Reddit says it's made $203M so far licensing its data
In its IPO prospectus, Reddit revealed that it has contractual agreements to license its data worth a combined $203 million.
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I wonder if there is any legal standing for users to sue Reddit for a fair share of those profits. That’d be nice if it could happen. But i suspect, probably not.
Their TOS says they own your content in any current or future formats or derivative works.
I’d say Reddit would win.
Their TOS says they own your content in any current or future formats or derivative works.
Their ToS could say they own you and your children and grandchildren, but that doesn't make it enforceable.
If I post a frame from the movie Akira on Reddit would any reasonable person suggest that they own not only that frame, but also the entire movie that it came from as a derivative work? There is a glut of second-hand data just like that all over Reddit, Twitter, and every other social media network, and I'm willing to bet that's also part of what's being sold.
But hey... I'm not saying you're wrong, just that the idea that they automatically "own" the things that people post on their website is ridiculous. It's a bit like UPS or FedEx saying they own the contents of your package while delivering it.
It is true that Reddit does not hold a valid license to content that is
However, as far as I understand it, the extent to which Reddit—a content provider and social network—is legally required to remedy this is to comply with DMCA requests and review reported content. Perhaps there is a higher standard that I am not aware of?
And yet that exact kind of data is all over reddit in ways that are impractical to enforce by case by case DMCA. How many memes are there using footage from popular shows? How much fanart?
More importantly, is that stuff not included as part of the data that reddit "owns" when they sell their data to tech companies? Because whether a DMCA takedown has been requested on that kind of data or not, doesn't change the fact that they don't hold the copyright in the first place. How can they sell things that they don't even own?
Something smells. The logic of this entire industry doesn't add up.
The answer is that it’s more practical than any alternative.
Copyright holders can’t sue Reddit for selling access to copyrighted content (before Reddit receives a copyright claim) because there is no way Reddit could reasonably distinguish between original and copyrighted content. Reddit users violate copyright law and the ToS in submitting copyrighted content, and Reddit is only required to take action as they are made aware of the content’s copyright status.
It would be trivially easy to to circumvent Reddit’s ToS otherwise: I could create some original content, sell my copyright to a friend for $1, and immediately put Reddit in violation of copyright law by submitting the content to Reddit. My friend could go after Reddit, and Reddit could go after me, but my friend would likely get more out of Reddit than Reddit could successfully get out of me.
It’s the same reason publishers can’t sue Cloudflare for hosting a piracy website unless they refuse to take it down, nor can they sue Facebook for ad revenue earned from banners placed next to a copy+paste of a New York Times article. The content providers do not knowingly/intentionally violate copyright law, and they make reasonable attempts to prevent/rectify it. Without such limitations on legal standing, the internet becomes a way bigger mess than it already is.
I think you're conflating two very different things here.
The DMCA covers hosting and dissemination. If a user submits copyrighted data to Reddit that they do not own and Reddit unknowingly (because, to be fair, they can't know what is or isn't owned or by who), then Reddit is not liable for copyright infringement as long as they comply with DMCA takedown requests from people who claim to own the original IP.
But again, none of that implies that Reddit themselves (or Twitter, Facebook, TikTok, etc.) can realistically claim ownership over all of the data that is on their website. The reason they are subject to DMCA at all is because there is a globally shared assumption that data that users submit may or may not be owned by some other party, and while the DMCA protects them from being held liable for simply hosting and disseminating that data, it does not magically make them the owner of all data that hasn't had a DMCA claim made against it.
In other words, if I post a picture of Homer Simpson on Reddit (and there are many), it is ridiculous for anyone to suggest that they have any intellectual property rights over that picture, that character, any trademarks, etc., whether someone has made a formal DMCA take down request or not. And if they don't own the picture, the character, the trademark, etc., when what exactly are they selling (licensing) and where did they get the right to sell it?
They might not be liable for just hosting/distributing it, but just like you can't sell someone else's car, you can't license out someone else's IP.
I see your point, and I’m somewhat inclined to agree with you, but what Reddit is doing doesn’t seem very different from what Meta and friends have been up to for years. Reddit isn’t selling the rights to the content on their platform, nor are they attempting to. They’re effectively selling API access to its content, in bulk, to Google. I don’t see how that is legally distinct from Meta selling (insulated) access to its content via their ad platform. They are both monetizing data that is potentially copyrighted by other parties.
The TOS shouldn't hold up in court. A contract must be an exchange of two things, eg money for a product or service. You can't say "Our service is free of charge!!!" And then in the fine print "(((But also you agree to give us everything we can take free of charge)))".
The issue is how everyone does it. Facebook and Google started when data had no value, now they're amongst the wealthiest businesses in the world. Now, Microsoft have joined in, *even though you already pay for their products and services anyway!"
However, the other aspect is that everyone is a victim. Lawmakers are the victim. They still haven't quite yet realised how much is being taken from them (at least $50 per year, probably more like $1,000 per year if not more for prominent figures) but they are still being abused.
It's like that form of bank fraud, where the criminal takes pennies from accounts, hoping the user won't notice and the bank will write it off. Do it to enough people and enough times and you can make millions. They do this to everyone and they make billions.
Either the data is public domain and they don't have to pay for it, but also cannot charge others for it, or the data is private and they must pay the author a fair share.
The exchange is you getting to be on reddit.
No, it isn't. The website is offered free of charge, regardless of whether you provide them data or content. The exchange for data/content is a second transaction tucked away in the terms and conditions, and the website offers nothing in return for that.
The reason the 2nd exchange is hidden in the terms and conditions is to intentionally hide what the user is giving away, such that the user cannot make a fair value assessment. It is fraudulent and deceptive.
Yeah, probably not. When you sign up and agreed to their ToS, they don't "own" your content, but you grant them a worldwide, royalty-free, perpetual, irrevocable, non-exclusive, transferable, and sublicensable license to use it without compensation.
From their ToS:
Any ideas, suggestions, and feedback about Reddit or our Services that you provide to us are entirely voluntary, and you agree that Reddit may use such ideas, suggestions, and feedback without compensation or obligation to you
Source: A pretty good post on r/HFY, though it is on Reddit, so don't click it if you don't want to :P
But how many TOS have been shot down because they over reach? I don’t know. You’re probably right. It it’s still fun to imagine.
There is legal standing, IMO. You can't take something without consideration, and access to the website was granted free of charge while the data collection was squirrelled away in the fine print. That isn't a lawful contract, the fine print is for technicalities about the main transaction of X in exchange for Y. You can't say "we'll give you X for free!!!” then sneak into the fine print "(((you also give us Y for free)))". The structure is clearly deceptive in a manner that is designed to prevent a fair assessment of the value being exchanged.
Insurers have to provide a "key facts page" where they summarise in plain English what you're paying for. The fine print gives the detail, but the front page is still "we give you X in exchange for Y".
You can't build a car without paying for the nuts and bolts. Tech companies have placed themselves amongst the wealthiest businesses in the world without paying for the nuts and bolts we provide.
Hell, even Microsoft is in on it now, even though you pay for Windows and Office 365!
Next question then: how do we mobilize into a class action against Reddit and google and Microsoft and whomever else?