By Eric Goldman, Esq.
Cooley Godward LLP, Palo Alto, CA
1. WHAT ARE THEY?
- Website A brands pages on Website B and usually drives traffic to such page
- Can range from banner ad buy to full-blown outsourcing
2. WHY DO THEM?
- Provide extra services to users
- Generate revenues subject to a split
- Generate traffic/registered users (“distribution”)
- Indirect software/content license
3. HOW ARE REFERRALS BEING TRACKED?
- How long do they persist?
- What if not accepted? (by user choice or due to browser)
- Other holes: erasing cookie files, changes in browser
- Custom Destination URL
- Referring URL (one step)
- Keywords into URL (tracking referral URL through multiple steps)
4. NET REVENUES.
- If advertising…
- Net revenues vs. net profits: deducting commissions (including internal commissions?); ad serving costs; agency shares; sales taxes. If there are multiple ad spots on a page, are all subject to a split?
- Who controls the inventory? Are there proper financial incentives?
- If sales of goods and services…
- Defining the scope of revenue subject to split
- Watch out for cross-subsidization
- Watch out for driving traffic outside the scope of the split
- Revenue recognition issues
5. MINIMUM PERFORMANCE STANDARDS.
- Minimum Impressions. Easy to control. Make-good as remedy for failure to perform.
- Minimum Clickthroughs. Unpredictable and incentives for bad behavior. Usually can be stated as minimum impressions by making assumption about clickthrough rate.
- Minimum Revenues. Expect revenue stream trickles, not torrents. Is co-branding a branding opportunity, or a revenue stream?
6. INTERFACE CONTROL.
- Is it true private label, primarily referrer branded, or primarily referee branded?
- What happens when there are page layout changes?
- Trademark quality control
- Exclusivity based on identified competitors
- Exclusivity based on positioning/control over pages
- Exclusivity based on categories of services
- Does this cover all content on servers, or only co-branded content? What about other activities “in a network”?
- Watch out for user content
- Watch out for banner ads placed by ad networks
- Watch out for restrictions on editorial content
8. USER DATA.
- Maintaining trade secrets
- Losing control over demographic information
- Allowing competitors to target valuable users
9. OTHER SUBSTANTIVE ISSUES.
- Copyright and trademark licenses
- Hosting standards (uptime, throughput, server response, security, customer support, software errors)
- Protecting the brand from being associated with “bad content”
- Protection for third party claims (e.g., false advertising, IP, violation of law, imputed agency). How much of this is already covered by CDA/DMCA?
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.