisdiction and governed entirely by YouTubes’ internal policies. While this may seem more benign, copyright strikes afford the claimant a lot of power when it comes to protecting their content. When a newly uploaded video matches their copyrighted content: they can block it from going Live, mute the audio on a video entirely to prevent copyrighted music from being played, monetize the video with ads, or track the video passively. Meanwhile, a content creator whose monetized video has been claimed has a few avenues: they can accept the claim and do nothing, which will cause revenue generated by the video to go to the claimant automatically; dispute the claim within five days, and revenue generated will instead be held in escrow from the day the claim was issued, or file a dispute after five days, and the revenue from monetization will then be held in escrow from the date the dispute was filed.
What is incredibly important to understand here, is that whilst the Content ID system is a good first point of defence for copyright owners, and the escrow system is a fantastic step in the right direction for content creators, it is rarely in and of itself a resolution. In this context, there exists an adversarial relationship between content creators and copyright holders, and if a resolution cannot be found throughout this process, the next step will often be to pursue legal action outside of the YouTube platform.
Ultimately, when it comes to copyright, YouTuber’s are in a novel position, in which they are both liable to have their content stolen but also have the potential to infringe on the copyright of others. This means they are in the unenviable position of having to navigate the complex world of pursuing those who use their content through YouTubes content ID system, or in more direct cases, through a DMCA claim. They must also manage the responsibilities that come with this - like, for example, considering fair use on behalf of the content user or, more importantly, ensuring that they do not issue a DMCA claim fraudulently, the penalty of which can cause the aggrieved party to sue for damages. They must also ensure that they are able to fight any DMCA or copyright strikes that come their way, and they must do so whilst understanding both U.S and Domestic Law, as well as YouTube's own internal policies. Having good legal representation can ensure that you are able to deal with these kinds of issues effectively and also give you confidence when creating content that you are not putting yourself or your channel at risk of liability.
Multi-Channel Networks - Promoting the Good, Avoiding the Bad.
Multi-channel networks (MCNs) are interesting, insofar as they can show us the absolute best and worst of YouTube simultaneously. They are both a massive opportunity and substantial risk, and as such, should be navigated carefully. An MCN is a third-party company, not affiliated with YouTube in any way. They work by partnering with individual content creators and bringing them onto their network, in doing this, they promise to give the channel more exposure, as well as access to their other partners for various different collaborations. We can see several successful examples of MCN’s still thriving, particularly in the E-sports and gaming communities, there are several examples of YouTubers who made their mark and found substantial success on the back of an MCN collaboration. However, we have also seen rather explosive disputes arise from these relationships, and in 2019, we saw the collapse of one of the world’s largest MCN’s, Machinima. With this, there are two primary things that a YouTuber must consider when deciding the join and MCN, first, the legitimacy of the MCN, and secondly, the content of the agreement that both parties enter into.
Traditionally, In order to enter an MCN a YouTuber gives up anywhere from 10% to 30% of the revenue generated from their videos. This number is decided by factoring in a plethora of different metrics including video views, channel subscribers, monthly viewership statistics, lack of copyright violations on a channel, and much more. This is a point that having legal representation can act in your favour, as at this stage you are in a negotiation, and having an advocate in your corner can bolster your ability to negotiate for a lower percentage of revenue. It is important when working out this percentage to consider not only your current revenue but also your potential revenue in the future. 30% of £5,000 doesn’t seem like much, but 30% of £100,000 MRR is. It is often difficult once this has been agreed to get it changed, we recently saw a dramatic version of this happening when ESports gamers ‘Tfue’ attempted to leave ‘Faze clan’ under accusations that they had been taking upward of 80% of this total revenue.
The other side of why it is important to have legal representation when entering an MCN is that it gives you security. MCN agreements cover a lot of different elements, such as brand deals, copyright strike support, production support, and channel optimization. There are even MCNs that will provide access to sound production collateral, proprietary analytic dashboards, and productivity tools for managing content on YouTube and responding to fan communities. It is easy to become overwhelmed with all of this information and forget to ask important questions. One of the most important examples of this is term time, a standard MCN deal usually lasts 1 year and is renewed at the end of each year. However, it is common for less moral MCN’s to intentionally lock new or naive YouTubers into multi-year contracts, with no options to terminate or exit early. This can be incredibly damaging to your YouTube channel and seriously hamper your ability to make content for a substantial amount of time. Related to this, is the single most important factor to consider when joining an MCN, which is termination. It is fundamental that when negotiating a deal with an MCN, that in the event of termination, licensing rights to any music library tracks do not also expire and the YouTuber maintains ownership of videos uploaded during the term.
MCN’s are an example of an opportunity that can be maximised and a risk that can be averted through effective legal counsel. Not only does it ensure you are able to secure the terms that work best for your channel as well as negotiating favourable rates when it comes to revenue share, you also mitigate the risk should your contract be terminated. When handled responsibly, MCN’s can be a fantastic opportunity for YouTubers of all sizes.
YouTube as a Business, - Formations, Ownership & Opportunities
Successful YouTubers often find themselves the unwitting CEO of a digital media empire in that they command a tremendous audience, generate significant revenue, and in many cases even employ staff. However, they are often unaware of issues such as personal liability, tax implications, intellectual property, particularly when they are shot into limelight in the way that YouTubers often are. From a Legal standpoint, YouTubers are no different than a traditional media company and should work with a lawyer just as any business does. It is important that they are able to form the business correctly so that it is in their best interest and to ensure they limit personal liability. As discussed earlier, liability for issues such as copyright can become an incredibly costly mistake, single-handedly crippling the viability of Youtuber’s business.
As with traditional media businesses intellectual property is also extremely important, and YouTubers should be careful when entering into agreements that may result in the transfer of ownership of intellectual property rights surrounding their content. While this isn’t entirely common, it can happen if the YouTuber is not diligent when forming partnerships, or as discussed earlier, entering into an MCN. It is the role of the lawyer here to ensure that in all relationships the channel forms, IP is maintained at all times. This should also include situations where a YouTuber has entered into a partnership and in doing so has used content provided by another partner, in the event that the partnership was to dissolve, both parties should be careful that their right to use that content does not dissolve with it as this can lead to the removal or claiming of those videos as discussed earlier.
YouTubers in 2020, have incredibly diverse business models, and in most cases, are not dependent entirely on YouTube ad revenue to thrive. One of the most common ways that they do this is through brand sponsorships and deals. Historically, this has always been an incredibly simple process, a business approaches your channel to promote a product, and in your videos, you mention the product name and in return, you get a percentage of the products you sell. This has changed significantly in recent years, such that YouTubers and Social Influencers must now announce when they are attempting to promote a product. Whilst this isn’t actually something new and can be found in the Consumer Right Act, social media influencers and YouTubers had largely ignored it. However, this has become a primary concern for the ASA, and following new guidelines from the CMA, it is actively being enforced. So widespread was this issue of not announcing promotions that the UK’s Competition and Markets Authority even produced a booklet named: ‘An Influencer’s Guide to making clear that ads are ads’. Failure to do so is an offense that can have serious implications for any online business.
Another element of promoting brands on a YouTube channel has to do with the company that is being promoted. It is incredibly important that YouTubers do their due diligence on the businesses that they promote. There has been a series of instances over the last few years in which YouTubers have unknowingly promoted scams, which can massively erode audience trust.
In this article, we have covered some of the main reasons that YouTubers should consider working with a lawyer when running their channel. As well as everything we have covered so far, there are also many other factors that are equally, if not more important. YouTubers, like any business, are at risk of liability for a number of different things, including deformation, employee and salary issues, tax considerations, trademarks, as well as ensuring that they are not violating UK broadcasting laws such as the Communications Act 2003.
Having a legal team with you ensures that you are not only limiting your liability across all of these different realms but that you are also setting up your channel to maximise its potential, to scale effectively, and grow. At Moore Law, we work with some of the UK’s largest YouTubers, offering legal advice, consultancy, and representation.
Researched and written by Oliver James, Legal & Marketing Assistant
The information presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice. Internet subscribers and online readers should not act upon this information without seeking professional counsel.