The Contractual Rights and Obligations of Prosumers on Social Media Platforms

“The hideous ugliness of the term prosumer (the online creator, after Toffler 1980) should not hide the potential for the individual to move far beyond a caterpillar-like role as a producer of raw silk and encompass their ability to regenerate into a butterfly or moth”, said Brown and Marsden in their 2013 monograph Regulating Code. Good Governance and Better Regulation in the Information Age (MIT Press 2013, p. 184; see also SSRN). Translated into legal terminology, what they professed was a wish to create a regulatory framework that would enable content creators on the internet to take back some power over their creations from the Big Tech companies monetizing it based on generously drafted licensing agreements.

To this day, the question how to balance the rights of users against the powerful position of Big Tech remains a topic of contention. The European legislator has been a frontrunner with the adoption of the Digital Services Act (DSA) and the Digital Markets Act (DMA) in 2022. Still, these acts focus primarily on creating a “safe” online environment for users of internet services and online platforms. They do not address the question how the position of content creators — that is: prosumers — can be improved with regard to the value that they create, of which the operators of websites and platforms are still the main beneficiaries.

This contribution will consider the question how contract law can contribute to a fair balance between the rights of prosumers and online platforms, with a specific focus on social media platforms. It starts with an assessment of the values that contract law should reflect, proposing the recognition of use value alongside the exchange value of products on the market. The second part of the contribution will consider which mechanisms in contract law could be employed to do justice to both values.

Values

Alvin Toffler coined the term “prosumer” in his 1980 book The Third Wave, conflating the concept of the consumer with that of the producer. The prosumer is a natural person, not acting in the course of a business (i.e., a consumer) but also a creator (i.e., a producer).

The relevance of this concept is that it relates to a part of the economy that is mostly invisible. It concerns value created outside the market for mass produced goods and commodities, referred to by Toffler as Sector B. Taking note of the rise of “do it yourself” practices and in general acknowledging housework as part of economic productivity, Toffler stated: “But even in these words the “productivity” of the consumer is still seen only in terms of Sector B — only as a contribution to production for exchange. There is no recognition as yet that actual production also takes place in Sector A — that goods and services produced for oneself are quite real, and that they may displace or substitute for goods and services turned out in Sector B.” (The Third Wave, Bantam Books 1980, p. 280).

This conceptualization of markets can be applied without difficulty to content creators on social media platforms. They are creating the content that makes these platforms viable — TikTok videos, Facebook photos, Instagram vlogs — and can therefore be seen as prosumers.

But how does their work get rewarded? Although some content creators are earning large amounts of money through social media platforms, most are not. They are, however, not considered to be badly off. It has been said that “[i]t’s difficult to think of prosumers as exploited. This idea is contradicted, among other things, by the fact that prosumers seem to enjoy, even love, what they are doing and are willing to dedicate long hours to these activities without receiving anything.” (Ritzer & Jurgenson 2010).

Whilst that statement may be true, or may have been true for a long time, it dates back to the earlier days of social media use. Where we stand today, the rise of Big Tech has led to an increasing disparity between users and platform operators. The latter are earning billions of dollars on the basis of business models built on the analysis of user data, which allows for targeted advertising and hence attracts business users and advertisers. It seems at least dubious, morally as well as economically, that users are not seeing any of that income go into their own pockets.

To address this imbalance, one step forward would be to give recognition to the value created by users that does not have quantitative economic value on the market. That value, named exchange value, is recognized by law and forms the basis of the ways in which Western private law systems balance the interests of businesses, consumers and other private actors (see on European private law for example Michaels 2011). As was seen, however, prosumers on social media platforms also create qualitative value. They post photos, videos and other digital content aimed at connecting socially with other users of the platform. That social goal is not reflected in the exchange value that can be quantified in relation to products exchanged on a market. It should rather be seen as a satisfaction of needs in a qualitative way — a use value (see Henrique do Nascimento Goncalves & Furtado 2021).

That leads us to the question: how can contract law facilitate the recognition of the use value generated by prosumers on social media platforms?

Contract Law

One answer is straightforward: the parties to the contract have the possibility to stipulate such a reward. In some cases, social media platforms have started to offer payment to content creators, and in innovative ways. TikTok, for instance, contains a function allowing users to live stream content and collect payments from other users of the platform, for example, by performing a challenge. Australian “sleepfluencer” Jakey Boehm earned 34,000 dollars this way, simply by allowing other users to disrupt his sleep in exchange for money (Weiss & Bradley 2022).

Such reward schemes will only benefit the most popular content creators on social media platforms. In order to more generally reward use value, contract law itself could be assessed with an eye to strengthening the contractual position of prosumers vis-à-vis platforms. As a starting point for further debate, the following focuses on transparency and unfair terms control as means for addressing the imbalance between prosumers and social media platforms.

Licensing & Transparency

Most social media platforms stipulate in their terms and conditions that users, in exchange for having access to the platform’s software and interface, grant the platform a license for using the content that they create. Such licenses tend to give very broad permissions to the platform, as exemplified by Facebook’s terms of service, clause 3.3:

Specifically, when you share, post, or upload content that is covered by intellectual property rights on or in connection with our Products, you grant us a non-exclusive, transferable, sub-licensable, royalty-free, and worldwide license to host, use, distribute, modify, run, copy, publicly perform or display, translate, and create derivative works of your content (consistent with your privacy and application settings). This means, for example, that if you share a photo on Facebook, you give us permission to store, copy, and share it with others (again, consistent with your settings) such as Meta Products or service providers that support those products and services. This license will end when your content is deleted from our systems.

For individual users of the platform, this clause is part of the general terms and conditions. They are therefore in a ‘take it or leave it’ position: access to the platform is only available if they accept this term as part of their contractual agreement with the platform. However, if they reside in the EU and if they act in a non-professional capacity, they may garner some protection from the Unfair Contract Terms Directive (UCTD, Directive 1993/13/EEC). It stipulates that terms that are not individually negotiated can be set aside if they lack transparency or if they are substantially unfair; the latter is to be determined by a national court.

In a report for the European Parliament’s JURI committee, Marco Loos and Joasia Luzak note that Facebook’s previous iteration of this licensing clause was struck down by a Paris tribunal for lack of transparency. The tribunal considered the term unclear and confusing for not specifying the scope of the license, nor allowing users to terminate the license with the effect that their content would be removed (see their report, p. 40-41). Loos and Luzak recommend placing such terms on the grey list of the UCTD, containing terms that are presumed to be unfair and may be set aside at the request of the consumer or ex officio by a national court. That would mean that a term would only be valid if the platform provider proves that it has been brought specifically to the consumer’s attention at the moment of conclusion of the contract, and that it has been individually, separately and explicitly accepted by the consumer (p. 41). Of course a practical solution for the platform operator is to amend their terms and conditions so that they do pass the transparency test, which Facebook appears to have done.

The protection against a lack of transparency, of course, only goes some way towards protecting users of social media platforms. If the term is clear and intelligible, the user who agrees to it is bound by it. Another question is whether the term, substantially, creates an imbalance of rights and obligations between the parties that would, taking account of the requirement of good faith, constitute an unfair term in the meaning of Art. 3(1) UCTD. As things stand, that is not the case. There is no regulation preventing platforms from stipulating such a broad license. Under the EU’s Digital Content Directive (2019/770) the consumer’s provision of personal data (in the form of content) could even be seen as an exchange or counter-performance in relation to the platform’s supply of digital services (Art. 3(1) DCD).

Unfair Terms Control

Unfair terms protection can still be an instrument for addressing the imbalance of power between social media platform and prosumer. The UCTD has already had an effect on the fairness of terms used by social media platforms, even on platforms not located in the EU, to which it is not applicable. By way of illustration: Google updated its terms of service so as to comply with the European rules. Where its 2016 terms and conditions contained a clause on unilateral change of terms that violated the UCTD for lack of explanation (see Loos & Luzak 2016, p. 69), its current terms of service (as of 21 April 2023) are compliant.

The adaptation of terms and conditions by social media platforms located outside the EU can be seen as part of the “Brussels effect” (Bradford 2020). It makes a difference for users of social media platforms, as US law does little to protect them against unfair terms (for comparison, see Becher & Benoliel 2021 on the lack of unfair terms control US law).

Further strengthening of this regulatory framework is in the making. As part of the EU’s digital single market agenda, the UCTD is now up for reassessment to determine whether it needs updating to ensure fairness for consumers in digital markets. Part of this so-called ‘Digital Fairness Fitness Check’ are also the Unfair Commercial Practices Directive (2005/29/EC) and the Consumer Rights Directive (2011/83/EU). The responses to the European Commission’s consultation reveal that many stakeholders find that additional regulation is required to ensure fairness in the digital market. European consumer organization BEUC recommends blacklisting certain practices that result in disempowerment of the consumer in the digital market, such as terms giving the trader the right to unilaterally delete a consumer’s user account (see BEUC position paper, p. 11). Regulation should, however, as acknowledged by other stakeholders too, be considered in combination with alternatives such as “fairness by design” (compare the response of the Dutch Authority for Consumers & Markets).

Further Re-evaluation

Contract law, therefore, contains some tools that can push towards a fairer balance of rights between content creators and social media platforms already. Transparency is a first step, substantial fairness a second one. To radically change the position of prosumers on social media platforms, however, a thorough reassessment of fairness in digital markets is needed. Restricting the possibilities for platforms to unilaterally change their terms or to delete the user’s account will not in itself lead to a reward for use value generated by content creators. It will only protect them from disempowerment by the platform, for example in the form of losing access to their followers or fan base. The recognition of use value would require a deeper evaluation of the ways in which contract law views economic exchange.

Further avenues for research could examine whether data portability — that is, the possibility to move content from one platform to another — could effectively open up new ways for content creators to take control over their own creations (Kuebler-Wachendorff et al. 2021), or even more radically: whether content creation should be recognized as an economic activity for which platforms should be required to provide a reward in the form of payment.