Media and sport: A virtual black hole

The pace of change in the social media arena is outstripping any risk management capability and with anyone able to publish online, law firms are seeing a new area of work developing. Gregor Pryor and Sachin Premnath report

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There has been much talk in 2009 about the social media phenomenon. In broad terms, this means the adoption of social networking tools and digital communication technologies to upload and transmit content to a wide audience. It is important to note at the outset that these capabilities are by no means new; people have been able to post content, interact and engage in all kinds of marginal activity online for 10 years or more.

However, it is the mass market adoption of these technologies that is driving change. The figures are staggering - Facebook now has a UK audience of 18 million users with an average engagement time of 23 minutes. Contrast this with traditional television audiences: in the UK, Sky has an audience of 9.4 million, with an average of two hours per month viewing time. As mobile devices become as powerful as laptops were only a few years ago, this trend of social engagement through technology will continue to grow.

Why do we, as lawyers, care about social media? First, the speed of development in social media far outstrips corporate risk management capability. Now that everyone is a potential publisher across multiple media channels, there are risks to our clients in a broad range of legal practice areas, including advertising and marketing, intellectual property (IP), employment, financial and securities and privacy. Second, these new behaviours are affecting our clients' businesses in unexpected ways, from reputation management to declining stock prices and loss of revenue.

Third, the laws in this area are still developing, with constantly changing legislation, case law and policy. To make matters more interesting, the classic solution to a client's legal problem in social media may not always yield the result the client would like - as social media commentator Loren Feldman asks, "You think Twitter users care about lawyers?".

Here's a great example (perhaps apocryphal) of how social media can collide with employment law. When a young Australian call centre worker had a particularly heavy night, he decided to take the day off and let everyone know that he was "still trashed - sickie woo". Unfortunately, his line manager picked up on his status update and called him to account.

The Facebook misdemeanour is now a common headline: the Virgin staff member that called customers "chavs"; the teenager sacked for her "my job is boring" comment; the football fan duped into cheating on his girlfriend by the fans of rival team. Legal documents have even been served via Facebook. While all this happens, companies wrestle with adapting their employment policies to deal with social media. In some instances, corporations have prevented their employees engaging on social networks during office hours.

Employee conduct on social media can have knock-on implications for corporate reputation and, in extreme instances, can result in falling stock prices. When a United Airlines passenger posted a YouTube video singing his complaint about the airline, the story was picked up by the major US news networks and United's stock fell.

A cottage pseudo-legal industry is developing around protecting corporate reputation on social media platforms. In simple terms, this can mean more than sending notices demanding that a social network shuts down a "[INSERT LAW FIRM NAME] sucks" page and can include search engine optimisation work, 'spoofing' (the practice of countering negative commentary on social media with positive commentary) and advising on techniques for raising a company's profile generally.

On the other side of the coin, companies are seeking to engage with customers directly using social media, sometimes with unintentionally hilarious results. Advertising law and regulation has been amended to keep pace with the new forms of commercial promotion enabled by social media technologies. As an example of the kind of marketing activity that companies now undertake, see here.

The challenge for in-house lawyers when advising on these kinds of activities is determining policies about how marketing teams should interact with the online community at large. In some cases, this can go horribly wrong - the classic example being where a person employed to act as a social media site moderator starts to abuse users of the site. As lawyers, we are being asked to advise on issues arising from everyday human interaction - fascinating and wildly unpredictable.

The protection of IP on digital media platforms has always been a hot topic and social media only creates additional problems and complexities. The hottest social media case, Viacom v Google, which concerns the legitimacy of Viacom content posted by users on YouTube, rumbles on quietly in the US. If the case goes to trial, it has the potential to help resolve huge legal questions concerning the extent to which operators of social media sites (such as MySpace, Bebo and Veoh) are exempt from liability for IP rights infringement as repositories for content posted or uploaded by users.

Content owners continue to fail to realise revenues from online and mobile exploitation of content between users. Instant messaging services which allow sharing of large files and large file upload services such as RapidShare allow social media users to transmit content within a community and without paying a rights holder. Lawyers have made millions of pounds in fees in the last few years trying to bring file-sharers to account, with very limited success.

We are now also seeing a more leftfield trend in virtual worlds (and for the uninitiated, a virtual world is a digital environment which replicates or mimics the real world), where brands are engaging with consumers. Although many companies have a corporate presence on Second Life and Habbo, for instance, this interaction is now becoming a commerce opportunity. As an example, in Sony Playstation's virtual environment, Home, you can create a digital avatar that can buy and then wear virtual clothes from a virtual Diesel store. Sounds odd, doesn't it?

Yet for Generation Y, this kind of online personalisation is important in establishing an online identity within social media environments. Consequently, there is commercial value in offering virtual products. It's ripe for lawyers too - what if a third party were to establish an outlet that sold counterfeit virtual Diesel goods? In what currency should transactions be undertaken? Under what terms can users create and sell virtual products?

There is also the question of privacy. Social media enterprises collect, store, use, share and dispose of a huge amount of personal data. This data can be used to analyse any number of human interactions, from the way that friends connect on Facebook to the demographic and purchasing habits of users. Accordingly, it has potentially huge commercial value.

Over time, users of social media sites have become more alive to the value of their personal data. In turn, this has created work for lawyers in advising social media companies about their compliance with privacy and data protection laws.

This does not always produce uniform results - as an example, if an employee of a company records a confidential meeting with a customer, could the company seek removal of the confidential video from a social media destination on the grounds of invasion of the customer's privacy? If you review the user agreements of various social media sites, you may find that the result is different according to which site the content is posted.

It is abundantly clear that many companies are looking for guidance and comfort as technology changes and affords even greater levels of instant communication and interaction. Even lawyers can take advantage of social media to further our own business and provide guidance to clients. We can also exchange ideas within the profession, share information and, if we are so minded, criticise, argue and debate with each other.

We look forward to hearing from you...

Gregor Pryor is a partner and Sachin Premnath an associate in the digital media team at Reed Smith.