How Brands and Content Creators Work Together
Before an attorney can advise a content creator or brand, the attorney must first understand the risks involved. Key to understanding these risks is an appreciation of the various ways in which brands can partner with content creators.
Here are some of the ways content creators earn money from their content, and how they partner with brands:
- Brand ambassadors. Brand ambassadorships are frequently long-term commitments. An influencer might, for example, sign a 6- to 12-month ambassador arrangement with a brand. Influencers who are brand ambassadors do more than just promote the brand on social media. They frequently appear as a model or spokesperson for the product on the brand’s social media channels or website.
- Affiliate marketing. When influencers share a link to purchase a product, they receive a part of the transaction if a follower buys something through that link. As a result, it has become one of the most popular methods for influencers to earn money. In daily social media posts, a fashion influencer, for example, is likely to offer links to the clothing he or she is wearing. Fans then buy the clothing, generating a cash stream for the influencer. The affiliate commission may be as low as a few percent, depending on the item.
- Advertising websites. Bloggers have been using advertising on their websites to monetize their traffic for a long time. Bloggers may earn money only when a visitor clicks on an ad or whenever it appears on the screen, depending on the type of ad. Sidebar and in-content advertising can be incredibly profitable for bloggers with substantial traffic to their websites.
- Digital products and e-courses. Many influencers have branched out into education and sell digital items to educate their followers on a specific topic. A travel blogger, for example, might build an entire course on how to travel on a budget. Another example might be a fashion influencer who writes an e-book about putting together a capsule wardrobe. Selling online courses may bring in thousands of dollars every month for some people.
- Donations, tipping, and subscriptions. Donations, tipping, and contributions are additional methods by which influencers get money. Some influencers, for example, offer a page on their websites where followers can donate money to the influencer. Likewise, some feature a link where followers can purchase a cup of coffee from them. Services like Patreon allow followers to donate a set amount of money to an influencer each month. The influencer may create content available only to Patreon backers in other circumstances.
- Reselling of clothing. It’s becoming more typical for fashion influencers to generate money by reselling the items they promote. In addition, these influencers frequently purchase significantly more clothing than they require, primarily to show their fans a range of outfits. Then many people sell their lightly used products on a separate Instagram page or Poshmark.
- Sales from live events. Live events, whether in person or online, are another opportunity for influencers to make money. A travel influencer, for example, could make money by booking a vacation for a limited group of followers. On the other hand, a fashion influencer might make money by conducting a live closet sale where fans can buy worn goods that the influencer has showcased on their social media platforms.
- Product lines created particularly for influencers. Influencers can also generate money by creating product lines. Some influencers start from the ground up with their own product lines. Other influencers leverage their following to form partnerships with businesses, launching beauty lines, clothing lines, and other products.
Each of the foregoing income streams creates its own type of legal issues that must be addressed by content creators.
Legal Considerations for Content Creators
Unlike prior generations of ad spokesmodels, sports stars, and other celebrities, today’s content creators typically don’t have teams of lawyers, managers, and agents protecting their interests. For that reason, they often do not have legal guidance, without which they can fall prey to legal pitfalls and costly legal issues.
Thus, whether a content creator makes $500 a year or $10 million, the creator must protect his or her legal rights, respect the rights of others, and comply with state and federal advertising laws. Below are some of the typical legal considerations and issues that content creators commonly need to address.
Intellectual property. “Intellectual property” (IP) refers to range of creative properties that content creators own, including the content they post and upload, as well as their own name, image, and likeness (NIL). These rights, which typically fall under either copyright or trademark law, must be identified, secured, and then enforced. Unfortunately, many content creators do not fully appreciate or understand their IP rights. In addition, content creators must respect the IP rights of others, or risk legal action and social media bans for infringement.
Legal entities. Once a content creator begins to monetize his or her content, it often makes sense for the content creator to form a legal entity. These entities, like limited liability companies and corporations, can provide a number of benefits, including limited liability protecting their personal assets from claims related to the business. Choosing an entity requires consideration of a number of factors, such as tax implications and management flexibility, and should involve discussions with legal counsel as well as tax planning.
Contracts. As in any business, contracts drive the relationships between content creators and their various clients, vendors, affiliates, and advertisers. Contracts of principal importance for content creators include endorsement contracts and the terms of use for the platforms where their content appears.
Endorsement or brand ambassador relationships are an important source of income for many content creators, and these relationships are governed by contracts. The agreements outline what services the content creator is expected to provide, as well as what type of compensation the content creator will receive. Aside from the definition of services and compensation, key terms in these agreements often involve IP and NIL rights and termination provisions.
All users of social media platforms must comply with the terms of use for those platforms, and those terms are contractual obligations that govern a wide range of behavior on and with the sites. Otherwise, the users risk censure or even removal from the platform. For content creators, having an account suspended or demonetized can effectively close their business.
Regulations and disclaimers. In addition, content creators must comply with state and federal advertising laws, including Federal Trade Commission (FTC) regulations and guidelines against false and deceptive advertising.
If a content creator agrees to serve as a brand ambassador or otherwise endorse a product through social media, the content creator’s endorsement message should make it obvious when he or she has a relationship (i.e., a “material connection”) with the brand. A “material connection” with the brand includes a personal, family, or employment relationship or a financial relationship, such as the brand paying the content creator or giving the content creator free or discounted products or services.
Financial relationships aren’t limited to money and can include anything of value to mention a product. For example, if a brand gives a content creator free or discounted products or other perks to mention one of its products, the content creator must make a disclosure.
Telling followers about these kinds of relationships is important because it helps keep recommendations honest and truthful, and it allows people to weigh the value of content creator endorsements.
It is the responsibility of the content creator to make these disclosures, to be familiar with the FTC’s Endorsement Guides, and to comply with laws against deceptive ads. Content creators cannot offload this responsibility to the advertiser or manufacturer who compensates them to promote its products.
According to the FTC’s publication Disclosures 101 for Social Media Influencers, which is available on the FTC website, it is important to make disclosures even if the content creator believes his or her evaluations are unbiased. Content creators should not assume their followers already know about their brand relationships, and they should keep in mind that tags, likes, pins, and similar ways of showing they like a brand or product are also considered endorsements. Of course, content creators who have no brand relationship and are just telling people about a product they bought and happen to like don’t need to declare that they don’t have a brand relationship.
In making disclosures, use simple and clear language. Simple explanations like “Thanks to X [brand] for the free product” can be sufficient, as are terms like “advertisement,” “ad,” and “sponsored.” On a space-limited platform like Twitter, the terms “X [brand] Partner” or “X [brand] Ambassador” are also options. It may also be advisable to include a hashtag with the disclosure, such as #ad or #sponsored.
Finally, content creators cannot talk about experience with a product they haven’t tried. If a content creator is paid to talk about a product and thought it was terrible, the content creator can’t say it is terrific. Also, content creators cannot make up claims about a product that would require proof the advertiser doesn’t have, such as scientific proof that a product can treat a health condition.
Special Considerations for Businesses Engaging Influencers
Brands wishing to engage influencers to promote their products must be cognizant of the same regulations and concerns discussed above. In addition, when working with content creators, companies must manage any legal risks that the relationship might create for themselves.
For that reason, when brands engage social media influencers as ambassadors or promoters, they must be aware of several legal issues and include specific contractual provisions to protect their interests.
Here are some of the key contact considerations that brands should address in their agreements with content creators and other influencers:
- FTC compliance: Brands should ensure that their influencers clearly and conspicuously disclose their relationship, and the contract should specifically place the burden for compliance on the influencer.
- Intellectual property rights: Brands should clarify who owns the content created by the influencers. Typically, the brand retains ownership, but influencers may have a license to use the content for their own promotional purposes.
- Content approval: Specify that the brand has the right to approve content before it is posted. This ensures that the content aligns with the brand’s values and messaging.
- Exclusivity: Define any exclusivity arrangements, which prevent influencers from promoting competing products during and after the contract term.
- Term and termination: Establish the duration of the agreement and the conditions under which it can be terminated, including breach of contract or failure to meet performance metrics.
- Compensation: Clearly outline the compensation structure, including whether the influencer is paid a flat fee or a commission, or receives free products in exchange for promotion.
- Performance metrics: Set specific performance metrics or key performance indicators that the influencer must meet and the consequences for failing to meet them.
- Confidentiality: Include a confidentiality clause to protect sensitive brand information and trade secrets.
- Indemnification: Address liability and indemnification, outlining who is responsible for legal consequences if there are issues related to the influencer’s content.
- Dispute resolution: Specify the method for resolving disputes, such as through arbitration or mediation.
- Force majeure: Include a force majeure clause to account for unforeseen events or circumstances that may affect the influencer’s ability to perform.
- Rights upon termination: Detail what happens to content, rights, and obligations upon the termination of the agreement.
- Compliance with laws: Ensure that the influencer agrees to comply with all relevant laws and regulations, including copyright, trademark, and advertising standards.
- Licensing and endorsement: Address any licensing or endorsement agreements, as well as any limits on the influencer’s ability to endorse other products.
- Data privacy: Ensure compliance with data privacy laws when handling consumer data collected during promotions.
- Geographical restrictions: If applicable, specify any geographic limitations on the influencer’s promotion activities.
These contractual provisions should be drafted with the guidance of legal counsel who specializes in influencer marketing agreements.
Conclusion
As noted above, the rise of the global influencer market affords opportunities for individuals seeking to become influencers and content creators with very low start-up costs. Because content creators often do not have legal guidance, they can face costly legal issues or fail to protect their rights and interests.
In addition, businesses seeking to partner with influencers need to ensure they comply with laws and must also protect their brands and operations from any risks or liabilities related to the relationship.
It is essential that both parties clearly understand their rights and responsibilities to avoid potential legal issues and protect the brand’s reputation. For that reason, brands and influencers should work with experienced legal counsel to draft clear and comprehensive agreements to govern their relationship and protect their respective interests.
