User-Generated Content and the Future of Copyright: Part Two - Agreements Between Users and Mega-Sites (2008)

Abstract This article examines issues surrounding the ownership of user generated content (UGC). In particular, it examines the contractual relationships that exist between the creators of UGC and the megasites that host the content. Furthermore, this article argues that many contracts, particularly those between minors and UGC mega-sites, are unconscionable and thus invalid on their terms. This means that these mega-sites are infringers on the copyright protected creative output of large numbers of their users. I. INTRODUCTION This is the second article in a series of three articles about user-generated content (UGC) and its importance to the future of copyright. The first article looked at foundational ownership issues regarding UGC. (1) Having settled some basic issues pertaining to initial investiture and ownership, the present article can proceed in a logical manner to the next set of issues that arise--those dealing with contractual exchange or alienation of this intellectual property. One thing that different forms of property have in common--be they physical or virtual--is that until there is investiture, there will be no ownership of property such as to allow for transactions. The sequel to the present article will take the analysis of the private law side of UGC to its logical conclusion by examining the core tort issues pertaining to UGC. The previous article considered ownership issues pertaining directly to the creation of UGC. We saw that in the simplest type of situation, a user-generated work will be owned by the user who created it, but that complications arise for the sorts of UGC that may have features that potentially require such works to be characterized as joint works, compilations, collective works, or works for hire. (2) We saw that not only is much UGC copyrightable and hence capable of being owned in copyright, but that it may be valuable in the economic sense that viable business models may be created to monetize it. (3) Such monetization is bound to involve exchange relationships for the obvious yet fundamental economic reason that not all UGC will be in the hands of those who most value it in virtue of the set of entitlements that emerge through initial investiture. This is of course not to say that all such property will come through commercial means into the hands of those who value it but who currently lack legal entitlements to it. For the narrowly self-interested rational actors presumed by conventional economic analysis, there are always alternatives to obtaining property through either creative means--such as initial investiture, as examined in the prequel to this article--or legal means--such as exchange via contract, as examined here. Those alternative means involve tort and crime; that is, one may gain access to creative content through civil or criminal infringement, or to use the word that encompasses both categories, piracy. (4) Torts and crimes in an offline world often occur between strangers--albeit strangers at arm's length in the literal rather than metaphorical/legal sense of that term. So too, copyright infringement in an online world often, perhaps predominantly, occurs among strangers. Most notably, the billions of songs that have been illegally downloaded in recent years have typically involved piracy among parties who are, legally-speaking, third-parties to one another. When it comes to UGC, however, torts and crimes tend to occur between parties who are not third-parties, but rather who exist in a contractual relationship with one another. This is another reason for examining the contractual relationships that occur in relation to UGC prior to examining the tort and criminal relationships. Since the torts and crimes occur in the context of pre-existing contractual relationships, the injurious activities can only be fully understood when these relationships are taken into account; after all, prior understandings codified in the contract regarding expected behavior may have an important impact on the types of behavior that are permissible between the parties. …