Although straightforward in its business model of "selling" digital postcards, this case provides an excellent opportunity to talk about digital content licensing, user accounts and data transfers from social platforms. Furthermore, referral programs are also prevalent nowadays, with more and more companies relying on their existing customer base to attract new business.
Terms and Policies for consumer-oriented businesses
It is said that "I have read the Terms of Service" is the biggest lie on the internet, with companies such as Google stating in the opening section of their terms: "We know it's tempting to skip these Terms of Service (…)". However, this provides no excuse for companies not to focus on how their terms are drafted and consented to.
Google's General Terms are a great example in this sense, making good use of both plain language, accompanied by a design that assists the user's understanding of the terms, and a clear onboarding flow that not only links to the Terms but also provides the most critical bits upfront (using a mix of clickwrap, browsewrap and sign-in wrap agreements). Being aware that this approach is based in part on specific privacy requirements; companies trying to be as resourceful as possible to capture consent for collecting the data they need to track users, deliver advertising and so on, we hope all of us would agree that this is an excellent improvement to the practice of implicitly consenting to legalese that would be next to impossible to understand by non-specialists.
Licensing for online content
Since our clients' business consisted in selling virtual postcards, the main focus was to include an appropriate licensing agreement within the Terms of Service.
Every time a postcard was "sold", the customer would enter into a licensing agreement that granted him a set of rights regarding the intellectual property that our client maintained full ownership of.
Among things like sending the postcard to friends via email, the license had to allow for posting on social media. However, this implied an added layer of complexity since most, if not all, social media platforms include user-generated/uploaded content in a broad license that is granted to them. Therefore, although it would have been counterproductive for the business to allow customers to sublicense the postcards, some exceptions had to be made with regard to social media platforms.
Another important aspect was providing an express disclaimer of the fact that commercial use was not covered in the license. For example, the postcards were not intended for mass distribution via marketing emails, nor were they to be used to promote a business. As with many stock photo providers or music services such as Epidemic Sound, different licensing conditions are imposed on companies that intend to use the content in their operations or for client work.
Referral Program
Referral Programs are great marketing tools when used appropriately. However, since they come with a high degree of legal complexity, always consult with your legal counsel before implementing a referral program. Let us say this: watch out for pyramid schemes!
Starting with initial applications to join the program, potential referral partners went through a KYC-like process. Following this step, applicants that were accepted into the program were provided with the referral agreement that could be signed using an e-signature provider.
An interesting fact regarding the referral agreement was that it contained clauses that we shall call "dynamic terms". These terms are linked to a page on the Clients site where details concerning aspects such as referral compensation amount, payment intervals, and minimum cash-outs could be easily and unilaterally amended by the client after the proper notice was given to the referral partner.
