“And what do you do?”
“Oh, I’m a YouTuber!”
The number of Americans who derive at least a part of their yearly income from posting original content on the Internet exploded over the past decade. The rise of new platforms like TikTok and Instagram Reels, combined with the video sharing site YouTube, has unlocked a new revenue stream for millions of individuals. Before these developments, creative individuals had limited means to monetize their artistic expressions. Now, the tools necessary to achieve financial gains as a content creator are available to any person with a functioning phone or laptop and a stable Internet connection.
General Legal Concerns for Content Creators
While this insight cannot address every concern, it will touch on the most common legal issues facing content creators. Creators most often run into copyright issues, particularly the question of whether their content constitutes fair use if the creator failed to secure a license for any third-party intellectual property. Creators must also be careful not to run afoul of unfair trade practice laws when posting online. Finally, creators, especially creators under the age of 18, should think carefully about the privacy concerns that arise when an individual becomes a semi-public persona.
Copyright is a primary concern when uploading any content. If a creator plans to upload original music, lyrics or video, they should include a copyright notice in the description notifying audiences that the content is original to the creator. Registering original music and music videos with the Copyright Office can be important in bringing legal action and collecting damages if the creator’s content is later used by others without permission. Original content creators may also want to work with YouTube to add their music and videos to the DMCA database the company uses to catch copyright infringers. Actively protecting original work is an important aspect of being a successful creator.
Covering an existing song is different. Most music publishers have established contracts with YouTube that permit individuals to post covers of their songs. In exchange, the publisher takes all of the advertising revenue the video would have generated for the creator. In rare cases, artists and publishing companies require YouTubers to acquire a synchronization (“sync”) license, which must be negotiated with the individual copyright owner. Musicians must obtain a sync license for these songs no matter how much of the song they use. If a creator displays lyrics or music notes in their video, they need a print license from the composer for the right to display the composition. In general, creators should research to see if the songs are “coverable.”
In more typical cases, creators will want to use background music that is already protected by copyright. Here, YouTube uses an artificial intelligence program to detect such content, in accordance with the Digital Millennium Copyright Act (DMCA). If music publishers receive a notification that their songs are being used without permission, they may send the user a copyright infringement notice and: 1) mute the video, 2) block the video or 3) place advertisements on the video and claim revenue. While the third scenario is the most likely, blocking a video may disable some features on a user’s YouTube account, and repeat offenses could lead to a permanent ban. Therefore, if a creator is attempting to make money from YouTube, they are better off using public domain content or their own original music.
In addition to copyright enforced by owners of music content, uploading third party copyrighted videos without permission is clear copyright infringement. For example, posting highlights of a Major League Baseball game without permission from MLB may result in the same infringement notices and consequences mentioned above. Although many famous YouTubers use copyrighted video clips, they have either secured licenses from the copyright owners or they already have so many followers that the copyright owners would prefer to share the revenue.
The doctrine of fair use may provide protection for some limited uses of third party copyrighted material. Section 107 of the Copyright Act states that a copyrighted work may be used “for purposes such as criticism, comment, news reporting, teaching… scholarship, or research,” and that such use is considered “fair;” i.e., the work can be exploited without the consent or approval of the copyright owner. To determine whether a use is “fair,” four factors are considered: (1) the purpose of the use, including whether it is for commercial or nonprofit purposes; (2) the nature of the copyrighted work, including whether the work is highly creative; (3) the amount and substantiality of the copyrighted work used in relation to the work as a whole; and (4) the effect of the use on the potential market for or value of the work. With few exceptions (Crash Course, Khan Academy, PBS) most YouTube channels are commercial, which weighs against the first fair use factor. If a copyrighted work is used in a “transformative” way, it is more likely to be fair. Transformative use means that the use adds a new creative expression or changes the purpose or character of the copyrighted work. Videos that are more likely to be transformative include videos that employ heavy use of commentary and criticism, such as a video that criticizes a recently-released song for being misogynistic. Those videos have a stronger claim to fair use but may still risk infringement claims if the original content owner is particularly litigious. A video that does not add anything new to the underlying clips but only uses a small fraction of each work may also be covered by fair use, but it is a much harder case to prove. Creators who do not transform the existing work should err towards not using copyrighted material.
It is worth noting that YouTube’s copyright guidelines maintain a "three-strike" policy. After one copyright strike, users are required to attend “Copyright School,” an educational series regarding copyright guidelines on YouTube. The policy does not expressly indicate what happens after a second strike, but a third strike may result in termination of the YouTube account, removal of all videos, and a ban on creating more channels. This is all part of YouTube’s compliance with the DMCA, which requires that online service providers implement a takedown notice system for users to report copyright infringement, as well as bans on accounts that become repeat offenders. Additionally, YouTube has a similar “three-strike” policy in its Community Guidelines for other violations such as harassment, violent content and privacy complaints.
Unfair trade practice law may also be implicated if creators upload product reviews or create increasingly popular “unboxing” videos, which consist of users opening products (usually the flashiest new technology) for the first time. For example, Ryan Kaji, considered by many to be the most successful child star of YouTube, came under fire when an advocacy organization filed a complaint with the Federal Trade Commission (FTC), stating that his channel aired advertisements without clearly acknowledging the sponsored content. The complaint alleged unfair trade practices, stating that the videos target children who are too young to understand that Ryan is being paid to talk about certain toys. Similarly, it was common in the early days of YouTube and Vimeo for creators to post flattering reviews of products without disclosing that the video was sponsored by the manufacturer of the product, potentially resulting in an ethical violation at a minimum, and an unfair trade practice in the worst case. The trend in recent years, however, has been to clearly disclose when a YouTube or TikTok review is sponsored by the manufacturer of the reviewed product, yet this transparency is not universal. Thus, creators who wish to engage in product reviews or unboxing videos should understand that if they receive endorsement deals they must clearly disclose that their content is officially sponsored.
Finally, privacy concerns will be inevitable for content creators. Any YouTube content involving minors is subject to a certain protocol, so younger posters should be wary of uploading videos of themselves in addition to other minors. First, YouTube reserves the right to disable comments, live streaming and chats, recommendations and other community features on video posts involving minors. Furthermore, YouTube requires that minors are supervised by adults when filming and posting content, and that minors are engaging in age-appropriate activities. Finally, videos should refrain from divulging personal information about minors. For example, a teenager posting an innocuous video about their hobbies should, under no circumstances, reveal which school they attend or their home address. While there are obvious rules against sexually explicit, violent and other vulgar content, disclosing personally identifying information could also be dangerous.
Older creators should also be wary of posting too many biographical details on the Internet. It can provide fodder for online stalkers and could lead to overzealous fans attempting to contact the creator in inappropriate ways. In addition to removing any mentions of current or past addresses, creators may need to vary the location of where they vlog (video blog) if they frequently post “walk and talk” style videos. If a creator too frequently vlogs from their neighborhood, malicious actors could identify where the poster lives with minimal effort. Lastly, posting content online can have offline ramifications. Creators who post content that is even remotely controversial should be aware that offline employers may not welcome having an employee who brings unwanted scrutiny to the business. Striking it big on social media can lead to groups of amateur Internet sleuths searching through a creator’s past postings, looking for any indiscretion they can find. As always, creators (and non-creators alike) should post online responsibly.
Financial Concerns and Where to Post to Maximize Income
Of course, the democratization of content creation does not mean that any individual who posts content on a social media platform is guaranteed a meaningful financial return. While there are a handful of YouTubers making tens of millions of dollars, most creators earn a more modest income. Additionally, a significant number of the most viewed accounts on YouTube are those of musicians, athletes and others with an existing public persona from which they derive most of their income. For instance, in 2018, Taylor Swift made $7 million via record sales and publishing in royalties, but she only earned an estimated $2.4 million from streaming platforms. More importantly, she earned a whopping $266 million for her Reputation world tour. While anyone can monetize their YouTube videos by enabling advertisements, the website takes a 45% cut of the revenue and the payout itself can be modest. Although some YouTubers make enough money to support themselves exclusively through posting, they are in the minority.
TikTok compensates its creators very differently. Total video views on TikTok often dwarf total video views on YouTube for most creators who post on both platforms. Instead of basing payout on a percentage of ad revenue like YouTube, TikTok has a static pool of money that it divvies up every day based on a number of factors, including a creator’s total daily views, the average length of each view and the average engagement count (likes and comments). The fund is currently capped at $200 million per year, which has yielded an average payout of 2.5 cents per 1000 views. Compare this to YouTube which pays roughly 10 cents per single view. As a result of these different payment schemes, in 2020 YouTube paid out roughly $10 billion to its content creators; TikTok paid out $200 million. Under TikTok’s current business model, the more popular the platform becomes, the less money each creator will make and the more successful a creator becomes, the less money they will earn per view. The takeaway: diversify where you post your content. TikTok may be great for amassing a following, but YouTube is the best bet for deriving income from posting.
Platform compensation is not the only way creators can monetize their content. Many creators derive a substantial income from branding deals, sponsorships, small-dollar donations through sites like Patreon and selling their own branded merchandise either through their own store or an online marketplace like DFTBA.com. Just as creators should diversify where they post content, they should diversify how they monetize their brands.
New content creators have many issues to keep in mind as they enter this new career path, whether it is their primary or secondary job. Issues pertaining to copyright, privacy and trade practices affect both new and well-established creators. Lutzker & Lutzker is here to help with these legal issues, especially the IP and privacy concerns. We look forward to helping creators succeed.