How Influencers Can Influence More Revenue and Stay Out of Trouble

Social media platforms such as YouTube and Instagram have become the go-to destination for video content consumption by teens and millennials. It far surpasses what they consume on television. These platforms (often referred to simply as “social”), collectively generate billions of views, and hundreds of millions of hours of watch time, every single day.

Teens and millennials create most of this content. On YouTube, they open an account (called a channel), create videos, often in their home with just a webcam or mobile phone, and upload their videos to their channel.

Some of these content creators have generated tremendous followings on social, becoming fashion, makeup, lifestyle, or entertainment influencers for their viewers. Some influencers have millions, if not tens of millions or more, of followers. Some Kardashians/Jenners are reported to have hundreds of millions of followers on social.

Influencers (also called digitally native talent) have become the new rock stars. Being an influencer can be stunningly lucrative, with several possible revenue streams, as discussed below.

Brands are more willing than ever to pay influencers a lot of money to tap into their hundreds of thousands or millions of followers, to promote their products to what have proved to be willing and able consumers.

But it’s not just big influencers that brands are courting. They’re also going after micro-influencers (ranging from about five to 20,000 followers), who are becoming increasingly important for smaller brands and niche campaigns.

As with bigger influencers, it’s not the number of followers but their engagement with the influencer that matters.

To be successful, influencers need to know how to maximize revenues, and to protect the content they create that generates it.

There’s also a need to be aware of those ever-present, pesky legal land mines, which can blow (up) influencers’ abilities to fully monetize their popularity, stay out of trouble, and protect their content.

I’ll highlight relevant issues, suggested solutions, and best practices for influencers, so they don’t go from influential to inconsequential.

Content Protection

I always advise influencers I represent to register their content for copyright as soon as it’s created, and their name and/or channel’s name for trademark as soon as they begin using them on social in connection with their content.

Why register for copyright as soon as possible? One can only collect money damages from the date of registration (which can take up to a year). By the time registration occurs, the major financial damage to the infringed work, and its owner, has likely been done. Most content generates its most revenue during its initial availability. Imagine an influencer is ripped off, with damages and losses mounting, and is unable to make the guilty pay for all the damages caused to the influencer and the influencer’s work.

Copyright and trademark protect two things. Copyright protects original creative works, such as videos, and some posts. This can prevent others from using an influencer’s content, including for reposting or linking, if the influencer wouldn’t want them to.

Trademark is a source identifier. It enables consumers to know the source of products or services made available under a brand. An example is Coca-Cola Co., for its cola soft drink.

Trademark registration helps prevent others from using trademarks for their own benefit. Examples include putting out content under the influencer’s name or channel name, to trade on the influencer’s audience and monetization ability, or to put out inferior content, for purposes of hurting the influencer.

Registrations also have several other important benefits and disincentives to infringement. For both copyright and trademark registration, these include:

• Constitutes public notice, and presumption of, ownership.
• Provides ability to sue for infringement, and the disincentive to infringers of having to pay money and other types of damages, including attorneys’ fees.
• Makes it easier to have infringing content taken down.

Other copyright registration benefits are:

• One must prove content ownership to monetize it via YouTube’s Partner Program, with ads through Google AdSense.
• Reciprocal benefits in some foreign countries.

And one doesn’t need a lawyer to register a copyright. (Yes, you heard right). It’s easy — go to www.copyright.gov, and click the “Registration” link); it’s quick — takes maybe 20 minutes; it’s inexpensive — usually $35 or $55 to register, and multiple videos can be registered with one application.

Other trademark registration benefits include:

• It’s a prerequisite for being able to monitor infringement on YouTube (through its brand registry), and Facebook (through its Commerce and Ads IP tool). These text and image search tools police counterfeits and unauthorized use of the influencer’s marks (and copyrighted content). This can result in faster takedowns and/or having the infringers blocked.

If Influencers have a large catalog of copyrighted content, they can register for YouTube’s Content ID Database. Works are submitted for digital fingerprinting — called Automatic Content Recognition — and included in the database.

Whenever content is uploaded to YouTube, the content ID database scans it, and checks for matches of content already in it. If it finds a match, the content owner can either block the video, mute its audio, monetize it with ads, or track it.

Social Shouldn’t Own Any Influencer’s Content

Influencers need to read and understand the terms of use/service for each social platform on which they want to be. It could be too late if they’re already on it, and haven’t. Some terms of use/service give the platform ownership and control of whatever’s uploaded or posted to it.

YouTube is one example. One must be a YouTube Partner (this occurs when uploaded content is monetized, and ad revenue is shared with YouTube) to exercise ownership and control of one’s uploaded content.

Maximize Channel Monetization

As mentioned above, there are several ways an influencer can do this:

• One is by attaching ads to videos, through an ad network. On YouTube, the influencers sign up for Google AdSense, have a link from it to their channel, and they’re provided ads. But the influencer must individually mark his or her videos as monetized. This should be done before content goes viral, so no revenue is lost.
• Influencers can also use cost per click (CPC) ads, which people click to take them to the influencer’s landing page, where the visitor will hopefully partake of the influencer’s goods or services. One benefit of CPC is that the influencers only pay when someone clicks their ad.

Other ways influencers monetize their channels include: selling branded merchandise, including books, video games, or other things the influencer creates, on it; or through affiliate networks or program sales. Here, an influencer video usually reviews or provides instruction on how best to use a product. There’s a link on the video to where the viewer can buy the product. The influencer gets a percentage of the purchase price.

Properly Disclose Endorsements

As noted above, brands are more willing than ever to pay popular influencers lots of money to tap into their followers, to promote their products to what have proved to be willing consumers.

The Federal Trade Commission is paying attention, and getting aggressive. It has ramped up enforcement of the FTC Act, the main body of law governing truth in advertising. Those endorsing or promoting products or services must follow the act.

Influencers need to know that if they’re being paid, or receiving anything else of value (free goods or a discount, for example) to promote a product on social, they must disclose it — or else.

The FTC sent out more than 90 “compliance reminder” letters in April 2017 alone to influencers and advertisers, including Victoria Beckham and Jennifer Lopez.

The FTC has also started suing noncompliant influencers.

To help influencers comply, the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising” have been repeatedly updated, to cover advertisements, endorsements, and promotions on social, as it continues to evolve. Updates have included how an influencer could disclose on Twitter, when limited to 140 characters, and how to disclose on Snap or Instagram Stories, when no written text accompanies the content.

The Guides’ intention is to provide transparency, so that anyone exposed to those endorsements and promotions can determine whether they’re merely reviews or opinions of those giving them, or are paid for, or otherwise supported by, the goods or services provider. The FTC calls the latter “material connections,” which must be disclosed.

The FTC also began publishing answers to questions it had been frequently asked by those who promoted or endorsed products and services in digital media. But not all of the answers are clear.

Many advertisers and social platforms, such as Instagram, are trying to help by having policies in place for influencers’ compliance with the act.

But it’s not enough. It’s the influencers’ obligation to comply with the act. They should still separately disclose, even if the advertiser or platform has a compliance policy.

Here’s some of what I’ve shared with my influencer clients, to do so:

• A single, general disclosure on a homepage, channel, or the like isn’t FTC-compliant.
• Disclosures should be conspicuous, unambiguous, and at the top or beginning of the endorsing video, picture, blog or post, to make it practically impossible to be overlooked. Visual content, like video, should be clear, eye-catching images, as well as in text, in a large, simple-to-read font, that contrasts with its background.
• Don’t use audio disclosures alone for visual content. Many users view these without sound. Repeat the disclosure periodically, as viewers may tune in midstream.
• Getting a discount on something is the same as being paid. Disclose it.
• If a brand donates to charity any time you review or endorse one of its products, disclose it.
• If friends or family want you to review their product or service, disclose it under certain circumstances. If family or friends invite you to try their restaurant, to get feedback on the food and service, and you eat for free or at a discount, disclose it, and the personal relationship. Even if an endorsement isn’t asked for, it could be implied that the restaurant owner(s) want their restaurant reviewed.
• On Instagram, tagging a product brand, such as clothing, in a posted photo of the influencer wearing the item — that’s an endorsement. Disclose it.
• Disclosures on Instagram should be at the beginning of any pictures or text. It shouldn’t be on the part one must view by clicking “More.”
• On Snapchat and Instagram Stories, superimpose the disclosure over the images. Since Snapchat and Instagram Stories expire, disclose on each post.
• Facebook “likes” are generally considered endorsements.
• If a brand pays influencers to write or say that they want to buy a certain product, and a link is included to that brand’s site, disclose it.
• Payment to endorse something isn’t always necessary to require disclosure. If two or more influencers, or likely anyone else, agreed to endorse or post reviews on social of each other’s products or services, it should be disclosed. Another example is having a hotel brand put influencers up for free at a new property, with the expectation they’ll write about it. This should be disclosed.
• “#ad” or “#sponsored” can indicate endorsement. Best practice is to put it at the beginning of the endorsement or review, by itself, separated from, and not mixed in with, other text, links, or hashtags. Hashtags such as “#client,” “#advisor,” “#consultant” or “#ambassador” are too vague.
• Saying “Thanks” to a brand isn’t a disclosure. It needs to be something like “Thanks for the gift of (the product),” “Thanks for letting me work with (the brand),” “Thanks to (the brand) for paying me as a consultant,” or “Thanks to (the brand) for the discount on (the product).”

Have Rock-Solid Contracts

There’s often a huge difference between the deal one thinks one has made, and what winds up in the written agreement that’s eventually signed. Among other problems, this can cause influencers to make less money under the contract than they thought they were going to, as well as impose obligations on influencers for which they didn’t intend.

How can influencers avoid this? By having the contract’s language be as clear, concise, and unambiguous as possible. The parties are then on the same page about its subject matter, and their rights and obligations under it. They work in tandem towards achieving their mutual goals in that deal, be they substantial profits, developing a brand, or something culturally significant. Clarity also enables the parties to refer to the contract if a difference of opinion or dispute arises over it, and resolve it themselves.

To me, a contract’s primary objective is to be a clear set of instructions. Clarity avoids controversy.

To accomplish this, contracts should be written, or revised, in plain, conversational English, with detailed terms, conditions and obligations. Legalese (words like “shall,” “deemed,” and “heretofore”) should be avoided. They’re ambiguous, archaic, and can have several meanings. (The word “shall” has four meanings, according to many dictionaries).

Vague or imprecise contract language can lead to misunderstandings and disagreements between the parties. This, in turn, can lead to the deal not being beneficial to one or both parties, or worse, to litigation.

Influencers shouldn’t negotiate their own contracts (any more than I should promote clothing or makeup). A lawyer wrote it. It was written to benefit the brand, and contains phrases and terms of art whose meaning and effect on influencers they rarely understand.

Some examples of this, as well as certain terms and conditions the contract should include, are:

• Content ownership: The influencer shouldn’t cede any of its existing intellectual property rights (copyrights, trademarks, name, face, or likeness rights). Ideally, influencers should also own the content they create under the contract. If not, post-contract, the brand’s use of it should only be for internal purposes, and the influencers’ for their promotional purposes. Any type of post-contract commercial use by the brand should result in additional, specified payments to the influencer.
• Type of license: All the brand should get is a specific, non-exclusive license, limited to the contract’s purpose.
• Reserve rights: Not specifically granted in the contract.
• Campaign length/parties’ obligations: Specify the number of videos, tweets, and posts the influencer is obligated to provide (this prevents underpayment and overexposure); over what social will the content be promoted; who’s responsible for any third-party licenses or consents.
• Payments: Should be gross to the influencer, without deductions. If instead it’s on some type of “net” basis, the deductions should be specified, defined, and limited as much as possible.
• Dedicated or nondedicated?: Can other brands be mentioned in the content?
• Payment details: Clear and regular payments, accounting, and audit protocol.
• Exclusivity: Any influencer exclusivity should be limited to identical or very similar products, for the shortest time possible.
• Approvals: The brand will insist on this for the content. The influencer should have final approval of its face, likenesses, and portrayals. No content edits by the brand, once it approves the content.
• Standard terms and conditions: They’re usually negotiable, but brands don’t like to deviate from theirs, or what they like to say are “industry standard” terms.
• Breach/cure: A party’s right to cure any curable breaches, in a specified number of days, after a written breach notice from the nonbreaching party.
• Insurance: The influencer should be added to the brand’s general and products liability insurance, in connection with the fruits of the contract.
• Early termination: By the influencer for reasons besides breach, such as product recalls, brand-affiliated individuals’ bad behavior, and falsities coming to light, and ideally receive all monies due under the contract. Proration is appropriate in some circumstances.
• Quality control: The influencer should have some level of this, on any influencer-branded products.

Binding contracts traditionally need the parties’ signatures to create them, or to modify an existing contract. But an exchange of texts, posts, or other electronic communication between the parties can do this, as well, even if it wasn’t intended by one or both parties.

One way to prevent this is to state in the contract that any type of electronic communication can’t modify it.

Deal Types

There’s been some shift in how deals are being structured, from a guarantee basis to a sliding scale bonus or royalty model. The payments are usually based on impressions, such as views, comments, likes, or reposts, not on the number of followers an influencer has. Some examples of deals I’ve done for my bigger influencers are:

• One-offs: One was for $75,000 for three short videos, three Instagram posts, and for the influencer to be tagged in social posts by that brand. Another was for $20,000 for four posts, one short video, and four Snaps.
• Exclusive endorsement, branded merchandise contracts: A royalty of 25 percent to 50 percent for apparel, 65 percent to 88 percent of net for cosmetics.
• Multichannel networks: MCNs are third-party companies, not endorsed by Google, that partner with independent YouTube channels to provide additional services to them, in exchange for a percentage of revenues generated by the channel. Maker, Machinima, and Awesomeness are examples. They’re usually content-centric, composed of videos or live streams based around such things as education, beauty, music, “let’s play” (videos or live streams of people playing video games) or “unboxing” (people unwrapping gifts. Really. I’m not kidding).

Some MCNs also provide music libraries, analytics, production facilities, and assistance, content and fan management tools, and most important to many channels, access to and brokering of brand deals.

Some common terms, conditions, and considerations of MCN contracts are:

• The MCN retains 10 percent to 40 percent of channel revenues, depending on the influencer’s social rank. The metrics for this include number of subscribers, monthly viewership, and lack of channel IP violations.
• Cost per thousand impressions (CPM) revenue to the influencer.
• Access to brand deals.
• Support for copyright issues, production, and channel optimization.
• A one-year term, but MCNs often try for multiyear, exclusive deals, with no early termination right by the influencer.
• The influencer should own the content and channel.
• Any music licensed from an MCN’s music library doesn’t expire when the contract does.

Don’t Infringe Others’ Content

I’m continually amazed that many people, including C-suite executives, still think that just because content is on the internet, it’s free for them to use.

It’s not. Generally, unless a creative work, such as music, photos, other images, or any other content, was created in or before the early 1920s, some person or entity owns it. Use of any part of it without the owner’s permission is almost always copyright infringement.

Influencers using unpermitted background music on social is a huge problem. Michelle Phan, a prominent makeup influencer with more than 3 million YouTube followers, and more than 2 million on Instagram, was sued for using artists’ recordings as background music on her videos, without permission. (That plaintiff found out about it via Content ID).

Being sued for infringement can be incredibly expensive for defendants, encompassing legal fees, settlement money, and, if they lose, money damages payable to the infringed party/parties, as well as often the infringed party/ies’ legal fees.

Fortunately, it’s easy for influencers to avoid infringing music. Either license the music from its owners (that’s both the recording, and the underlying song on it), or use music from free music libraries.

YouTube offers one. It also created a tool called Music Policies. It allows influencers to research songs and find out whether music recording or publishing (the underlying song) rights have been licensed or pre-cleared by the copyright owners for the YouTube platform. The Music Policies tool helps influencers that upload existing music recordings determine whether the uploads will be allowed, or blocked in specific territories, due to rights issues.

The Takeaway

Influencers don’t need to be lawyers. But knowing and understanding how they can avoid legal problems, while protecting their content and maximizing the revenue from their activities, is the cornerstone of becoming and staying a successful influencer.