Co-Branding/Internet Distribution Agreements
By Eric Goldman, Esq.
Cooley Godward LLP, Palo Alto, CA
1. What is Co-Branding?
· Website A (“provider”) creates a version of its standard website co-branded with Website B (“portal”). Website B promotes the co-branded pages to drive traffic there.
· Business paradigms: hosting/service outsourcing; advertising; and trademark license
2. Why Do Co-Branding?
· The portal wants integrated branded services but wants to outsource them
· The provider wants to obtain new users or increased visibility
· The parties may want to generate a stream of revenues to share
3. Threshold Issues to Consider.
· Who is paying whom?
· Dividing hosting responsibilities for content/services
· Whose domain name?
4. How to Track Referrals.
· Unique URL
· By Referring URL/Keywords
5. Ways to Promote the Co-Brand.
· Navigation Links
· Display of Editorial Content
· “Category” exclusivity (by industry or by functionality)
· Exclusivity based on identified competitors
· Exclusivity based on positioning
· Setting the boundaries of the exclusivity commitment
7. Data Integration/Exchange.
· What user data is the portal passing to the provider?
· What user data is the provider passing back to the portal?
· What technology is being used to make these data exchanges?
· Privacy policies
· Database synchronization
· Negotiating user data rights clauses
· Fees for development, placement, exclusivity and clickthroughs/bounties
· Advertising split
- What spots are being sold?
- Who sells?
- Who serves?
- What happens to unsold inventory?
- Defining gross and converting it to net.
· Split of product/service sales
9. “Portals are Pigs.”
· Portals want providers to pay for the privilege of being their outsourcer
· Portals don’t promise placement or a minimum promotional efforts
· Portals don’t promise minimum clickthroughs or registered users
· Triple dipping: promotion fee + revenue share + warrants
· Portals require co-branding and other custom development work for free
· Portals restrict use of user data to effectively prevent customer acquisition
· Portals want to terminate for bogus breaches with no refund of prepaid fees
· Examples of other egregious clauses:
- Exclusivity in favor of the portal
- Provider’s promotion of the portal outside of the co-branded site for free
- Requirement that the promoted site spend part of its ad budget with the portal
· Conclusion: when doing a portal deal, try to limit how much money you’ll lose.
About the Speaker: Eric Goldman (formerly Eric Schlachter) is an attorney practicing cyberspace law with Cooley Godward LLP, Palo Alto, CA. He also is an adjunct professor of Cyberspace Law at Santa Clara University School of Law. Cooley Godward’s web page is located at http://www.cooley.com, and Eric’s personal home page is located at http://members.theglobe.com/ericgoldman/. Eric can be reached at firstname.lastname@example.org.