“User-generated content can be a blessing to the bottom line or a curse in the courtroom, depending on how platforms publish it.”
That observation come from Ken Goldstein, assistant vice president of Chubb & Son, and worldwide media liability manager for Chubb Specialty Insurance who provided some tips for media companies in an article appearing in the September/October 2009 issue of The Financial Manager, the magazine for members of MFM – the Media Financial Management Association.
Goldstein goes on to describe the protection media companies that publish user-generated content enjoy under the Communications Decency Act (CDA) and the limitations of that protection. As Goldstein noted, companies that think the CDA is all the sun block their companies need for withstanding the glare of legal action can still get burned.
To support his point that companies need greater protection, Goldstein reminds readers of several recent court cases involving prominent online content publishers, including a complaint that Myspace.com failed to ensure minor’s safety and made possible a sexual assault on a 14-year old girl, a discrimination suit against Craigslist for its third-party housing ads and a suite against Roommates.com alleging it violated the Fair Housing Act by asking users to provide personal information about themselves through a drop-down menu of questions.
Most companies seek protection from these types of litigation under Section 230 of the CDA, which states that providers of interactive computer services shall not be treated as the “publisher or speaker” of content that its users provide to their interactive platform.
However, an online platform may lose that protection if it engages in certain activities, such as adding or editing content, Goldstein warns. When that takes place, the courts may consider a company to be a publisher of content, rather than a mere provider.
This is the scenario that unfolded in the Roommates.com case. While Craigslist and MySpace maintained Section 230 immunity, since they merely allowed content that users published, the drop-down questions used by Roommates.com added content, making it a publisher and thereby not protected by Section 230.
Goldstein also points out that the CDA’s immunity protection doesn’t apply to federal criminal liability or to certain intellectual property laws (such as the right of publicity violations). Although the CDA extends to all types of platform providers, including social networking sites, blogs, Web-hosting services, listserv providers, online message board operators and basically any Web site that allows user interaction, these services may also face liability for content published by their users.
Goldstein provides the following scenarios to help companies determine whether or not Section 230 will protect their online platforms:
You allow content from a third party to be posted to your site without altering it in any way. Is immunity maintained? The likely answer is, “yes,” as long as the content was not provided by you, but by a user. Section 230 was designed to protect passive hosting.
You remove offensive or obscene material from your Web site. Most likely, you’ll be protected under Section 230 – as long as the content is not edited in a way to give rise to a claim.
You edit content from a user. In this instance, it is most likely that you have forfeited immunity under Section 230.
You add content to a user’s comments. You’ve probably forfeited immunity under Section 230. When deciding whether it’s appropriate to edit content, consider whether changing the content’s meaning makes it potentially defamatory. For example, if you change the sentence “Joe is not a murderer” by editing out the “not” (creating the potentially defamatory statement: “Joe is a murderer”), you could forfeit immunity under Section 230 and be held liable in a defamation suit.
To assist media companies in determining which activities could result in loss of immunity, he provides the following general guidelines:
You can help preserve your Section 230 immunity if you:
■ Allow users to publish content (“passive” or “positive” hosting);
■ Pre-screen content;
■ Perform traditional editing functions—as long as the edits do not twist the content’s meaning. Removing offensive content is permitted.
Goldstein reminds readers that the third-party publishers of any content in question remain liable for what they say. Activities that could result in a loss of immunity for third-party publishers include:
■ Editing content in a way that goes beyond mere clarification;
■ Adding content;
■ Using drop-down questions that require an answer.
As Goldstein counseled our readers, companies should consult with their legal counsel or a lawyer who specializes in media liability whenever they have questions regarding potential loss of immunity.
He also outlines the case for maintaining a strong media liability insurance policy that offers important financial protection in the event of a lawsuit. Even if a platform provider is innocent of any wrongdoing, it can still be sued, and cases are often factually complex and take a long time to resolve, making them costly.
Goldstein encourages platform providers to look for a media liability insurance policy with broad wording to ensure that their Web sites are covered. The policy should also cover all new media, such as cell phones, portable media players and any other electronic way of communicating content. He recommends asking the following questions when considering liability policies:
■ Are advertising risks covered appropriately?
■ Are all media-liability-related perils covered (an “all-risk” policy), or just named perils?
■ Under the policy, do you have the option to defend your case in court instead of being forced to settle?
■ Do you have the ability to select your own defense counsel?
■ Does the insurer have media liability expertise?
He also warns that, as judicial interpretation of Section 230 continues to define and potentially narrow the scope of immunity for platform providers, it’s important to realize that interactive features on a provider’s Web increasingly can lead to exposure. These developments should serve to remind media companies of the importance for protect their businesses with careful content management, strong loss prevention practices, expert legal counsel and a solid insurance policy.
In addition to monitoring what is happening in the legal space, it’s likely that companies will want to revisit their exposure to litigation as they continue to expand their use of user-generated content on sites they control. I have been reminded of the expanding role that user-generated content plays for most media companies as I prepares for “Media Outlook 2010,” a regional seminar being organized by MFM and its BCCA subsidiary.
The CPE (continuing professional education) seminar will be held on Tuesday, November 17 at the McGraw Hill Building in Manhattan (1221 Ave of the Americas -between 48th and 49th streets) and will open with an overview of the U.S. economy from Richard Hastings, Consumer Strategist for Global Hunter Securities. Hastings presentation will be followed by a discussion on tracking Internet advertising orders with Patrick Dolan, Executive Vice President and Chief Administrative Officer for the Interactive Advertising Bureau and a breakout session for MFM attendees by Brian Weiser, senior vice president and director of industry analysis for the Magna Global unit of Interpublic Group. Weiser’s remarks, which will include a review of the trends in media consumption and their implications for media companies, are likely to show just how important user-generated content is becoming to our businesses and advertisers.
That afternoon, the seminar will offer a CFO roundtable discussion moderated by Claire Atkinson, business editor for Broadcasting and Cable magazine, and a session providing the media industry investor’s perspective.
We will also host a presentation on the outlook for auto advertising from Gene Cameron, Vice President, Auto Marketing/Media Solutions at J.D. Powers & Associates. Cameron’s remarks will include insights from this year’s J.D. Power Automotive Marketing and Media Annual Review, which describes the importance of user-generated content in developing “buzz” about new makes and models, and his takeaways from the 2009 Automotive Internet Roundtable, which will be held in mid-October. More information about the Seminar is available on MFM’s website.
MFM also offers access to an online edition of The Financial Manager, and I encourage you to read Goldstein’s full article as well as several related stories concerning the media trends that represent both challenges and opportunities for media companies. When we look to the importance of social media going forward, it’s clear we will be doing more with user-generated content in the months and year ahead. And that means we will also need to be even more vigilant about protecting our businesses from any of the pitfalls that we may encounter along the way.
–Mary M. Collins, President & CEO, Media Financial Management Association
