The Wisdom of Crowds: The Risks and Rewards of Crowdsourcing and the User-Generated Content Movement

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By: Brian J. Meli

Nowhere is the Internet’s ability to lay waste to established but out-moded industries on fuller display than in the realm of crowdsourcing. Everywhere you turn there’s a new crowdsourced-based start-up boldly proclaiming the dawn of a new era and the end of the way you’re currently (and have always been) doing something. Whether that something is locating sources for investment capital or booking a second honeymoon, there’s a host of new companies promising to do it more efficiently and less expensively than ever before by unleashing the power of the masses.

A car service with no cars

These companies aren’t laying claim to having created a better mousetrap (or app, if you prefer). In fact, most of them don’t “create” anything in the traditional sense. But by embracing the ability of the Internet to do what the Internet does best—namely, network people—they’re able to connect consumer with supplier in ways never before conceivable. As a result they’re not just facilitating transactions, but opening up new, largely untapped sources of inventory and labor.

Take Uber, a company that can turn any enterprising Tom, Dick or Sally with four wheels and some spare time into a personal chauffeur, virtually overnight. Uber seamlessly connects paying passengers to willing drivers at a fraction of the cost that taxis and other car services charge, but without employing a single driver or claiming a single vehicle as an asset on its books. It’s large and growing fleet of cars belongs entirely to the drivers themselves, who are willing to offer their time, property and services in exchange for some extra money. Needless to say, it’s a model that strikes fear in the hearts of traditional livery companies and taxi services.

Want another example? Take a look at Airbnb or HomeawayThese companies can make an ad hoc hotelier out of just about anyone with a spare bedroom or vacation home and a spirit of sharing. They don’t just aggregate rental properties like Expedia or Travelocity. That’s been done. Instead, they create entirely new rental supplies from private residences that their owners want to put to more productive use. And these companies cater to more than just the couch-surfing set, with a surprisingly fast-growing portion of their revenue coming from business travelers.

Companies like Uber, Aribnb and Homeaway promise to do to the transportation and hospitality industries in the coming years what iTunes and Amazon did to the recording and retail industries before them: namely flip them on their heads and shake them until the old established players either join the innovation express or fall out of favor with their ever bolder and more demanding customers.

Creativity, squared 

Since it’s infancy, the Internet has offered the promise of becoming the greatest force of innovative destruction the world has ever known. And now that it’s coming into its own, crowdsourcing is helping make good on that promise. And perhaps nowhere is that more the case than in creative industries, where that force is being harnessed with particular aplomb.

User-generated content (UGC), is creativity writ-large, and it’s empowering the individual creator and opening up a whole new world of opportunities for companies hungry for original content, new ideas, and fresh, authentic thinking. Rather than hiring photographers, writers, actors and directors to create scripted advertising, company’s are letting the passion and creativity of their own customers do much of the work for them.

The beauty of UGC in the advertising context is it’s intuitiveness. Consumers inherently distrust advertising. So who better to promote a company’s brand than the real live customers who use their products everyday, and whose passion for those products is genuine. In other words, UGC gives advertisers instant credibility, with the added benefit of a little cost savings.

To understand just how powerful the crowdsourced creative revolution is becoming, witness GoPro, the mobile camera company that relies heavily on user-generated content created via its line of mini-cameras to serve as the workhorse for its promotional efforts. The company’s idea is as simple as it is profound: put its cameras in the hands of its customers and let them do the rest. The resulting customer-produced footage is then uploaded to the company’s own YouTube channel, where the unique capabilities of its cameras promote themselves. The results so far speak for themselves: GoPro doubled its YOY net income from 2010 to 2011, while only spending an incremental $50,000 to do it. And its brand user-engagement numbers continue to outpace the rest of the consumer electronics category by a comfortable margin.

Okay you say, that’s great if you’re in the portable camera business, but how can my business crowd source user-generated video? Well, in GoPro lies that answer as well. Their goal is to eventually move beyond simply being a camera company and become the world’s most prolific user-generated media company. In other words, GoPro wants to empower other brands to promote themselves in the same highly engaging ways it promotes its own—by using its unique technology. So if you’re interested in a new campaign showcasing your customers enjoying your skateboards, cross-trainers, or soft drinks, just put a GoPro in their hands (or anywhere else on their bodies, for that matter) and sit back and watch the magic happen.

A picture is worth a thousand downloads

User-generated video not your thing? That’s ok, crowd-sourced content comes in many different forms, and can be integrated into marketing to widely varying degrees. Looking for original stock imagery to spruce up your social media campaign, but can’t find what you need from the traditional stock services? Or maybe you’re looking for something specific, like images of people eating at your restaurant, or vacationing at your resort? No matter what kind of photography you’re searching for, there’s a good chance a crowdsourcing option like FoapTwenty20 or Scoopshot has something to offer. Much like Uber and Airbnb make drivers and inn-keepers out of regular people, these next generation stock image services turn anyone with a camera phone and a hint of creativity into a freelance photographer. Whereas traditional image services like Getty Images and Shutterstock are aggregators of photos that are mainly staged, these services specialize in “real” images, turning a person’s vacation photos or wedding album into an online creative resource. And because they’re highly customizable, brands can easily find candid examples of their products in use.

Looking for a more comprehensive advertising solution that affords you more control over the creative process? There are now a variety of web-based crowdsourcing services that offer full-service creative services. On platforms like Tongal, you upload your strategy brief and they do the rest, making use of their global network of creative-minded people to develop scripts, storyboards and even fully produced spots–executed to your particular specifications. In theory, it’s like having your own dedicated, fully outsourced advertising agency. In practice though, the verdict is still out on how much value these “virtual creative” shops actually deliver. But there’s no denying their potential for disrupting long-held beliefs about how best to creatively solve business challenges.

Crowdsourcer’s warning: ignore at your own risk 

The creative crowdsourcing movement certainly represents huge opportunities for both talented individuals eager to have their work recognized, and companies looking to engage customers in new and authentic ways. But crowdsourcers beware: as with most new methods, crowdsourcing has its limitations, and comes with its own set of warnings. While these warnings shouldn’t discourage companies from exploring crowdsourced solutions, they nonetheless highlight the problems that occur when creativity meets technology-enabled mass sharing. While not an exhaustive list, the following are three legal issues that every advertiser should keep top-of-mind when deciding when and if to incorporate crowdsourcing into their larger communications strategy:

1. Copyright: It’s critically important to understand that these new technologies come with serious copyright implications. The first question to ask when using them, whether as a producer or as a consumer, is who owns the work? Usually that’s a distinction reserved for the creator, but it can get murky when you have multiple people contributing their talents. That’s why for content producer and consumer alike, it’s vital to read and fully understand the terms of service of any crowdsourcing site before using it. You need to understand who owns the copyright to the work you’re downloading (or uploading if you’re the creator), and whether or not your transferring title (ownership) in that work, or merely licensing those rights. If your licensing them, then you need to know the limitations of those licenses.

Just as importantly (if not more so), if you’re downloading content, you need to know if the service your using warranties that content against third party claims of copyright infringement. If it doesn’t, then using that particular service may not be a risk you’re willing to take, especially if you represent a well-known brand with a lot to lose from a high-profile lawsuit. Unfortunately, a lot of crowdsourced creative services do not offer any warranties whatsoever because of the logistical difficulties in doing so. That means the creative is purchased “as-is,” with no guarantees of any kind. For this reason alone many companies simply regard the risks of procuring crowdsourced content as too great to justify the potential benefits.

2. Publicity & privacy rights: Even if you have clear copyright title in a work, or a license granting you broad rights to use it, you still may not be able to use it commercially if the work contains the names, images or likenesses of people who have not consented to the use. Even depictions of buildings or other properties without permission can get you into trouble. As with copyrights, it’s important to check to see if the service you’re using guarantees that all necessary model and property releases have been obtained, and that you’ll be indemnified in the event you’re accused of violating anyone’s publicity or privacy rights. Unfortunately, this is something many of these services simply aren’t prepared to do.

3. Trademark: It’s important to remember that people out in the real world snapping pictures and shooting videos usually aren’t thinking about if their work contains references to trademarked products and services. And why should they? After all, only when those pictures and videos are placed into a commercial context does the potential for source confusion, passing off, unfair competition and trademark infringement arise. But when they are, it can lead to all kinds of problems that even traditional creative resources like iStock are not immune to. Trademark infringement is often hard to gauge, but the issues are usually relatively easy to head off. It takes dutiful review of footage and imagery prior to publication to make sure it’s free of any third party brand identifiers; and if it isn’t, properly removing or obscuring the offending elements. A lot of services will not accept uploaded content that blatantly contains third party trademarks, but even if they do, this is a risk that’s largely within the control of an advertiser to minimize.

The bottom line is, if you’re thinking about using a crowd sourcing service, or a UGC platform, know what you’re getting into. Read the terms of service. Don’t be intimidated by the fine print. If you don’t understand it, ask someone who does. It’s undeniable that crowdsourcing represents a giant leap forward in the area of creative collaboration and idea sharing, but there’s a lot to consider before simply going online and finding a good picture for your company website. Understand the risks, as well as the rewards, and then make an informed decision about whether these brave new services can benefit your business.

The content of this blog is intended for informational purposes only. The information provided in this blog is not intended to and does not constitute legal advice, and your use of this blog does not create an attorney-client relationship between you and Brian J. Meli. Under the rules of certain jurisdictions, the material included in this blog may constitute attorney advertising. Prior results do not guarantee a similar outcome. Every case is different and the results obtained in your case may be different. 



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