“A study on copyright challenges in the
crowdsourcing era”
Cristina Dominguez Fraile
MB-551: Business Intellectual Property Law
December, 2013
1. What is crowdsourcing?
Crowdsourcing is challenging the traditional state of the music industry and has
gained substantial popularity and visibility around the world in recent years. With
such a sudden rise in the practice of this model characterized by the participation
of a large pool of individuals, it appears pertinent to analyze the legal challenges
affecting the different parties involved, paying close attention to projects involving
creative endeavors and copyright ownership in jointly developed works.
As defined by Crowdsourcing LLC (2013) crowdsourcing is: “the act of outsourcing
tasks, traditionally performed by an employee or contractor, to a large group of
people or community (a crowd), through an open invite (call).”
This practice is usually facilitated by online communities or platforms whose
members share skills or interests, enabling individuals to co-create, collaborate,
innovate, evaluate or fund a project in exchange for both intrinsic and extrinsic
rewards, and differentiates from outsourcing in the fact that the work is not
performed by a specific group or corporation but by an undefined public.
2. Crowdsourcing categories and platform analysis
Crowdsourcing efforts can be directed towards multiple and diverse goals, such as
business innovation, product development, funding, compilation of knowledge for
collective resources, co-creation of creative works or even travelling. As such, this
model can be subdivided in different overlapping categories with various legal
models depending on the nature of the project and its contributions.
2.1 Crowdlabor:
Connects companies and individuals with a virtual workforce available on demand
to jointly collaborate on the fulfillment of a project or to conduct specific microtasking jobs such as translations, design, or content production. (Crowdsourcing,
2013) One of the most representative platforms, Fiverr, labels itself as “the world
largest marketplace”, and allows its members to buy and share various services
called “gigs” starting at $5. (Fiverr, 2013)
The common practice in such platform is that creators waive all the rights
associated with their creations or contributions to the buyer or the platform, and
are economically compensated for their work. This means that the authors of
creative works delivered though such platforms, like a song on demand or a
company logo, assign all the rights associated with copyright ownership, videlicet
reproduction, preparation of derivative works, distribution, public performance and
public display. (Legal Information Institute, 2013)
For example, an analysis of Fiverr’s terms of service reveals that “Buyers are
granted all rights for the delivered work, unless otherwise specified by the seller in
the Gig description” (Fiverr, 2013), allowing for some flexibility to adjust to the
specific needs to each buyer and seller.
Crowdflower, specialized in outsourcing micro tasks of large company projects to a
large pool of contributors, assigns all rights to the platform itself, specifically: “If
you are a Contributor, CrowdFlower, and not you, has proprietary rights in any
work you produce as part of completing any task. By accepting the terms of this
Agreement you agree to transfer possession, ownership, and title to your work to
us.” (Crowdflower, 2013)
Ultimately it is important to consider that Crowdlabor’s contributors are treated like
independent contractors and not employees, which is a controversial subject of
recent debates, and has several implications, i.e., companies have no need to
comply with the Fair Labor Standards such as minimum wage or Social Security,
and contractors are independently responsible for complying with tax
requirements. (U.S. Small Business Administration, 2013)
2.2 Crowdfunding:
As one of the most popular crowdsourcing alternatives within the music industry,
Crowdfunding’s aim is to raise capital from micro donations to finance projects and
initiatives, frequently in exchange for exclusive rewards, revenue or equity.
(Crowdsourcing, 2013) Kickstarter, the largest funding platform for creative
endeavors has helped to bring together creators and backers in order fund over
53,000 creative projects since its launch in 2009. (Kickstarter, 2013)
Crowdfunding has had a vast impact on the music industry in an era characterized
by the decline in album sales and the popularization of “do-it-yourself” models. In
this scenario, several industry-related platforms have been developed to help
artists fund their records, tours and projects while engaging their audience, such
as Artist Share, Sell a Band, Pledge Music or My Major Company. These
technologies are changing the practices of the industry and opening new
opportunities for emerging artist, empowering them to fund their projects and
eliminating the middlemen: record labels, distribution networks, agents, promoters,
etc.
As these initiatives only involve the contribution of financial resources from the
backers, creators retain complete ownership of their creative works, with the
platform commissioning a percentage on the amount raised.
2.3 Distributed knowledge:
Distributed knowledge focuses on the development of information resources,
crowdsourcing the collection, sharing or dissemination of knowledge.
(Crowdsourcing, 2013)
As crowd contributions are typically embodied in a large compilation of information
used to shed light on social issues such as medical research or for educational
purposes, individuals typically license their work to the crowdsourcing platform
through an open license, supporting its free distribution and access.
Wikipedia, the popular collaboratively edited online encyclopedia, requires from
authors that wish to include their contributions a dual license from:

Creative Commons Attribution-ShareAlike 3.0 Unported License (“CC
BY-SA”): Creative Common licenses are based on copyright law, but aim
to make copyright more flexible by allowing licensors to “grant copyright
permissions to their creative work” (Creative Commons, 2013) In
Wikipedia’s specific case, users are free to both create and adapt the
preexisting articles under the following required terms: Attribution
(authorship recognition is compulsory) and ShareAlike (modified works
should be made available under the same license.) (Creative Commons,
2013)

GNU Free Documentation License: worldwide, royalty free license for
textual works. (GNU, 2008)
Wikipedia contributors are required to license their original articles and corrections
under a free and open license, granting permission for all users to reproduce,
distribute and publicly display the content freely. More flexible copyright systems
like Creative Commons are one of the available alternatives to overcome copyright
ownership challenges present in online collective works, allowing platforms to use
the content freely, reducing transaction costs.
2.4 Open innovation:
Open innovation is characterized by the use of the crowd as an external source of
innovation to generate, develop and implement ideas or technologies. This model
encourages practices such as software development, business model innovation
or product design. (Crowdsourcing, 2013)
These projects demand the analysis of vast amounts of both valuable and
inadequate proposals derived from a large pool of users, and it can be complicated
to spot which people contributed enough to be considered authors and if so, in
which proportion. Platforms like Idea Bounty act as intermediaries between supply
and demand of ideas, and solve this problem by allowing clients to select and buy
the ideas that best fit their needs and that will be implemented. Once an idea is
selected, both parties receive a copyright assignment agreement in which the
creator agrees to assign all intellectual property rights and interest in the Idea to
the Client, who becomes the sole owner in exchange for a pre-established reward.
(Idea Bounty, 2013)
An alternative to copyright ownership assignment is, again, the use of open
content licenses. This is the alternative chosen by the free and open source
software Linux, which receives contributions from thousands of developers and
programmers. Users license their contributions to the Linux Foundation through a
Creative Commons Attribution 3.0 License, which allows other users to use, share
and modify the software. Linux’ Terms of Service section specifies: “visitors to this
website agree to grant a non-exclusive, irrevocable, royalty-free license to the rest
of the world for their submissions to the Linux Foundation” (Linux Foundation,
2012)
2.5 Crowd creativity:
Exploitation of creative talent pools to access, develop or jointly create artistic
content tapping fields such as photography, advertising, video production, graphic
design or music. Crowd creativity allows artists to generate more ambitious works
while lowering the production costs. (Crowdsourcing, 2013)
Many platforms in this area act like intermediaries between creators and clients, in
this scenario, Audiodraft allows companies to set open contests for their audio
needs in fields such as advertisement, TV, film or videogames. The selected artist
receives an economical reward and handles a worldwide license for the buyer for
all media, for a specified term to be determined between parties. (Audiodraft,
2013) Brands and companies are becoming increasingly involved in this projects.
For example, Nokia used Audiodraft to launch a campaign to crowdsource the
creation of a new tune for the company, offering a prize of $10,000 for the winner.
(Audiodraft, 2011)
Record Together connects songwriters that want to add instrumentation to their
songs with session musicians. Each songwriter is the sole owner of his
composition, and is offered the opportunity to buy the rights from the submitted
recorded track that best fits his needs. Thus, upon purchase, the musician
“irrevocably transfers all rights, ownership, intellectual property interest and legal
title of the recording to the buyer. The Studio Musician/vendor will not use the
recording in any further or derivative work.” (Record Together, 2013)
An interesting example is Talent House, a platform for creative collaboration that
connects emerging artists in all fields with other talents, established artists, brands
and sponsors. (Talent House, 2013) While the platform’s About Us section
specifies that artists retain ownership of their work, a deeper analysis of different
available contests reveals that this is not always the case. Artists should take care
when submitting their creations to crowdsourcing platforms and read the fine print
of the contracts carefully as they may find themselves waiving all rights to their
work without noticing. For instance, the terms for a former sponsorship contest for
$10,000 specifies:
“By entering the Contest, entrants irrevocably grant Sponsor, its subsidiaries,
divisions, affiliates, designees, clients, sponsors, licensees, and advertising and
promotional agencies, an unlimited, worldwide, perpetual, non-exclusive, royaltyfree, unconditional license and absolute right to edit, post, publish, store, copy,
transmit, publicly display, and exhibit, the Work (in whole or in part) in connection
with the Contest and/or the promotion of the Contest. Upon Sponsor's request,
winners agree to sign any and all legal forms deemed necessary to license or
assign all right, title and interest in and to the Work, including without limitation, all
copyrights associated therewith, in exchange for the Prizes set forth above.”
(Talent House, 2013)
More stimulating than intermediary platforms are online projects that involve the
co-creation of an artistic joint work, such as the Johnny Cash Project. Through this
interactive webpage, each user can submit a drawing of a specific frame of Cash’s
“Ain’t No Grave” video clip, creating a moving portrait that evolves with each
submission. (The Johnny Cash Project, 2010) Each of these drawings is
considered a contribution to a joint work, defined as “a work that is created by two
or more people that intend their contributions to be merged into inseparable parts
of a whole” (Lease & Wolfson, 2011) Typically, each author holds copyright rights
on his specific contribution to a joint work, however, as the project organizer,
Universal Music Group establishes itself as the exclusive owner of all the content
provided, while authors are entitled to attribution rights and appear as creators in
the credits. (Universal Music Group, 2010)
Another remarkable project is Eric Whitacre’s Virtual Choir, a user-generated
global choir comprising more than 5,903 singers that individually record and
submit performances that are later synchronized in a video. In order for Virtual
Choir to be able to synchronize all individual creations to a video, reproduce,
distribute and publicly perform the project, users agree that all content provided is
non-proprietary and can be used by the webpage at their discretion. (Eric
Whitacre, 2013)
3. Legal challenges and recommendations for risk
minimization
The previous platform analysis reveals that there are several crowdsourcing
models available that provide an instant and global access to talent, workforce or
funding, fostering creativity and innovation at a reduced cost. Crowdsourcing can
also exert a positive influence on consumer and audience engagement, as they
feel more involved in the project, allowing for successful campaigns and initiatives.
Nevertheless, it is important to be conscious of the legal implications that these
efforts entail for both creators and buyers, and ensure that all parties involved
enjoy adequate IP protection.
Artists should be careful not to assign more rights that what they need, as they can
easily lose control on creations that they planned to exploit in the future, since in
many projects buyers become the owners of the submitted ideas or works.
Each platform’s terms and conditions should be carefully analyzed to avoid
misunderstandings, and proper research should be conducted to find the
appropriated model for each creator’s interests and career. Artists should choose
carefully between platforms that involve copyright assignment and models that
only require a license, specifically paying attention to clauses related to exclusivity,
revocability and term.
As users may be concerned about intellectual property protection, some tools are
available to protect innovators’ and creators’ ideas that are still in their early stages
of development such as provisional patent applications or Creative Barcodes,
which allow authors to place a unique barcode on their content that gives
information on the granted permissions, allowing for a safer mechanism to share
groundbreaking ideas. (Crowdsourcing, 2013)
On the other hand, buyers should ensure that their contracts with content
providers assign them the required intellectual property rights to use the
contributions without falling into copyright infringement since most crowdsourcing
authors are considered contractors and the initial ownership of IP rights lies in
them. Because contributors are not employees, crowdsourcing projects do not fall
into the work for hire category, unless otherwise specifically agreed in writing by
both parties. This has several implications to consider: the license or transfer of
rights should be properly cleared and creators are entitled to request the
termination of copyright assignments after 35 years.
To soften this situation, platforms should provide clear written terms of service,
and define in advance the relationship between the different parties involved,
specifying what buyers are entitled to do with users’ names and likenesses and
their rights over the submitted intellectual creations in order to avoid potential
claims regarding data protection or copyright infringement. (Lieberstein, Tucker &
Yankovsky, 2012)
Additionally, buyers should ensure that the acquired creations do not contain IP
rights that belong to a third party. As contributions come from a large pool of users,
it is likely that some submissions will contain infringing or unauthorized material
protected by other parties’ copyright, trademark law or image rights protection. To
protect buyers and themselves, platforms typically require content providers to
warranty that they are the sole owners of their contributions, and terminate the
account of infringing users. However, this may not be absolutely effective and
claims for copyright infringement are a risk that buyers hold, as infringing users
may lack the resources to indemnify plaintiffs, and the liability would fall on the
buyer. (Lieberstein, Tucker & Yankovsky, 2012)
Another potential legal pitfall that buyers may face is related to platforms in which
the potential buyer is provided with many ideas or works from which a winner is
selected. Unsuccessful authors may sue the company for copyright infringement if
a similar idea to their contribution is selected and implemented. As a defense to
any potential claim for copyright infringement, it would be advisable for these
companies to maintain a record of the idea development to prove the individual
process of creation. (Draper, 2013)
Crowdsourcing platforms are here to stay, and can be of high value to both
creators and idea-seekers, although it is highly recommendable to conduct a prior
extensive research or legal consultation to increase awareness of the law affecting
its practices, ensuring that both parties enjoy effective IP protection, evade its
potential legal pitfalls, and extract the maximum from the presented new
opportunities.
4. Bibliography
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http://fiverr.com/terms_of_service
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