Legal

Saturday, April 19, 2008

Overcoming key resistence to adopting social media

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I’ve talked before about the reasons companies resist social media. The Arthur W. Page Society and the Corporate Executive Board are out with a study that puts some numbers behind the top reasons for organizational resistance. The study, which targeted more than 30 chief communications officers who are corporate members of the Page Society, revealed nothing surprising, but still, it’s easier to offer counter-arguments when you know what’s holding companies back.

Resistance from the legal department

Lawyers take too much heat for opposing social media. Their job is to be cautious, to advise their employers/clients against things that pose legal risks. The fault rests with leaders who blindly follow legal advice rather than balancing it against other factors. When faced with lawyers who want to put the brakes on new media, offer the following points:

• Lawyers have okayed blogs of all stripes at 58 of the Fortune 500.
• Sun Microsystems’ general counsel is blogging.
• Few of the legal concerns have materialized among companies with blogs.
• The value of engagement in social media, applied intelligently, will easily outweigh the risks (see next item).

Lack of ROI

There have been a lot of developments in the ability to assess the return on investment for engagement with social media. See Kami Huyse’s example of ROI from a social media effort on behalf of her client, Sea World. PR measurement guru Katie Delahaye Paine also addresses measurement of social media quite nicely in her new book, “Measuring Public Relationships.”

In any case, the days of shrugging off social media because there’s no ROI are over. We need to educate the decision-makers about the kinds of ROI being attained by others and how it can be measured for our organizations.

Too labor-intensive

I remember speaking to the CEO of a Dutch company who said his board was concerned about the amount of time spent blogging. He answered that he wasn’t spending any more time communicating than he was before. However, some of the total time allocated to communicating had shifted to his blog because the blog was a more effective tool, in many circumstances, than phone calls, speeches at industry association meetings, and newspaper interviews. He hadn’t given up on those (and other) older forms of communication, but adding blogs to the mix allowed him to use the most appropriate tool for the job.

On the other hand, some social media will require additional labor. Southwest Airlines had to hire additional staff to monitor and approve comments left to its blog. It wasn’t something Southwest hesitated to do, though, given that they had already concluded that the ROI from the blog would far outweigh the cost of managing it (see previous item). If the company takes a strategic approach to its social media activities, the ROI will already be understood (a far better approach than saying, “Hey, we gotta have a blog!").

It’s also easy to start small in order to get comfortable with social media before diving in. I advised one colleague that his company could start with a blog focused on recruiting (a key issue for his company) rather than a Southwest-like blog or a CEO blog. The audience is more limited and the discussion more focused. When the value of that blog proves itself, additional online social activities simply become the next step.

Lack of expertise

This is actually a valid concern, but shouldn’t be a deal-breaker. The solution is to get some expertise.

There are several ways to do this: Hire someone, start small (see previous item) in order to develop the expertise, find someone in your organization who is already engaged and take advantage of their experience or contract with any of the agencies or individuals out there who can help provide you with the expertise you need.

Challenges, not obstacles

I always rolled my eyes at the corporate-speak that positioned problems as “opportunities.” But we who advocate our companies’ involvement in social media should see the resistance as challenges to overcome rather than roadblocks that send us packing. That’s what Northwest Mutual Life Insurance did, according to the Forrester case study. The conservative, 150-year-old financial services company identified the areas of resistence, then found the means to overcome them, ultimately launching an internal blogging initiative. Applying the principles of sound business management to a company’s entry into the social media space doesn’t have to be an oxymoronic concept. 

Thursday, March 06, 2008

Blogging in a regulated environment

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Wednesday, January 16, 2008

Blame the law, not the lawyers

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Getting a degree in journalism back in the mid-1970s, when I got mine, required a class in journalism law. I suspect this is still true, but I wonder if a parallel class is required for students in PR, marketing, and communications majors. Based on the speed with which people working in these disciplines jump on lawyers, I would guess not.

I was as amazed as everybody else when I read that Hasbro (representing US distribution) and Mattel (which owns international rights) issued a cease-and-desist to the group behind Scrabulous, a Facebook app that emulates the board game, Scrabble. (I’m one of the more than 600,000 people who use the app, by the way.)

Matt Dickman, who writes the Techno//Marketer blog, wrote a terrific post outlining some of the alternative approaches the toymakers could have taken. (Thanks to Chris Brogan for pointing the post out to me; Matt learned about the incident from Shel Israel.) Matt suggests that Hasbro or Mattel could have bought Scrabulous and made it an official Scrabble game or sponsor the app. These are great ideas. But there’s a compelling reason the lawyers (whom Matt suggests should be forced from the room during discussions about situations like the intellectual property issue Scrabulous presented) make the decisions they do.

I learned about this when I worked for Mattel (1984-88; I left as director of corporate communications). From a PR perspective, I opposed legal action against someone who infringed on the Barbie trademark. The infringement didn’t strike me as particularly onerous and I thought the PR fallout would be worst than any losses we might suffer as a direct result of the violation. Our IP lawyer—a very nice guy named Ron, as I recall—set me straight. Here’s the scenario, modernized to address the Scrabble/Scrabulous issue:

Let’s say Hasbro and Mattel opt to do nothing about the Scrabulous infringement, or that they decide to follow Matt’s advice and buy or sponsor the application. Then, next year, a truly egregious violation occurs: Somebody produces a boxed board game called “Scramble” that is, for all practical purposes, a complete knock-off of Scrabble, which is distributed to dealers who sell the game at flea markets and swap meets. Hasbro takes the company behind Scramble to court, where the defense attorney gets up and says, “Your honor, not only did Hasbro not defend its trademark with the Facebook app called Scrabulous, they paid money to sponsor the application! If Hasbro didn’t defend its intellectual property then, what standing do they have to do so now? Why aren’t they paying us to sponsor Scramble?”

This argument is a valid one in court. Companies lose the right to defend a trademark if they don’t take action against any and all violations of which they are aware.

I’m certainly not suggesting this is a good thing. But it’s the law that needs to change, not the lawyers.

As Matt says in a reply to a comment I left on his post, companies now must weigh the risk to the trademark against the risk associated with alienating customers. But from the lawyer’s perspective, there is no choice. We’d all know this if we knew just the basics of the law as it applies to brands and marketing.

Tuesday, September 25, 2007

Be careful how you use Flickr images

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When I started my music podcast, I needed an apporpriate image for the podcast blog. I found an ideal image on Flickr accompanied by a Creative Commons attribution share-alike license. The image of an electric guitar neck now graces the JamJourney blog.

Scouring sites like Flickr, where amateur and professional photographers alike share their work, has become a standard means of finding just the right image. So it’s not particularly surprising that Virgin Mobile Australia took the same approach in its effort to find images to support a print-based advertising campaign. Among the images they found was one of 16-year-old Alison Chang, taken by a friend at a church event and posted to the friend’s Flickr account. Seeing the Creative Common license, Virtin Mobil’s marketers grabbed the image and splashed it all over bus stops with taglines like, “Dump your Pen Friend” and “Free Text Virgin to Virgin.”

Now, Chang and her family are suing Virgin Mobil and Creative Commons, not because Virgin failed to pay for the rights to Chang’s image, but because using the image is a violation of her privacy rights. (You can watch a CNN interview with the Chang’s attorney here.)

On its surface, the lawsuit is a cautionary tale for organizations who view Flickr as an archive of royalty-free images. Lawrence Lessig—the Stanford professor, Constitutional law attorney, and intellectual power behind Creative Commons—offers a deeper dive into the issue (although he is constrained from commenting on the merits of the suit). In a post to his blog, Lessig raises a number of points:

...this case does again highlight the free culture function of the Noncommercial term in the CC license. Many from the free software community would prefer culture be licensed as freely as free software—enabling both commercial and commercial use...But this case shows something about why that objective is not as simple as it seems. I doubt that any court would find the photographer in this case had violated any right of privacy merely by posting a photograph like this on Flickr. Nor would any court, in my view, find a noncommercial use of a photograph like this violative of any right of privacy. And fianlly, as the world is now, while many might resist the idea of Virgin using a photograph of theirs for free...most in the net community would be perfectly find with noncommercial use of a photograph by others within the net community.

The Noncommercial license tries to match these expectations. It tries to authorize and reuse—not within a commercial economy, but within a sharing economy.

I urge you to read Lessig’s entire post, where he points out that the Creative Commons has been effective and that the organization has taken pains to make the meanings of the various licenses easy to understand (easier, he points out, than Congress does with copyrights). The suit, however, shows CreativeCommons has some way yet to go. And the distinction between commercial and noncommercial licenses does not address permissions “for a puboicity right, or a right of privacy” (a point reiterated by Ryan Zhel, the Changs’ attorney, who says the suit is about privacy, not commercial vs. non-commercial distinctions).

We in the social media community embrace and extoll the virtues of Creative Commons licenses, but this lawsuit seems to show that they are not a panacea. It’ll probably be up to the courts, ultimately, to decide who has rights to your image once it escapes into the social media space, with or without your knowledge or consent.

Not surprisingly, there’s plenty of commentary on the story.

Wednesday, July 25, 2007

Query: the legal side of employee blogging

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I got this question in an email today regarding blogs on intranets:

One of areas I keep getting pushed back on is the legality of blogs.  “What if someone says something inappropriate about another Colleague…we’ll get sued.”

I know the risk/benefit argument and I know that clearly communicated policies play an important part. But, since I’m not a lawyer, I don’t know if clearly-communicated policies to which a blogging employee has agreed would keep the company out of legal trouble in the event that employee did say something inappropriate. For those of you with intranet blogs, what’s the official line from your lawyers on this issue?

Sunday, July 15, 2007

Embed Creative Commons license in a PDF file

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The Creative Commons license is useful in a variety of applications. I’ve even started including them in the opening and closing slides of PowerPoint presentations that I make available for download. I don’t make the actual PowerPoint deck available, though. For a number of reasons, I save the deck as an Adobe Acrobat PDF.

Now, a company called Cogniview has come up with open-source software that embeds your Creative Commons license metadata into the PDF file. The app works as a Windows printer. You select the desired CC license as an option when you print a document to PDF. Once you make your selection, the license metadata is embedded in the file; you can also opt to have the document stamped with the license so it’s visible to people viewing it. You can choose to have the stamp appear in the footer of the first page linking to the full license on an extra page added at the end of the document.

You can download the app (Windows only) and view a screencast showing how it works here. 

Thursday, January 25, 2007

What Reg FD says

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I had removed this post initially because Dominic Jones—whom I still think is one of the more knowledgeable IR people I’ve ever read—told me I was making a fool of myself by posting it. I didn’t want this blog to be the source of inaccurate information.

From the standpoint of the current regulation, though, Dominic (in a comment to this post) wrote, “For what it’s worth, your post did a fair job of analyzing what Regulation FD actually says.” Since the point of my post was not to address debate that has ensued since then (the part that made me look foolish), but rather to outline what the current regulation actually says—the regulation that could lead to sanctions against your organization if it is violated—I guess I’ll go ahead and re-post. I certainly acknowledge the debate that has raged since this regulation was enacted, but I don’t believe the SEC would accept a defense along the lines of, “Yeah, but some of the commissioners have been saying the regulation needs to be updated.”

I’ll pick up the post, with a few minor modifications, from the part where I started talking about Reg FD ,and skip the bit about my motivation for posting. You already know that.

First, I wanted to make sure I was clear on what is meant by “material.” My initial understanding turned out to be right: Reg FD suggests careful review of some items such as earnings information, mergers, changes in management or control, change of auditor and the like. Reg FD does not, however, change older rules regarding the nature of material information. Information is material if “there is a substantial likelihood that a reasonable shareholder would consider it important” in deciding to buy or sell the company’s stock. It’s also material if it would have “significantly altered the total mix of information available.”

Before slogging through the regulatory language of Reg FD to determine once and for all the role of the press release, I searched the Web looking for a repository of information about disclosure, but came up dry. (It would make a nice project for someone, wouldn’t it?) I did find a few interesting tidbits here and there, such as this from the PR Newswire site:

When a corporation goes public, it assumes certain obligations to disclose material information about its operations and financial performance, both in documents filed with the SEC and through timely public disclosure via the media. Announcements of material events or information are not deemed to have been properly disseminated or made public until they have been released to the exchanges...and distributed to key media.

Okay, but not specific to the U.S. law, so I moved on to the regulation itself. (Dominic was right; I should have done that instead of relying on Wikipedia.) There are several passages that are pertinent, beginning with this one:

...technological developments have made it much easier for issuers to disseminate information broadly. Whereas issuers once may have had to rely on analysts to serve as information intermediaries, issuers now can use a variety of methods to communicate directly with the market. In addition to press releases, these methods include, among others, Internet webcasting and teleconferencing.

Hmm. Webcasting and teleconferencing, but not blogging or RSS feeding. But is a webcast or teleconference enough? Let’s continue. The final rule on selective disclosure and insider trading notes:

As adopted, Rule 101(e) states that issuers can make public disclosure for purposes of Regulation FD by filing or furnishing a Form 8-K, or by disseminating information “through another method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public.”

What does that mean?

In the Proposing Release, we stated that an issuer’s posting of new information on its own website would not by itself be considered a sufficient method of public disclosure. As technology evolves and as more investors have access to and use the Internet, however, we believe that some issuers, whose websites are widely followed by the investment community, could use such a method. Moreover, while the posting of information on an issuer’s website may not now, by itself, be a sufficient means of public disclosure, we agree with commenters that issuer websites can be an important component of an effective disclosure process. Thus, in some circumstances an issuer may be able to demonstrate that disclosure made on its website could be part of a combination of methods, “reasonably designed to provide broad, non-exclusionary distribution” of information to the public.

The pertinent question to this conversation, then, is whether blogs and RSS feeds qualify as “broad, non-exclusionary distribution of the information to the public.” I would maintain they do not, given that most of the public does not read blogs or RSS feeds. The SEC agrees. Here’s what Reg FD says:

We believe that issuers could use the following model, which employs a combination of methods of disclosure, for making a planned disclosure of material information, such as a scheduled earnings release:

• First, issue a press release, distributed through regular channels, containing the information;
• Second, provide adequate notice, by a press release and/or website posting, of a scheduled conference call to discuss the announced results, giving investors both the time and date of the conference call, and instructions on how to access the call; and
• Third, hold the conference call in an open manner, permitting investors to listen in either by telephonic means or through Internet webcasting.

By following these steps, an issuer can use the press release to provide the initial broad distribution of the information, and then discuss its release with analysts in the subsequent conference call, without fear that if it should disclose additional material details related to the original disclosure it will be engaging in a selective disclosure of material information. We note that several issuer commenters indicated that many companies already follow this or a similar model for making planned disclosures.

In the Proposing Release, we stated that an issuer’s posting of new information on its own website would not by itself be considered a sufficient method of public disclosure.

Again, the SEC seems pretty clear here, while not mentioning blogs specifically, that a blog simply won’t cut it. While the regulation does not reference blogs and RSS—leaving that in the category of technological advances—the regulation is pretty damn clear on the expected use of the press release!

There’s one more passage worth citing:

In determining whether an issuer’s method of making a particular disclosure was reasonable, we will consider all the relevant facts and circumstances, recognizing that methods of disclosure that may be effective for some issuers may not be effective for others. If, for example, an issuer knows that its press releases are routinely not carried by major business wire services, it may not be sufficient for that issuer to make public disclosure solely by submitting its press release to one of these wire services; the issuer in these circumstances should use other or additional methods of dissemination, such as distribution of the information to local media, furnishing or filing a Form 8-K with the Commission, posting the information on its website, or using a service that distributes the press release to a variety of media outlets and/or retains the press release.

We also caution issuers that a deviation from their usual practices for making public disclosure may affect our judgment as to whether the method they have chosen in a particular case was reasonable. For example, if an issuer typically discloses its quarterly earnings results in regularly disseminated press releases, we might view skeptically an issuer’s claim that a last minute webcast of quarterly results, made at the same time as an otherwise selective disclosure of that information, provided effective broad, non-exclusionary public disclosure of the information.74 In short, an issuer’s methods of making disclosure in a particular case should be judged with respect to what is “reasonably designed” to effect broad, non-exclusionary distribution in light of all the relevant facts and circumstances.

I’m hopeful I got this all right; I am not an investor relations expert and it has been 14 years—long before Reg FD—since I handled any financial communications for a public company. But even if I misinterpreted or missed something (I’m sure someone will let me know), the crux of the content is unmistakable. Press releases have a role to play under the current regulation—whether they should or not, given the evolution of the technology—which means they are far from dead. Blog postings by executives or employees will not satisfy current regulatory requirements.