UK halts broad AI copyright exception, New digital economy taxes, Social media brand usage guide, Copyright infringement settlement checklist, + more!
This is Creator Economy Law, a newsletter dedicated to exploring and analyzing the legal issues surrounding the creator economy, creators, and internet platforms. If you enjoy what you’re reading, share with friends, and invite them to subscribe using the button above and share using #CreatorEconomyLaw.
Winter is coming… for Netflix moochers! Internet sleuths have spotted an update to the Netflix FAQs page that details what subscribers (and their non-subscribing friends and family) can expect. Where will this leave you? Are you a subscriber? Or, did you wrangle someone’s password?
It’s also the start of Black History Month. As Google’s Chief Diversity Officer Melonie Parker writes, “It’s a time we dedicate to reflect on the achievements of African Americans and to celebrate Black culture in all its forms.” I look forward to spending this month listening/reading, learning, reflecting, and celebrating!
Here’s what’s been happening in the world of Creator Economy Law.
UK halts potential expansion of TDM exception to copyright for training AI
Two videos tweeted by Sarah Olney, Liberal Democrat MP for Richmond Park, on February 1st (1:42pm ET) detail her debate in support of creators and the creative industries against a previously proposed broad, all-out exception to copyright for text and data mining (TDM) activities.
Olney argued the broad TDM exceptions “would see a huge transfer of value from individual creatives to tech companies and strip creatives of the opportunity to refuse or grant permission for the use of their work by AI companies, placing thousands of jobs within the creative sector under threat.”
In a second tweet in the thread, she confirms the hold, writing: “I am extremely pleased to say that in response, the Minister confirmed to me that these plans will be halted, pending further consultation. This is a huge win for millions employed in creative spaces across the UK, and I look forward to seeing the updated proposals.”
If you recall back in June 2022, the Intellectual Property Office UK released its response to the recent request for evidence and views on a range of options on how AI should be dealt with in the patent and copyright systems. Part of that included a focus on “text and data mining,” where the plan was to “introduce a new copyright and database exception which allows TDM for any purpose.” They add that “Rights holders will still have safeguards to protect their content, including a requirement for lawful access.” However, the proposed path forward was to adopt an exception for “any purpose” and without the right to opt-out.
Currently, there remains a research exception to copyright for data mining in the UK.
Digital economy tax coming to a state near you
Bloomberg Law published insights into four states (Connecticut, Indiana, Massachusetts, and New York) that have started the process, or have already, introduced bills that would bring new taxes on the digital economy, including digital advertising, social media, shopping, and data mining. Often, these types of laws face challenges in court after becoming enacted.
“Proposals similar to these latest New York and Massachusetts bills have been rejected by the respective legislatures in prior sessions,” as noted by Charlie Kearns & Samantha Trencs of Eversheds Sutherland (US) LLP in a recent blog post that provides a detailed recap for some of the legislation.
- “States Float New Taxes on Digital Ads, Social Media, Data Mining” by Michael J. Bologna and Angélica Serrano-Román via Bloomberg Law (Subscription may be required)
- “Chamber of Commerce wages federal appeal of Md. digital ad tax” by Steve Lash via The Daily Record
- “What do recent changes to state taxes mean for US SaaS startups?” by Ardy Esmaeili via TechCrunch
🗣 Franklin’s Take: If you recall, local governments were rolling out “amusement taxes” to target subscription streaming services like Netflix, as early as 2015. Chicago’s went as high as 9% and was challenged in court by Apple, yet in 2018 was dismissed following a private settlement.
From a business standpoint, state-level, or local government-level, tax regulations, and codes present headaches for tech platforms. Larger companies, such as the Googles, Apples, and Amazons of the world, will likely have the existing tax and legal infrastructure to ensure compliance across jurisdictions. However, absent the bills accounting for minimum revenue thresholds before requiring compliance, smaller platforms or even creator-owned and operated platforms may face significant compliance issues as their communities grow and their customer base expands into jurisdictions that have these kinds of tax rules.
Additionally, it’s important for creator businesses to understand what, if any, tax liability is passed on to them from a platform. It’s not uncommon for parties to a contract to attempt and pass off tax liabilities to the other party, especially if the contracts aren’t negotiated (such as click-through terms).
GoodRx under fire from FTC for sharing data with Meta and Google
In the first case under the FTC’s Health Breach Notification Rule, GoodRx is in trouble for violating user privacy for failing to notify consumers and others of its unauthorized disclosures of consumers’ personal health information to Facebook, Google, and other companies.
The FTC has issued a proposed order, filed by the Department of Justice on behalf of the FTC, in which GoodRx will be prohibited from sharing user health data with applicable third parties for advertising purposes, and has agreed to pay a $1.5 million civil penalty for violating the rule. The proposed order must be approved by the federal court to go into effect.
California-based GoodRx operates a digital health platform that offers prescription drug discounts, telehealth visits, and other health services. The company collects personal and health information about its users, including information from users themselves and from pharmacy benefit managers confirming when a consumer purchases a medication using a GoodRx coupon. Since January 2017, more than 55 million consumers have visited or used GoodRx’s website or mobile apps.
- “FTC Enforcement Action to Bar GoodRx from Sharing Consumers’ Sensitive Health Info for Advertising” via FTC Press Release
- “First FTC Health Breach Notification Rule case addresses GoodRx’s not-so-good privacy practices” by Leslie Fair at the FTC
- “GoodRx Leaked User Health Data to Facebook and Google, F.T.C. Says” by Natasha Singer via the New York Times
- “Canada’s online streaming act could discriminate against American companies: U.S. embassy” by Mickey Djuric via Global News
- The EU is purportedly planning to make big tech pay for 5G infrastructure. “EU Weighs Proposal to Charge Data-Heavy Streamers for Telecom Upgrades” by Jillian Deutsch via Bloomberg; “Internet providers warn against EU plans to make Big Tech cover telcos costs” by Martin Coulter via Reuters
- Shou Zi Chew, CEO of TikTok, is expected to testify in Congress, before the House Energy and Commerce Committee, on March 23rd. The focus will be on “TikTok’s consumer privacy and data security practices, the platforms’ impact on kids, and their relationship with the Chinese Communist Party.” Read more from Axios or The Wall Street Journal.
- “[W]e say [Section 230 is] a bad idea [….] We explain what recommendation algorithms are, what S. 230 has to say about them, & how best to regulate platforms’ use of such algorithms,” tweeted Tomer Kenneth sharing about an article, co-authored with and Ira Rubinstein, that’s forthcoming in the Duke Law Journal Online and explores Gonzalez v. Google. Download from SSRN.
- There’s a new piece out in The Wall Street Journal that profiles Kris Kashtanova and their journey to keep the copyright registration for their AI-assisted work. I disagree with their attorney’s take regarding photography being analogous to AI tools. That’s a bit of a stretch 🤔 My Tweet caused some discussion over on Twitter, if you dare to check it out.
- Microsoft and OpenAI responded to the class action lawsuit over GitHub Copilot asking the court to dismiss the complaint. The Verge‘s Emma Roth reports more (and includes links to the two filings).
- It’s happening again! Mesa Public Schools (in Arizona) filed a lawsuit against Meta (including Facebook and Instagram), Snap Inc., TikTok, and YouTube (including Alphabet Inc. and Google). The case is Mesa Public Schools v. Meta Platforms Incorporated (2:23-cv-00172), District Court, D. Arizona, and was filed on Thursday, January 26, 2023. It appears to be from the same firm that has filed the previous two similar lawsuits. Check out my post covering the original lawsuit by Seattle School District No. 1.
- “Problems Inside Facebook Gaming’s Black Creator Program; Meta Expects Revenue to Drop” by Mahira Dayal via The Information
- Will K-pop fans be the secret sauce for helping a/the metaverse break through more barriers? The NYTimes dives into recent developments and advancements from South Korea in a piece by Jin You Young and Matt Stevens. (Subscription may be required)
- The National Institute of Standards and Technology (NIST) published the NIST AI Risk Management Framework (AI RMF). The voluntary framework was developed “to better manage risks to individuals, organizations, and society associated with artificial intelligence (AI).” NIST’s statement indicates that “the Framework was developed through a consensus-driven, open, transparent, and collaborative process that included a Request for Information, several draft versions for public comments, multiple workshops, and other opportunities to provide input.”
- Attorney Robert Freund breaks down the latest TikTok drama dubbed “#LashGate” and the implications of sponsored content and content that’s potentially misleading to consumers.
- “Spotify wants 50 million creators on its platform by 2030. BandLab already has 60 million.” by Tim Ingham via Music Business Worldwide; Also, BandLab has acquired beat marketplace Airbit.
- Q4 earnings calls and results are being reported. Today (Thursday) it includes Alphabet, Amazon, Apple, and others. Snap is having a rough time despite gaining subscribers to Snapchat+ and posting higher revenues and daily active users. Podcasts cost Spotify (a lot), but they saw subscriber growth. Meta sees a stock boost following 2 billion daily active users for Facebook and stock buyback announcements as part of its most recent earnings report. However, it also lost over $13 billion in 2022 on Virtual Reality Labs. LinkedIn News has compiled posts on the topic.
- Meta also announced a $40 billion stock buyback.
- Meta launched Rights Manager, a website dedicated solely to helping educate people on the way Rights Manager combats copyright infringement and protects lawful expression on Facebook and Instagram. Anyone with a Facebook Page can apply for access Read the announcement.
- Meta has also defeated the FTC’s challenge over its acquisition of virtual reality startup Within Unlimited. The Wall Street Journal and CNBC have more.
- The U.S. Supreme Court (SCOTUS) denied cert (meaning they won’t review an appeals court decision) regarding photographer Victor Elias‘s appeal of a decision by the Eleventh Circuit Court of Appeals that the hospitality company Shiji Group was not liable for the removal of copyright management information (or CMI) when software reformatted images and removed the CMI.
- SCOTUS has also asked the Biden Administration to weigh in on Texas and Florida social media laws. Jon Brodkin has more over at ArsTechnica.
- “Meta Will Use Shutterstock’s Image Library to Train its AI” by Jaron Schneider via PetaPixel. Read the press release. Shutterstock also recently announced the launch of its AI image generation platform, a text-to-image generation tool for “ethically created visuals” that can be licensed.
- “Warner Music Group has launched Rhythm City, which it describes as “a first-of-its-kind music-themed social roleplay experience” on kids gaming platform, Roblox.” by Murray Stassen via Music Business Worldwide
- YouTube provides more clarity behind policy violations as part of a new policy update. SocialMediaToday has more, but you can also watch the official announcement as part of this YouTube Creator Insider’s video.
- “Social media is a defective product, lawsuit contends” by Ruth Reader via Politico
- Paramount+ and Showtime are combining, but it seems the Showtime brand is strong enough to still stand apart, with the service being named “Paramount+ with Showtime.” Read more from TechCrunch.
- “Logan Paul’s Prime Signs Multiyear UFC Deal as Drinks Sell Out” by Kim Bhasin via Bloomberg (Subscription Required). Coverage also over at Fight Sports.
- Contractors in Austin, TX, working on YouTube Music have been called back to work in the office starting in February by Alphabet and staffing firm Cognizant, which the Alphabet Workers Union is alleging the result of retaliation in a complaint filed with the National Labor Relations Board (NLRB). “YouTube accused of using return-to-office policies to thwart union organizers” by Jon Fingas via Engadget, also over on Bloomberg.
- Apple is also facing labor issues with Bloomberg reporting by Josh Eidelson, writing that: “the NLRB general counsel’s office has determined that “various work rules, handbook rules, and confidentiality rules” imposed by the tech giant “tend to interfere with, restrain or coerce employees” from exercising their rights to collective action, spokesperson Kayla Blado said Monday.”
- In a recent paper “Does Privacy Regulation Harm Content Providers? A Longitudinal Analysis of the Impact of the GDPR” by Vincent Lefrere, Logan Warberg, Cristobal Cheyre, Veronica Marotta, and Alessandro Acquisti, the question is explored and, according to the abstract: “We find a small reduction in average page views per visitor on EU websites relative to US websites near the end of the period of observation, but no statistically significant impact of the regulation on EU websites’ provision of new content, social media engagement with new content, and ranking in both the short-term and the long-term. We also find no evidence of differences in survival rates across EU and US content providers, and no evidence that monetization strategies change at a higher rate for EU websites relative to US websites. While industry predictions forebode dire consequences arising from the GDPR for content providers, we find that websites that responded more strongly to the GDPR were those less likely to be affected by such a response; in contrast, websites that relied in great part on EU visitors found, over time, ways to avoid being negatively affected by the regulation.” Thanks to Debbie Reynolds for the tip on this paper!
- “U.S. FTC asks judge to pause Meta deal for VR company Within” by via Reuters
- Spill is a new social media app from a former Twitter head. “Three months ago, he was laid off from Twitter. Now, his competing app Spill is funded.” by Amanda Silberling via TechCrunch
- “How YouTube is calculating creators’ ad-revenue shares for Shorts” by Tim Peterson via DigiDay, but also on YouTube; Don’t miss the discussion of this topic over on the Creator Upload and The Creator Feed podcasts.
- “Linktree’s new monetization options offer creators “freedom, flexibility, and security’” by Sam Gutelle via Tubefilter
- Something sounds…. familiar. Am I getting rickrolled?? Hold the phone, and don’t worry… this link actually goes to the article: “Why Astley’s New Soundalike Lawsuit Should Be Rickrolled Out Of Court” by Aaron Moss over at Copyright Lately. It’s a great rundown of the issues to consider when creators are attempting to sound super similar to existing works – covering the distinctions between samples, interpolations, and soundalikes. It’s also a great reminder of Midler v. Ford Motor Co. case.
- In addition to a fun AI-generated Pikachu art, Siyanna Lilova gives a helpful overview of the Digital Single Market (DSM) take on AI regulation in the EU. “Generative AI class-action litigation: US and EU perspectives”.
- Tiffany Kelly explores the other side of NIL deals — the impact on brands — by breaking down a recent study by Curastory (where she’s the CEO) for Fast Company. “NIL has changed the face of the collegiate athlete creator economy: Here’s how brands can seize new opportunities”
- Releasing a non-fiction audiobook and planning to use the recordings you make during interviews? You may need a waiver or proof supporting you captured consent to do so. “Donald Trump sues Bob Woodward, claims journalist’s audiobook violates copyright” via CBS News
- “Woman trawled social media to find and kill her doppelgänger in order to fake her own death, prosecutors say” by Joshua Zitser via Insider
- “Instagram’s co-founders are back with Artifact, a kind of TikTok for text” by Casey Newton via The Verge
- “Pornhub Domain Name Targeted in Bizarre Piracy Lawsuit” by Ernesto Van der Sar via Torrent Freak
- “Where Did All the Podcasts Go? — New Show Creation Down 80%” by Ashley King via DigitalMusicNews; “Where did all the new podcasts go?” by Joshua Benton via Nieman Lab
- Did you know that most social media platforms offer “official” guidance on how to use their brand assets? Are you, or your clients, using them the right way? Here’s how to tell…
- So you want to settle a copyright infringement claim? Here’s a checklist to start…
- Check out my movie review for ‘M3GAN’… it’s spooky!
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[Note: This week’s selection is NSFW and Explicit]
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