In conjunction with part one, this guide will help breakdown the process of determining what type of music license, if any, you may need to incorporate music into your top-quality content. As with part one, please keep in mind that intellectual property law is some of the most nuanced theory and practice in the United States legal framework. This guide is not an exhaustive resource and is not meant to be anything more than a free resource. The use of this resource does not create an attorney-client relationship, and this resource is not to be construed as legal advice. This resource should be viewed as a compilation of knowledge and may not be up to date. If you have specific questions about music, copyright, or licensing, please consider reaching out to the GreenRoom Team.

In part two of the guide, we will present a framework for deciding whether you can put a piece of music in your video, what to do if you discover that you accidentally have been using copyrighted materials, and a list of ways to find music for use in your videos in a legal manner.

1. Can I put this in my video?

a. Who Owns this Music?

i. I bought the music.

1. Does the Music sound just like another protected work?

a. Yes. If you had access to that other work, there is going to be a presumption that you borrowed from the other work and you could get in trouble.

b. No. Go nuts, you should probably protect it, but you can use the music (See the Work for Hire language in Section 3 Below).

ii. I got it from a free service.

1. Did you read the terms of use?

a. Look to see if you are allowed to reproduce musical work and or sound recording.

b. If you do not see an explicit grant to distribute both the sound recording and musical work avoid this.

c. If you do, feel free to use it. Print or save out the Terms of Use. If the grant is irrevocable then you can use it forever. If the grant is for a duration make sure to take down the video when that term expires.

iii. I got it from a website.

1. What type of Website?

a. SoundCloud:

i. Check the Terms of Service

1. Can you reproduce or use the Music?

Yes: You can use the music pursuant to those terms.

No: Contact the musician. Find out if the musician has a deal with a music label. If they are not, negotiate, a non- exclusive (or Exclusive) deal for the sound recording or musical works.

iv. I bought a physical or digital copy.

1. When you purchase a physical or digital copy you are buying the right to enjoy that musician's sound recording for your personal enjoyment. Anything outside of that sound without a license or some other use exception, you cannot use this for anything other than personal enjoyment.

v. I purchased a license.

1. Great! Now make sure that you understand the following

a. What does this license allow me to do?

b. How long is the license for?

c. How many times can I use the license?

d. Do I have to renew the license?

vi. I am only sampling the music.

1. Sampling music without permission is infringement. Sony, Ed Sheeran, and many others have lost millions of dollars from not understanding this.

vii. I am going to sing the song myself.

1. Without the rights to the musical works, you are still infringing on copyrighted materials. Sorry, but just because you sing it doesn't mean you can use it.

viii. It is fair use.

Sorry, it probably is not, but check out part one section five to evaluate the analysis.

2. I have been using copyrighted materials, what should I do?

a. If you have made a mistake and used protected works without permission, you need to take action. Given the amount of content on YouTube, you may not have been caught or you might have just received a warning. Either way, you need to take steps to reduce your risk and liability. In the practical application you have four choices: 1) secure a license for protected material, 2) remove the protected material, 3) maintain your stance that it is fair use, or 4) openly infringe.

i. Securing a music license is the safest method. To secure a license you should the right to license the protected work and obtain a fee schedule. There is a wide range of services that can make sure you avoid any problems. At the bottom of this guide are a few potential licensing companies. You should consider having a lawyer review the terms and conditions of any licensing contract.

ii. Removing protected content is a way to ensure that you do not expose yourself to any additional liability. If you have already received a notice of infringement or have been sued, this will not necessarily stop the legal consequences but will be a step in the right direction.

iii. Fair Use may absolve you from liability, but you may incur thousands of dollars in legal fees and experience many sleepless nights before you are vindicated. When applying the fair use doctrine, it is much more difficult than with other artistic expressions.

iv. You can always openly infringe and be subject to all the consequences associated with that choice. Please be aware that there are a whole host of potential consequences ranging from forfeiture of profits to hefty civil penalties. You may get away with it for a while but remember that bots are out their scanning videos as we speak.

3. Can I commission my own music?

a. You can absolutely commission your own work but if you do you need to make sure that you protect that work! Some general suggestions include having a contract that states that the music, recording and associated materials are all works made for hire. You can work out with the musician the exact terms, but it is important for you to get what you pay for!

4. Where can I license music?

a. List Licensing Resources.

i. https://www.bmi.com/

ii. https://www.ascap.com/music-users

b. Subscription-based packages.

i. https://www.musicbed.com/

ii. https://www.audionetwork.com/

iii. https://www.marmosetmusic.com/

iv. https://musicvine.com/

v. https://www.epidemicsound.com/

This has been a two-part guide to using music, the legal way, in a YouTube video. Once again, the use of this resource does not create an attorney-client relationship, and this resource is not to be construed as legal advice. This resource should be viewed as a compilation of knowledge and may not be up to date. If you have specific questions about music, copyright, or licensing, please consider reaching out to the GreenRoom Team.

This guide will help breakdown the process of determining what type of music license, if any, you may need to incorporate music into your top-quality content. Please keep in mind that intellectual property law is some of the most nuanced theory and practice in the United States legal framework. This guide is not an exhaustive resource and is not meant to be anything more than a free resource. The use of this resource does not create an attorney-client relationship, and this resource is not to be construed as legal advice. This resource should be viewed as a compilation of knowledge and may not be up to date. If you have specific questions about music, copyright, or licensing, please consider reaching out to the GreenRoom Team.

In part one of the guide, we will discuss the principles of copyright; licenses; how the two interact with music; some of the more commonly used, sharing-focused licenses under the Creative Commons; and the principle of fair use.

1. What is a Copyright?

   1. Definition: Copyright is a bundle of rights held by an author, developer, or composer of an original creative work.

      1. These rights include the exclusive right to:

         1. Make copies

         2. Authorize others to make copies

         3. Make derivative works

         4. Sell the works

         5. Display the works

         6. Perform the works

         7. Protect the works through legal action

      2. What can be protected by copyright? Original works of authorship.

         1. Sound Recordings:

            1. Example: Queen performing “Killer Queen”

         2. Musical Arrangements:

            1. Example: The musical notes and words surrounding “Killer Queen”

      3. Audiovisual Works:

         1. Example: Your YouTube Videos!

      4. Literary Works (Computer Software is included in this category!):

         1. Examples: Harry Potter and the Goblet of Fire, Fortnite, Microsoft Word, Quick Books.

      5. Graphic Works:

         1. Example: The Campbell Soup cans by Andy Warhol

      6. Compilations and Derivative Works:

         1. Examples of Derivative Works: New versions of a computer program, an adaptation of a dramatic work, a sculpture based upon a drawing, a movie based upon a play or a novel.

         2. Examples of Compilations: A list of the best short stories of 2019, a book of the greatest news photos, a website containing text, photos, and graphics

   2. How long is a copyright good for?

      1. If the copyright belongs to the original author, it lasts for the life of the author plus 70 years

      2. If the work is anonymous, pseudonymous, or a work for hire, either 95 years from the date of publication or 120 years from the date of creation, whichever is shortest.

   3. What cannot be protected by copyright?

      1. Ideas: You can only copyright things that have been created. Do you have a hit song in your head that is going hit? Put it on paper and protect it.

      2. Vague concepts:

         1. Example

            1. You cannot copyright an entire genre.

            2. You cannot copyright a space opera.

            3. You cannot copyright a movie about two people going through space.

            4. You can copyright a full written screen play about science fiction space opera about a Wookie and a scoundrel going through space to save the rebellion.

   4. How do I get Copyright Protections?

      1. All original forms of authorship are automatically granted copyright protection the moment that the work is created and fixed in a tangible medium. However, to enforce a claim to your copyrighted work, it must be registered with the copyright office.

      2. Go to the copyright office website: https://www.copyright.gov

      3. Hire an Intellectual Property Attorney

   5. Statutory Resources

      1. Copyright Act of 1909, https://www.copyright.gov/history/1909act.pdf

      2. Copyright Act of 1976, https://www.copyright.gov/title17/92appa.pdf

      3. DMCA, https://www.copyright.gov/legislation/dmca.pdf

2. What is a License?

   1. Definition:

      1. A license is a grant from the owner of some property made to a non-owner to use the owner’s property for some purpose.

      2. The owner of property can grant a license to anyone for any purpose. This can be as simple as a license for a non-owner to come on to the owner’s land, into the owner’s house, or to use the owner’s car. Licenses also apply to intangible property such as IP.

3. Copyrights and Licensing in Music

   1. Definition

      1. Musical Works: These protect songs and compositions

         1. Example: The written lyrics and/or musical notes

         2. Note: This only protects the actual notes and any accompanying lyrics. A recording of those notes and lyrics being played, in most cases, requires a separate registration.

      2. Sound Recordings: These protect the specific manner in which the music is arranged, recorded, and edited on the recording.

         1. Example: A recording of Queen edited by their music label

         2. Note: This is the converse note of Musical Works above. The recording only protects the recording of the artist’s rendition of the notes and lyrics in a musical work. In most cases, each must be filed separately.

   2. Types of Music Licenses (Definitions from BMI & ASCAP) (https://www.bmi.com/licensing/entry/types_of_copyrights https://www.ascap.com/help/ascap-licensing)

      1. The exclusive right of the copyright owner, granted by the U.S. Copyright Law, to authorize the performance or transmission of the work in public.

         1. Example: You want your corporate event to be able to play a particular song. Before you can play that song, you need a license.

      2. Public Performance License

         1. A company issues licenses on behalf of the copyright owner or agent granting the right to perform the work in or transmit the work to, the public.

         2. Example: You have a cover band or want to hire a cover band and want them to sing a particular cover. Before the band can do that, someone needs to secure the rights to perform the copyrighted music.

      3. Reproduction Right

         1. The exclusive right of the copyright owner, granted by the Copyright Act, to authorize the reproduction of a musical work as in a record, cassette or CD.

      4. Mechanical License

         1. A company issues licenses on behalf of the copyright owner or his agent, usually to a record company, granting the record company the right to reproduce and distribute a specific composition at an agreed upon fee per unit manufactured and sold.

      5. Synchronization License

         1. Music Publishers issue licenses as copyright owner or his agent, usually to a producer, granting the right to synchronize the musical composition in timed relation with audio-visual images on film or videotape.

            1. A YouTuber wants to sync a Hans Zimmer track to your cool zombie killing montage.

      6. Digital Performance Right in Sound Recordings

         1. Sound Exchange along with Record Companies license the exclusive rights on behalf of copyright owners in a sound recording (which is separate from the copyright in the underlying musical works that may be represented) under U.S. Copyright Law to authorize many digital transmissions (e.g., Internet streaming).

            1. Example: You create a streaming service and want to bring Taylor Swift to the masses.

4. Creative Commons

   1. The Creative Commons is an organization that attempts to balance the rights of creators and users alike. As they say Creative Commons provides “The combination of our tools and our users is a vast and growing digital commons, a pool of content that can be copied, distributed, edited, remixed, and built upon, all within the boundaries of copyright law.”

   2. Types of Licenses Provided by Creative Commons (https://creativecommons.org/licenses)

      1. Attribution(CC BY): This license lets others distribute, remix, tweak, and build upon your work, even commercially, as long as they credit you for the original creation. This is the most accommodating of licenses offered. Recommended for maximum dissemination and use of licensed materials.

      2. Attribution-Share Alike(CC BY-SA): This license lets others remix, tweak, and build upon your work even for commercial purposes, as long as they credit you and license their new creations under the identical terms. This license is often compared to “copyleft” free and open source software licenses. All new works based on yours will carry the same license, so any derivatives will also allow commercial use. This is the license used by Wikipedia, and is recommended for materials that would benefit from incorporating content from Wikipedia and similarly licensed projects.

      3. Attribution-No Derivs (CC BY-ND) This license lets others reuse the work for any purpose, including commercially; however, it cannot be shared with others in adapted form, and credit must be provided to you.

      4. Attribution-Non-Commercial (CC BY-NC) This license lets others remix, tweak, and build upon your work non-commercially, and although their new works must also acknowledge you and be non-commercial, they don’t have to license their derivative works on the same terms.

      5. Attribution-Non-Commercial-Share Alike (CC BY-NC-SA) This license lets others remix, tweak, and build upon your work non-commercially, as long as they credit you and license their new creations under the identical terms.

      6. Attribution-Non-Commercial-NoDerivs (CC BY-NC-ND) This license is the most restrictive of our six main licenses, only allowing others to download your works and share them with others as long as they credit you, but they can’t change them in any way or use them commercially.

      7. All Rights Granted/No Rights Reserved (CC0) This is a type of license that takes a work and puts it into the public domain. A licensor that implements this license waives any and all rights to the work, which means that anyone may freely build upon, enhance, and reuse the work for any purpose. Unlike the above CC licenses, CC0 opts out of copyright protection and grants the public full use of the work.

5. Fair Use

   1. What is Fair Use:

      1. Fair use is a doctrine that allows the unauthorized use of copyrighted materials if used for purposes such as criticism, commentary, or parody. Many people receive a copyright “strike”, take down request or other legal notice and want to instantly respond, “screw you, this is fair use." Unfortunately, the analysis is not that simple. Fair use’s basis was carved out by the Copyright Act of 1976. This carve-out allows any person the use of copyrighted materials in connection with 1) comment or criticism of the work, 2) news reporting, 3) teaching purposes or 4) scholarship.

      2. The use of these copyrighted materials still infringes on the rights of the copyright owner but "fair use", as an affirmative defense, limits the infringer from any liability. An affirmative defense is raised exclusively at trial. Fair use has some unique attributes in that, under the DMCA, copyright holders need to do a “subjective good faith” analysis or they could be held liable for damages resulting from copyright misrepresentation.

   2. To determine whether or not an unauthorized copy or use is protected by the doctrine of fair use they must evaluate the balancing of four factors. (remember that this is a subject factor test and is made on a case by case basis.)

      1. The purpose and character of the use

      2. This factor is to determine whether the use is transformative or adds value in its own right. The courts will look to see if you added new expression, meaning, value, information, insights, or understanding.

         1. Example: H3H3 Productions analysis and critique of another YouTuber’s content.

      3. Nature of the copyrighted work

         1. This factor looks at the actual work. Courts have been more inclined to find fair use when it encourages the free spread of ideas.

            1. Example: Fair use is more often found when it comes to news, scientific, or scholarly works rather than a motion picture.

      4. The amount of the work and the substantiality of the portion used in relation to the work as a whole.

         1. This factor looks at the amount of the work you are using. This is not limited to only time but also can be extended to the message.

            1. Example: Using 2 minutes of a 90-minute movie or using 1 still image from a movie (Do it for the memes)

      5. The effect on the potential or actual value of the copyrighted work

         1. This factor requires the Judge to establish what the potential effects a ruling of Fair Use would have on the current and future value of the Copyrighted work.

         2. Example: Using movie posters in a book about the director. This use does not limit the sale of movie posters or the sale of the movie or any other ancillary benefit.

   3. Fair Use Database

      1. The Copyright office knows that this legal principle is incredibly difficult and has compiled an index of all the findings. See the resource here: https://www.copyright.gov/fair-use/fair-index.html.

In part two of this guide, we will present a framework for deciding whether you can put a piece of music in your video, what to do if you discover that you accidentally have been using copyrighted materials, and a list of ways to find music for use in your videos in a legal manner. Once again, the use of this resource does not create an attorney-client relationship, and this resource is not to be construed as legal advice. This resource should be viewed as a compilation of knowledge and may not be up to date. If you have specific questions about music, copyright, or licensing, please consider reaching out to the GreenRoom Team.

Streamers on Twitch faced a new reality when the Recording Industry Association of America (RIAA), a conglomerate representing 85% of all music labels, issued huge numbers of "takedown notices” following review of Twitch’s back catalogue of VODs and clips. These notices drew attention to the use of three songs featured in streams between the years 2017 and 2019 and were the result of Twitch’s forced compliance with the requests to maintain DMCA safe harbor protection. Twitch now has to balance the rights of copyright holders and the streamers who make the platform a success. With Twitch's "three-strike" policy, streamers are penalized for actions from years ago and without any means to correct the actions. The shocked community continues to beg the platform for a better way. Twitch has stated that they will work with the community to enable better content management options, but unfortunately for many, the damage is already done.

While streamers and those in the industry knew that dealing with this issue is unavoidable, the sweeping application leaves many wondering: why Twitch did not learn from the mistakes of its competition? It is becoming common knowledge that as the digital media industry grows, more traditional media outlets are lashing out in a desire to get a piece of the profits and stay relevant. Twitch is not alone in being forced to deal with the grim reality of compliance with DMCA and the interplay of creating and controlling content on streams. YouTube encountered the same issue beginning in 2015 and still struggles to this day.

YouTube instituted dramatic changes in how it regulated copyrighted material and how "takedown notices" were processed leading to a near universal outcry from creators on YouTube. The volume of content on Twitch indicates that inspection, issuing of notices, and enforcement has been done via bulk computer-based review, similar to YouTube. This overbroad approach leaves many without answers for weeks as creators and streamers rely on clumsy appeal processes and manual re-review to either get their video monetization, avoid punishment, or to reinstate their video on the platform. Either way, creators and streamers lose out on valuable views and growth, but more importantly, they face the very real possibility of being removed from the platform without the ability to respond. If YouTube is any guide to how Twitch will handle this process, streamers should prepare for even more growing pains as Twitch attempts to balance the demands of traditional media, the law, and the needs of streamers everywhere. One of the most substantial hurdles for streamers on Twitch is the lack of control over what the audience clips. Twitch will need to ensure that there is a method to control audience generated content.

The continued controversy surrounding DMCA on digital platforms is unlikely to change. Streamers and creators will have to rely on the response of the platforms rather than government intervention. No particular agency has the authority to regulate or change the DMCA, which means that only an act of Congress can change the current predicament. Unfortunately, streamer and content creator rights are not a hot button issue at the federal level and no relief is on the horizon. Due to the widespread effect of the DMCA requests in the past week, we hope that Twitch will make incremental and meaningful change.

Prudent streamers will be extremely cautious of the content they use, and they will take steps to ensure that the music they play during streams is properly licensed. There are several options to avoid this issue. Streamers can play music from copyright-free services or, as long as the streamer complies with the terms, using services that offer music under Creative Commons.[1] Streamers can also subscribe to music licensing services such as Epidemic Sound, BMI, or ASCAP.[2]

If a streamer or creator receives a “takedown notice” the creator must decide how to respond. The streamer or creator should evaluate whether they have a right to use the content through a license. If they do, then the creator should assemble the appropriate documentation and or reach out to the rights holder and the platform. Each platform has an appeal process and the streamer may be able to resolve the issue without resorting to outside help. This follow through adds additional data to the platform’s machine learning program and helps others avoid the same false allegations in the future. With machine learning, a larger dataset has the highest likelihood of yielding more accurate results.

If the streamer or creator does not have any identifiable right to use the content, then they face  a difficult decision: delete the content, be banned from the platform, negotiate with the rights holder, or forfeit monetization and or be subject to the potential legal consequences. Many creators are now relying on online tools to delete their expansive back catalog, hoping that this will be enough to protect accounts that they have spent years building. This is a difficult and personal decision with a huge impact on the future of the creator’s channel. There are many factors to evaluate and we at GreenRoom Inc are available to help should the need arise. Please do not hesitate to reach out.

The DMCA

The Digital Millennium Copyright Act (DMCA) was designed to protect copyrighted material online and stop the infringement of digital or digital recreations of copyrighted works. Copyrighted material is any content where the creator has an exclusive legal right to the use of said content. The rights holder can restrict the authorization of others to do the same. Copyright attaches at the point that a work is reduced to a tangible medium, which means that any movie, television show, or professionally produced song is copyrighted. This includes music licensed as part of a video game, music playing on the radio, or the background score in a trailer. Infringement is the unauthorized display, use, or transmission of the copyrighted work. Platforms like Twitch and YouTube allow users to upload content independent of any immediate review from the platform. This results in huge amounts of copyrighted content being hosted at any one time. The liability related to the copyrighted content would make it impossible for platforms to exist. As a result, the DMCA provides safe harbor to Online Service Providers (OSPs), such as Twitch and YouTube, from liability for hosting infringing materials so long as specific conditions are met.[3] Online platforms depend on these safe harbors to avoid potential lawsuits. To keep the protection, as soon as the platform knows that infringing content is on the platform, it must remove or disable access to the infringing information.[4] If the platform fails to comply with these conditions, they could lose their safe harbor and be sued for infringement.

The primary way platforms are made aware of infringing content is through “takedown notices.” These notices are filed by the owner, rights holder, or a company authorized to perform takedowns on behalf of the rights holder. Platforms like YouTube and Twitch do not have an obligation to hunt for infringing content, just to remove it when they are provided notice that an issue exists. Part of the confusion in the community is that content stays up for years without issue as a result of the platform never actively looking to bring a “takedown notice” against a streamer or content creator.  As the platforms become more mainstream, traditional right holders and industry groups want compensation for the works to remain relevant. These organizations have purchased the rights to huge amounts of content, or are hired by the rights holder, and subsequently developed bots to “scrape” and review old content. These bots look for the use of copyrighted material and generate a “takedown notice” and report the streamer or creator. These bots are simply lines of code and do not undertake any due diligence or allow for any discussion between the creator or streamer and the rights holder until the damage is done. The platform is placed in an unwinnable position as it must balance between the need to retain the safe harbor provision and the wants of the community they create.

Twitch And YouTube Policies

While YouTube and Twitch are both struggling with the same issues, they have distinct methods of handling them. On Twitch, any third party can identify copyrighted material and file a complaint with Twitch. Twitch then takes down or mutes the content and imposes a strike on the streamer for violation of its DMCA Guidelines and violation of their terms of service.[5] This process takes place without any input or review from a human being. While machine learning has come a long way, it is still reliant on the reporting party who may look to abuse the system, and it is reliant on flagging false positives to distinguish between real infringement and anything that amounts to less than infringement. This process does not allow for any nuance or explanation until after the damage has been done. As a result, a user could face a ban without the opportunity to confront the issue or speak to a human about any solution.

YouTube has created a system where content creators can respond to and challenge these requests and solve these issues before facing a strike or ban on their account.[6] While still subject to exploitation, the process allows for some measure of due process for the creator and hopefully Twitch can adopt some of the more successful implementations.

These two systems have resulted in drastically different approaches from the userbase. It is becoming more common for streamers on Twitch to delete all VODs and clips to avoid any claim, which is occurring before anyone can check whether that content even contains infringing material. Some view this as a proactive solution, but the result is a loss of revenue and exposure relating to the decreased exposure and development of potential fans and viewers. A growing number are urging streamers to remain calm. They doubt Twitch's willingness to ban users, despite Twitch’s comments to the contrary, and believe that a new system could be developed to address the concerns. The current solution actively threatens Twitch’s business model, with less on demand content due to VOD and clip deletion, there is less content on the platform, marking a significant factor for existing streamers. Many could leave the platform entirely for alternative, more streamer friendly services.

Every platform has a slightly different approach and in the coming months, we shall see how Facebook and Mixer evolve their response to this very issue.

This article is for educational purposes only.

[1] https://creativecommons.org/about/program-areas/arts-culture/arts-culture-resources/legalmusicforvideos/.

[2] https://www.bmi.com/licensing, https://epidemicsound.com/, https://www.ascap.com/help/ascap-licensing

[3] 17 U.S.C. § 512

[4] § 512(c)

[5] Following, Twitch.tv, https://www.twitch.tv/p/legal/dmca-guidelines/

[6] YouTube, https://www.youtube.com/about/copyright/#learn-about-copyright

by Mitchol Dunham and Will Hanisch

California content creators and entrepreneurs have relied on independent contractors to edit, write, design, and help support their businesses in numerous ways. These contractors are key to a creator’s workflow. Assembly Bill 5 (“AB5”) has been heralded as one of the largest employment reclassifications in American history, potentially creating tens of millions of dollars in additional tax revenue for the state of California. It will also result in the mass reclassification of tens of thousands of independent contractors to employees. Some individuals might see benefits from this legislation, but small to mid-size businesses will be forced to reassess how and by whom their work is done.

The Change in Standard

Starting January 1, 2020, AB5 reclassifies individuals as “an employee rather than an independent contractor unless (1) the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, (2) the person performs work that is outside the usual course of the hiring entity’s business, and (3) the person is customarily engaged in an independently established trade, occupation, or business”. All three elements must be met for an individual to retain or be hired with the classification of independent contractor instead of employee.

Each company hiring independent contractors in California has the burden of either proving these elements or face potential prosecution and significant fines. If a company fails to satisfy even one of the elements, it must “make contributions with respect to unemployment insurance and disability insurance from the wages paid to their employees”.

The Professional Service Exemption

Despite AB5’s sweeping impact, the language of the bill carves out certain exceptions for “Professional Services”. The individuals falling under the Professional Services exemption are still regulated but are evaluated by the existing “Borello” standard. A full list of factors relating to the Borello standard can be found here under 1.A. Companies must make sure that this evaluation is done carefully as the consequences for misclassification are very severe and include significant fines. Professional Service providers are a varied class of exempt individuals, ranging from graphic design to lawyers and doctors. Critics of AB5 cite the spotty selection and variance of the exempted professional services and to the complexity of the analysis. See the language at Section 2750.3.(c)(2)(B) here. Of these professional service providers, the most pertinent to content creators include their lawyers, accountants, travel agents, fine artists, graphic designers, and payment processing providers.

The Freelancer Exemption

Under a separate exemption that we will coin the “Freelancer Exemption”, content creators will be able to contract with marketing professionals, photographers, freelance writers, freelance editors, and freelance cartoonists as contractors subject to additional conditions. The two most vital positions under this Exemption for content creators are editors and writers. These individuals are crucial to the production schedule of content creators but are not traditionally classified as employees. Content creators will be forced to re-evaluate these relationships and either ensure that they follow the process below or hire the editors and writers as employees.

To hire an editor or writer as a freelance contractor, the relationship must fall under the Freelancer Exemption. The Freelancer Exemption states that “services [are] provided by a freelance writer [or] editor . . . [where the freelancer] does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For purposes of this clause, a ‘submission’ is one or more items or forms of content by a freelance[er] that: (I) pertains to a specific event or topic; (II) is provided for in a contract that defines the scope of the work; (III) is accepted by the publication or company and published or posted for sale.”

The Freelancer Exception limits contractors to only 35 projects annually. Considering that many content creators put out videos daily, AB5 has a strong potential to change the way that content creators do business with freelancers. Many small content creators cannot afford the costs associated with transitioning an editor or a writer into an employee, indicating that this change in particular could end up hurting content creators, editors, and writers alike.

The Business-to-Business Exemption

The final relevant exemption for content creators is the Business-to-Business (B2B) Exemption. Under the B2B Exemption, bona fide B2B contracting relationships are governed by the Borello standard, referenced above. This Exemption is perhaps the broadest exemption described in AB5. To fall under this Exemption, the two contracting parties must both be businesses. Most content creators organize their operations under a corporate structure, whether as a corporation or an LLC; however, to fall under this Exemption, the other contracting party must also be organized under a corporate structure. Assuming this baseline requirement is met, the hired business will be considered a contractor if all of the following criteria, copied directly from Section 2750.3.(e)(1), are met:

(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.

(C) The contract with the business service provider is in writing.

(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.

(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.

(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.

(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.

(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.

(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.

(J) The business service provider can negotiate its own rates.

(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.

(L) The business service provider is not performing the type of work for which a license from the Contractor’s State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.

Considering an ordinary, written, contractual relationship between a remote editor, providing services as a business as opposed to as an individual, and a creator, several of these criteria will be easily met. The remote editor business can perform the contracted work at its own place of business, using its own computers and technology, at any hours that the business wishes, implementing the methods and editing programs that the business feels most comfortable using, creating an end product that will be incorporated into the creator’s channel, for rates agreed upon by the business and the creator. This type of relationship would, on its face, meet criterion (A), (B), (C), (E), (F), (I), (J), and (K). The remaining criterion, (D), (G), (H), and (L) require a closer fact and circumstances analysis. Most importantly, the remote editor’s business needs to advertise and hold itself out to provide its services to others. The remote editor’s business must, in fact, contract with other content creators to provide editing services. This means that the remote editor cannot be exclusively tied to one content creator. While the B2B Exemption has strict requirements, this Exemption might arise as the best option for some content creators to maintain their existing business operations.

AB5 will force all companies in California to re-evaluate how they do business, but the impact on content creators could be quite severe. Content creators cannot ignore this significant change. Content creators must change how they hire and utilize independent contractors or risk prosecution.

This article is meant for information purposes only. This article does not create an attorney-client relationship and does not constitute legal advice. If you have questions about how AB5 might impact you, please reach out to the GreenRoom legal team.

by Mitchol Dunham and Will Hanisch

This article will address another topic that content creators must focus on: protecting children’s privacy by complying with the Children’s Online Privacy Protection Act (COPPA).

Protecting children’s online privacy is primarily accomplished through the COPPA rule (the “Rule”). The Rule was created in response to a Congressional requirement that the FTC pass administrative rules that will help protect children online. The Rule outlines five requirements for websites, and digital content creators, to abide by if the creator or website is collecting any data about its users: Creators and website owners must: (1) disclose to parents the website’s data collection practices regarding children under 13; (2) provide notice to parents about those practices; (3) obtain consent from the parent to use his or her child’s data; (4) give the parent full control over his or her child’s data; and (5) not require more personal information than is reasonably necessary to allow a child to use the website. The Rule applies to a wide range of websites from forum websites, like Reddit, to more traditional social networking sites, like YouTube, Facebook, and Twitter.  It also applies to applications with an internet backend, such as Discord and mobile phone applications.

Step 1 is to determine if the channel, app or website is collecting data from users. Data is an inclusive category that includes all tangible forms of information that can be tied to an individual user. This category includes things like comments associated with a username, behavioral advertising tied to a persistent identifier, registration information for a user in a fan Discord, and so on. If a content creator is not collecting data, (e.g., the creator has comments, notifications, and inbox messages turned off, the creator is not obtaining or monetizing any user specific data like IP addresses or other computer-related identifiers, and the creator is exclusively using contextual advertising), then the content creator does not need to comply with the Rule. Otherwise, if the content creator is collecting any kind of data (which most content creators are), then he or she must move on to the next step in the analysis.

Step 2 is to determine if the content of the channel requires the creator to comply with COPPA. This article is directed to children’s content creators, which likely means that the answer to this question is yes. However, if a creator is not sure if their channel is directed at children, specifically children under the age of 13, then the creator must consider a long list of factors, including: (1) the subject matter of the content, (2) the actors used in creating the content, (3) the general fanbase of the channel, (4) whether the content involves animations or shows the actors engaging in child-oriented activities, (5) whether the channel is described as being “for kids” or “for children”, (6)the use of animated characters or other child-oriented activities and incentives, (7) the age of models, (8) the presence of child celebrities or celebrities who appeal to kids, (9) the presence of ads on the site or service that are directed to children, and (10) other reliable evidence about the age of the actual or intended audience.

If the answer to one or two of the above is “no”, that may not be enough to avoid compliance. This is a balancing test, and a content creator must be very careful in determining that their channel does not target children under the age of 13. If the channel is intentionally targeting children under the age of 13, or if the channel has knowledge that its fanbase primarily consists of children under the age of 13, compliance is mandatory.

Compliance with the Rule

If compliance with the Rule is required, the creator must meet the five requirements listed in the second paragraph of this article. To summarize, they include: (1) disclosure of practices, (2) providing direct notice, (3) consent of the parent, (4) assigning control, and (5) data minimization. A well-designed privacy policy takes care of the first requirement. This policy must include clear descriptions of who is collecting the data, what data is being collected and how it is going to be used. The key is honesty and transparency with the user. Specifically, the creator must list all individuals, including any advertising network or social network plug-in, that collects personal information on the creator’s website, platform, or app. The creator must also list all personal information that is being collected and how that information is used. Finally, the creator must disclose the rights of parents, namely, the right to data minimization, the right to review the child’s data, assignment of full control over the data to the parent, and so on.

To satisfy the direct notice requirement, the creator may collect limited data to be able to contact the parent. In this notice, the creator must tell parents: (1) that the creator has collected their online contact information for the purpose of getting their consent; (2) that the creator wants to collect personal information from their child; (3) that the parent’s consent is required for the collection, use, and disclosure of the information; (4) the specific personal information that the creator wants to collect and how it might be disclosed to others; (5) a link to the creator’s online privacy policy; (6) how the parent can give their consent; and (7) that if the parent doesn’t consent within a reasonable time, the creator will delete the parent’s online contact information from its records.  This sounds like a lot (and it is) but those who find a way to comply with certainly have an advantage over their competition.

To comply with the third requirement the content creator must maintain a database linking the identifier of the child to the consent of that child’s parent.  Evidence of parental consent includes: (1) a signed consent form sent back to the creator via fax, mail, or electronic scan; (2) use of a credit card, debit card, or other online payment system that provides notification of each separate transaction to the account holder; (3) a call to a toll-free number staffed by trained personnel; (4) connection to trained personnel via a video conference; (5) a copy of a form of government issued ID that the creator checks against a database, as long as the creator deletes the identification from his or her records after verification; (6) answer a series of knowledge-based challenge questions that would be difficult for someone other than the parent to answer; or (7) verifying a picture of a driver's license of other photo ID submitted by the parent and then comparing that photo to a second photo submitted by the parent, using facial recognition technology. Some of these methods are easier than others to achieve, and the best method depends upon the technological capabilities of the creator.

Under the fourth requirement, the creator has a continuing obligation to respond to the requests of the parent. Thus, if a parent requests: (1) a method to review the personal information collected from their child; (2) a method to revoke their consent and refuse the further use or collection of personal information from their child; or (3) to delete their child’s personal information, the content creator must comply with these requests.

Finally, requirement (5) involves minimizing and protecting the data that the creator collects. The creator must take reasonable steps to protect the confidentiality, security, and integrity of personal information collected from children. The first step in this process is analyzing what kind of data the creator collects in the first place and minimizing that collection to only the data that is necessary to provide the services of the platform. The creator must work with his or her service providers and third parties, to whom the collected data is being transferred, and obtain assurances that those third parties are capable of maintaining the confidentiality, security, and integrity of the data. The data may be retained for as long as it is reasonably necessary to accomplish the purpose for which the data was collected, and when data is no longer necessary, the creator must securely dispose of the data.

Compliance with these requirements may seem daunting or even impossible for small and large creators alike, especially given the current formats of platforms like You Tube. How will a creator provide direct notice about the data collection practices to the parent of the child in its audience? How would a creator with millions of followers create a consent form database? How would a content creator maintain safe and positive engagement with its audience while complying with the data minimization requirement? These are questions that remain to be answered, but given the value of the toy and other child product industries, one would think You Tube and similar platforms as well as software compliance firms would be seeking ways to make it happen – and fast.

Compliance Alternatives 

What if you want to avoid COPPA compliance altogether? A creator could pivot their content away from young children, but what if the creator is a pre-school education channel or other channel providing excellent, child-safe content? There are likely thousands of channels and scrupulous creators providing outstanding content to children. It seems extremely unfair and unrealistic to expect that all these creators should be forced to completely convert their content.

A more viable option could be to modify the channel’s data collection practices. To change a channel’s data collection practices, a creator must turn off behavioral advertising on all past and future videos and instead run contextual advertisements. The financial impact of this change is unknown, but when considering the potential liability from other courses of action, on balance, it might make the most business sense.

Another step to change a channel’s data collection practices is to turn off any free-form communication with the audience that can be associated with an audience member’s identifier. What does this mean in practice? Children’s content creators should turn off all comments on their videos. Children creators should go a step further and disable the inbox and notification features as well.

If a creator has a Discord server, they should require authentication that all users are over the age of 13 before the user can send, receive, or read messages. This is important, and willful ignorance, such as a don’t-ask-don’t-tell policy, is not enough. Content creators must take proactive steps to avoid falling under the auspices of the Rule.

This article indicates the state of the law as of the posting date; however, the interplay between the digital content creation industry and COPPA compliance may change in the near future. There is an ongoing public comment period, open until October 23, 2019, for individuals impacted by the COPPA Rule to write to the FTC with improvements to the Rule. The FTC is also hosting a workshop on COPPA on October 6, 2019, where further guidance may be revealed. Once again, the contents of this article do not constitute legal advice and are meant to act as an invitation to facilitate a discussion about your channel’s FTC compliance strategy. If you are unsure if your channel is compliant with the FTC requirements, whether for advertisements and sponsor integrations or for children’s privacy and data collection, please reach out to the GreenRoom legal team.

by Mitchol Dunham and Will Hanisch

The importance of proactive compliance based upon the FTC’s various requirements was highlighted by the recent FTC settlement with YouTube and Google violations of the Children's Online Privacy Protection Act (“COPPA”). This article will address one of the main topics that content creators must focus on: advertising disclosure standards.

Advertisements

Children content creators must abide by the FTC’s “truth-in-advertising standards” when advertising to children or marketing child-related products to parents. Most of the FTC advertising requirements focus on disclosures and transparency about any relationship between the content creator and advertisers (often referred to as “brands” in the influencer marketing industry). Adequate disclosure is both necessary and important any time a content creator promotes a product, but the need is greater when advertising to children.  The FTC’s fear is that children will not be able to understand the difference between advertisements and original content. Children’s creators would be well-advised to follow the guidance released by the Children's Advertising Review Unit (“CARU”) of the Council of Better Business Bureaus. The full guidance can be found here, but see our summary of the key points below in regards to how they apply to children’s content creators.

1. Advertisements cannot be unfair or deceptive. The FTC defines a representation, omission, or practice as “deceptive” if it is likely to mislead consumers and affect consumers’ behavior or decisions about the product or service. A practice is “unfair” if the injury that the practice causes, or is likely to cause, is substantial, not outweighed by other benefits, and not reasonably avoidable. In practice, unfair and deceptive trade practices are relatively intuitive. For example, a content creator who is endorsing a product in a video after organically discovering and reviewing the product is vastly different than a content creator that received a product from a brand for the purpose of integrating it into a sponsored video. Unless explicitly disclosed, an advertiser-promoted video can easily be confused for non-sponsored content. Without adequate disclosure, a sponsored video could run afoul of the FTC’s unfair and deceptive trade practice requirements.

CARU guidance is incorporated into the guidance offered by the FTC. CARU promotes a self-regulatory program to ensure safe advertising practices for child-directed content. CARU suggests considering the "net impression" of the advertisement to make sure that express and implied claims, omissions, and the overall format are not misleading to the targeted children.  Whether an ad is misleading is determined by considering how a reasonable child, of the intended audience, would interpret the message.  The child’s level of experience, sophistication, and maturity; limits on their cognitive abilities; and their ability to evaluate the advertising claims should all be taken into consideration when determining if your content is misleading.

2. Creators should be careful with product claims and presentation. CARU guidance recommends being aware of whether a product's characteristics and benefits are as described. This includes product descriptors. When describing a product, creators should not embellish or otherwise distort a product’s characteristics or benefits. Descriptions should be made in a manner that is understandable to the children who watch the content. Creators should not unduly exploit a child's imagination. Exaggerating or creating unattainable performance expectations must be avoided. Furthermore, advertisements should show how a child could actually use the product.

3. Disclosures should match the advertising format and media used. If a claim is made via an audio or graphic format, the disclosure must be made in the same audio or graphic format. Disclosures are necessary when advertising unassembled products, items that are not included, products that are sold separately, and when a phone call is necessary for the purchase. A simple way to think about this is if an additional step is necessary before the child can use the item as advertised, those steps must be disclosed.

4. Creators must be wary when they specifically endorse a product. There are two key concepts when it comes to endorsements. First, if a celebrity is used to promote a product, and that celebrity might significantly alter a child's perception of the product, the advertisement must attempt to dissuade any impression that the product enhanced the celebrity's performance. In other words, the advertisement must ensure that children realize that the celebrity did not become a celebrity only because of using the product. Similarly, the child must understand that the child will not become a celebrity simply because they purchase the product. Second, personal endorsements must reflect the actual experiences and beliefs of the endorser.

5. Children may have difficulty distinguishing between program content and advertisements. To avoid ambiguity, a character or personality associated with the content of a channel should not be used to sell products, premiums, or services in the program content, unless the content creator makes clear that an ad is being presented. This probably applies to every content creator on You Tube, which means it is vitally important to make fulsome and descriptive disclosures when promoting a product on your channel.  Honesty and transparency are the most important ways to protect the audience and the creator.

The contents of this article do not constitute legal advice and are meant to act as an invitation to facilitate a discussion about your channel’s FTC compliance strategy. If you are unsure if your channel is compliant with the FTC requirements, please consider reaching out to the GreenRoom Legal team. This posting may constitute attorney advertising.

by Mitchol Dunham and Will Hanisch

                The Federal Trade Commission (“FTC”) announced a record-setting fine against Google and YouTube. As a result of the settlement, Google and YouTube agreed to pay $170 million for violations of the Children’s Online Privacy Protection Act (“COPPA”) and make systemic changes that leave family friendly content creators with little option but to change their business model. As part of the settlement, on or before January 1, 2020, channels will be forced to self-certify whether they make content directed at children, defined as having a target audience which under the age of 13. Children’s content creators will no longer have access to monetization from behavioral ads. Behavioral ad rates are specific to individual creators, but the loss of this revenue may be crippling for creators.

The Settlement

                On September 4, 2019, YouTube and Google agreed to a settlement to resolve the allegations that they violated COPPA. This settlement included an agreement to pay a fine and undergo substantial changes in their data collection practices. The fine, while record-setting, represents a small percentage of the annual revenue of either company. The more impactful changes, both for YouTube and its content creators, will come as a result of the changes to advertising and data collection.

                The changes required by the settlement include YouTube implementing a system for content creators to designate whether their content is directed to children.[1] All content creators are required to participate in this system.[2] Second, YouTube must provide annual training to its relevant employees covering COPPA.[3] Third, YouTube must comply with the requirements of COPPA.[4] Compliance includes: (1) disclosing to parents the company’s data collection practices regarding children under 13; (2) providing direct notice to parents about those practices; (3) obtaining consent from the parent to use his or her child’s data; (4) giving the parent full control over his or her child’s data; and (5) not requiring more personal information than is reasonably necessary to allow a child to use the platform.[5] Fourth, YouTube must refrain from disclosing, using, or benefitting from the data previously collected from content directed to children.[6] Finally, YouTube must submit compliance reports establishing its continued adherence to the settlement, and in effect, compliance with the requirements of COPPA.[7] See here for a more in-depth discussion about COPPA, its requirements, and YouTube’s violations.

What This Means and Future Steps

                In a blog post on September 4, 2019, Susan Wojcicki addressed the settlement and announced several initiatives and changes for children’s content on YouTube. Ms. Wojcicki announced new data practices for children’s content. YouTube will no longer treat children’s content as it would any other content. Instead, data collection will be limited to only what is necessary to operate the service. YouTube will stop serving behavioral advertising on children’s content, and some features will be eliminated entirely, such as comments and notifications. Deciding what is classified as “children’s content” will be a two-step approach: self-flagging from content creators and a machine learning algorithm that will find videos clearly targeting kids, for example “[videos] that have an emphasis on kids characters, themes, toys, or games.”[8]

                Ms. Wojcicki noted two other platform changes in association with the settlement. First, an increase in investment in promoting YouTube Kids and continued investment in the product.[9] The YouTube Kids app will soon be brought to the desktop.[10] Second, Ms. Wojcicki notes that the change in advertising scheme will have a significant impact on “family and kids creators.”[11] YouTube will be giving content creators four months to “adjust before [the advertising] changes take effect on YouTube.”[12] YouTube is also “establishing a $100 million fund, disbursed over three years, dedicated to the creation of thoughtful, original children’s content on YouTube and YouTube Kids globally.”[13] Whether that fund actually makes it to a individual content creators is something that is hotly debated in the community.

                As of the time of this posting, children’s content creators are left with more questions than answers. It is possible that larger content creators may see increases in sponsored content and direct licensing opportunities as advertisers look to continue targeting this incredibly lucrative demographic. These gains could potentially off-set or exceed the revenue lost from behavioral ads. We do not know what actual impact this settlement will have on creators who rely more heavily on ad revenue. They may be forced to either pivot their content to retain access to behavioral ads or attempt to survive on contextual ads alone. This choice will be especially hard for gaming creators. While live action creators can diversify income streams through direct sponsorships, gaming creators have fewer income streams off of the YouTube platform. In any case, this settlement is a wake-up call to content creators and platforms alike that the FTC is able and willing to regulate the online space. Online creators and businesses must take action to comply with COPPA and FTC integration guidelines or risk being subjected to serious consequences. Hopefully YouTube and other platforms will acknowledge the rampant misinformation that is currently being distributed and put creators at ease as to their future.

                Next week, we will take a look at the questions still unanswered by the settlement, including potential enforcement areas on the horizon for the FTC. If you have questions about this article or how the YouTube policy changes might affect your channel, reach out to the GreenRoom team.

[1] In re Google LLC & YouTube LLC, FTC File No. 172-3083, 10 (Sept. 4, 2019) (settlement agreement).

[2] Id.

[3] Id. at 10–11.

[4] Id. at 11.

[5] Federal Trade Commission, Protecting Children’s Privacy Under COPPA: A Survey on Compliance 1–2 (Apr. 2002).

[6] In re Google LLC & YouTube LLC, at 12 (settlement agreement).

[7] Id. at 15–19.

[8] Susan Wojcicki, An update on kids and data protection on YouTube, YouTube Official Blog (Sept. 4, 2019), https://youtube.googleblog.com/2019/09/an-update-on-kids.html.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

by Mitchol Dunham and Will Hanisch

                COPPA was passed with the intent of protecting children from online dangers. COPPA required the FTC to create rules that will govern the online collection of personal information from children aged 12 and under.[1] In summary, the rules passed by the FTC require that a website: (1) disclose to parents the website’s data collection practices regarding children under 13; (2) provide notice to parents about those practices; (3) obtain consent from the parent to use his or her child’s data; (4) give the parent full control over his or her child’s data; and (5) not require more personal information than is reasonably necessary to allow a child to use the website.

                The dispute between the FTC, the New York Attorney General, and YouTube centers around the use of tracking cookies to serve personalized advertisements (specifically the use of persistent identifiers for behavioral advertising). YouTube allows for two types of advertisement: contextual advertising and behavioral advertising. By default, a channel that monetizes through advertisement revenue is set up to use behavioral advertising[2], which places a cookie on the user’s device and tracks “the viewer’s online activities to serve advertising that is specifically tailored to the viewer’s inferred interests.”[3] While channels can opt-out of behavioral advertising and opt for contextual advertising; this generates less revenue for the channel.[4]

                In various statements and presentations to potential advertisers, YouTube branded itself as one of or the most popular destinations for kids, including those under 13.[5] Despite this branding, YouTube asserted that channels do not need to comply with COPPA because they “don’t have users that are below 13 on YouTube and platform/site is general audience, so there is no channel/content that is child-directed and no COPPA compliance is needed.”[6] These two statements are inconsistent, and this lead to the complaint being filed by the FTC and the New York Attorney General which alleged that Google and YouTube violated requirements (1), (2), and (3).

[1] Federal Trade Commission, Protecting Children’s Privacy Under COPPA: A Survey on Compliance 1 (Apr. 2002).

[2] In re Google LLC & YouTube LLC, FTC File No. 172-3083, 7 (Sept. 4, 2019) (complaint).

[3] Id.

[4] Id.

[5] Id.

[6] Id. at 8–9.