This was first published on March 10, 2015 in Mediashift.
When I launched J-Lab in 2002, the best piece of advice I received was to have a lawyer draft a Memorandum of Understanding outlining the relationship between my center and its soon-to-be home, the University of Maryland.
The agreement detailed how I would support my startup, who owned the intellectual property, how much the university would charge for administering my incoming grants — and how I might spin the center into its own 501(c)3 or affiliate with another fiscal agent in the future.
Thanks to that MOU, when U-MD changed its rules for grant-supported centers, I was able to seamlessly transition to American University. The MOU basically served as a pre-nup agreement.
I never really expected to need the MOU — until I did. So, too, are new media startups finding themselves in situations where they need to know about, and plan for, an array of legal issues. Many of these issues particularly affect digital-first news sites.
With this, and many more experiences under my belt, I approached Jeff Kosseff, a Washington, D.C., media lawyer and fellow AU adjunct, about co-authoring “Law for Media Startups.” We wanted to make it a user-friendly online guide to what news entrepreneurs need to know and also help them identify when they needed professional help.
Next, I recruited CUNY’s Tow-Knight Center for Journalism Entrepreneurship to help support the project. The result: our 12-chapter guide that we hope will be as helpful to educators teaching media law courses and it will be to startup founders themselves. A downloadable PDF is coming soon.
Most journalists are used to working with legal counsel for such things as pre-publication review of important stories. But legal issues for digital-first news startups extend far beyond such traditional First Amendment issues as defamation, privacy and open government.
“New media has not changed the law of libel at all,” said Richard Tofel, ProPublica’s president and its resident lawyer. “But it has changed the breadth of laws entrepreneurs need to know about.”
How should you respond when someone is demanding the IP address or the identity of a commenter on your sites. How should you flag sites that steal your content? How can your make sure, in a rush to add an image to an article, that you are not posting a copyrighted photo? How to deal with a freelancer’s request to use for another assignment research gathered for a story you commissioned? When is it OK for someone to be a freelancer, and when do they have a right to be an employee?
“The No. 1 question by far that we hear from our members is about freelancer contracts and rights,” said Kevin Davis, executive director of the Investigative News Network.
The IRS sets out very specific guidelines addressing who should be an employee and who can be an independent contractor. As important, it requires all unpaid interns to meet six specific conditions.
Keeping some Data Private
All digital-first news startups are collecting some type of data on their users, and while most journalists advocate for openness and transparency, as an Internet-based business, you have a number of legal obligations to keep certain information private. You also need to tell your users how you will use their data.
Certainly, one of the biggest misconceptions some online publishers have is that your websites will only have immunity if you take a hands-off approach, and don’t edit or moderate any comments. Indeed, according to the e-guide, “service providers have wide latitude to edit, delete, or even select user content without being held responsible for it.”
Again and again, I have reviewed applications for J-Lab funding that promised that the startup would get grants to support its work. However, the applicant was neither a non-profit nor affiliated with one and, therefore was not eligible for the grants they wanted to support their business. News entrepreneurs need to understand what being a non-profit entails or pick another business structure.
As our guide notes, “journalism is not something the IRS recognizes as having a tax-exempt purpose.” So, if you embark on applying for 501(c)3 status, you need to flesh out how you will be different from a regular commercial publisher.
The ins and outs of partnerships
In the media startup space, legal needs can take surprising turns. Lorie Hearn, founder of inewsource.org, has partnered with a number of media outlets to amplify her investigative stories in the San Diego area.
But she says she has begun to feel the need to craft written distribution agreements to cover inewsource partnerships with other news outlets, especially pertaining to how they credit her material on their websites. Some “want their own correspondents to come in and interview our people and make like this is a joint investigation,” she said.
For that, she will likely seek out a lawyer who has worked closely with her site over the years.
These are just some of the issues playing out in startup newsrooms across the country. For more issues, see the full guide here.