Introduction
Business model of web-based businesses or online businesses is a well-known aspect on the Internet. Depending upon the type of website, corresponding legal disclaimers, website terms and conditions, and privacy policies are required to best suit the business needs.
Various types of online business models are discussed below from legal perspective.
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1. Blogs
Blogs are usually employed to facilitate social interaction. Most of the blogs these days employ social widgets, such as, for example, Facebook, Twitter, LinkedIn, Google Plus, YouTube etc. A blog should generally include disclaimer to minimize legal liability and disclaim any warranties. Additional information regarding name and contact details of company (individual) publishing the blog should also be stated.
If blog employs editors and / or guest authors, corresponding editorial and publication policy is mandatory, which should include writing & editing guidelines, disclaimers regarding original content, infringement of copyright (intellectual property rights or IPR) of third parties, moderation guidelines etc.
Most blogs maintain email subscription lists and subsequently collect data from visitors. Accordingly, appropriate privacy policy is also required. The privacy policy should clearly state purpose and mechanism for collecting personal data, types of data collected (name, email, phone number etc.), data protection mechanisms employed by blog owners (publishers), entities whose data is collected (visitors, users, customers, vendors, suppliers etc.), use of cookies, information related to tracking user traffic, information sharing and disclosure with third parties, un-subscription mechanisms, ways by which users can remove themselves from subscription list, etc.
Exemplary terms may be seen at Bits – The Business of Technology Blog by The New York Times. Terms and conditions are published here, while privacy policy can be seen here. Specific terms and conditions regarding user content is published here.
2. Membership Sites
Membership sites generally charge a fee (one-time, monthly or yearly) from users to provide exposure to valuable information, which may be used by the users to learn important skills.
In addition to above-mentioned legal disclaimers, terms & conditions, and, privacy policy, a refund policy is mandatory for membership sites. Also, the terms and conditions have to be detailed, specifically including important clauses like, user agreement, description of products and services provided to users, rights of users, user obligations, provisions regarding user account, security & password, domestic use vs. international use, user-generated (submitted) content, indemnity provisions, rights & restrictions for re-using, selling & publishing website content, termination of account, legal disclaimers regarding infringement of third party intellectual property rights, governing law, jurisdiction etc.
Exemplary terms may be seen at StudioPress website.
3. Affiliate Marketing | Review Sites | PPC Advertising
While general websites aim to drive huge traffic of visitors, marketing websites tend to refer products and services to the visitors. The affiliate marketing model generally provides purchase opportunities to the visitors by offering revenue percentage to affiliate marketing partners.
Certain websites follow PPC (pay-per-click) advertising model, wherein affiliates are paid every time a user clicks. Similarly, review websites publish expert reviews of products and services.
In addition to above-mentioned legal disclaimers, terms & conditions, and, privacy policy, specific affiliate agreement is advisable for such websites. Generally, the affiliate agreement shall include clauses related to, creating & managing affiliate account, pricing & revenue sharing mechanisms, rights & restrictions of affiliates, permissions, licenses & restrictions of usage, dispute resolution, payment terms, termination terms etc. Exemplary terms may be seen at Amazon Affiliate site.
For PPC advertising websites like Google AdSense, terms should include advertising details, how advertising works across multiple web & mobile platforms (iOS, Android etc.), use of cookies, use of location data etc. Google terms may be seen here.
Similarly, product review websites shall have specific legal disclaimers, terms and privacy policy customized as per the exact business model. Example terms of website consumersearch.com may be seen here.
4. Virtual Marketplace Model for On-Demand Services / Brokerage Model
In past few years, online marketplace for on-demand services has gained lot of traction. Examples include Uber for on-demand rides, AirBnB for on-demand stays, etc. Generally, these online business models operate upon a revenue sharing model, which can also be termed as brokerage model. For each transaction completed via the website or mobile application, the company charges a fee. This fee is usually charged from the vendor actually providing the service. So the consumers end up paying a flat fee for services.
Websites and mobile applications for on-demand services should carefully draft corresponding terms and conditions, privacy policy and user agreement. Uber has been facing regulatory hassles worldwide, so on its website, Uber has explicitly divided important legal provisions into sections such as, User Terms & Conditions, Privacy Policy, Security Policy, Copyright Policy and other provisions covering Zero Tolerance Policy, Non-Discrimination Policy, Uber Firearms Prohibition Policy, Guidelines for Law Enforcement Authorities, and, Guidelines for Third Party Data Requests. As it may be seen, these sections are applicable for jurisdiction of United States (US), and similar provisions can be seen for each geographical region Uber operates in. Depending upon local laws, the terms and conditions along with other sections will vary.
Considering the example of AirBnB, it offers two sections including detailed legal terms and policies. As may be seen, crucial legal provisions stated in website terms include clauses related to, rights & restrictions of guests for booking accommodation listings, rights & restrictions of members for accommodation listings, booking and financial terms for members, booking and financial terms for guests, member content, copyright & IP policy, dispute resolution mechanisms via arbitration etc.
5. e-Commerce Websites | Merchant Model | Online Marketplace
Companies like eBay, Amazon, Flipkart, SnapDeal etc. follow online marketplace model wherein third party vendors (sellers) are allowed to sell their products to buyers. Depending upon the extent of control exerted by marketplace provider, the legal terms required will vary. A detailed analysis of website terms of eBay, Amazon, Flipkart, etc. may be seen here.
Conclusion
Therefore, as may be seen from above examples, legal terms for website and mobile applications along with privacy policy have to be drafted in accordance with the online business model. It is advisable to follow best practices for drafting terms of use by using proper checklists (guide) for key clauses. You can also download free ebook for “Drafting Website Terms and Conditions – Important Legal Considerations” below:
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