Digital content creators are a dime a dozen these days, but only a few make a living from their work. These artists and entertainers need an airtight contract to ensure their earnings and reputations are protected, and typically negotiate a specialized partnership agreement with their streaming platforms. These deals are subject to NDAs and protected from public scrutiny.
Attorneys representing up-and-coming content makers face a challenge, because past contracts can’t be used as a reference when negotiating for their client. However, there are ways to discover what matters to the top distribution platforms by looking at publicly available documents. For instance, Twitch, a live-streaming service made popular by gamers, has an Affiliate Agreement that can provide clues to strengthen bargaining power.
In what follows, an analysis of this Agreement alongside some telling case histories illuminates how creators can build a fair and lucrative relationship with their streaming services. Keep reading to discover how available documents and information can offer excellent clues for contracting a strong partnership for all involved.
Questions in this Episode
- What should you keep in mind when negotiating exclusivity?
- What should drafters keep in mind when drafting limitation liability clauses?
- How can drafters decide whether to opt for arbitration on the basis of the scope of the agreement?
- How can you draft so that you can protect your client?
- What’s the best way to deal with contracts of adhesion?
The Background
The Twitch affiliate agreement is signed when you become an affiliate by meeting certain predetermined benchmarks. Twitch is a live streaming platform similar to YouTube, except that everything happens in real-time and different creators can have different levels of privileges where people can pay to subscribe to their content and ultimately make a lot of money. Hannah Baker’s article featured a story about a streamer named Doctor Disrespect. He now streams on YouTube, but he had a seven-figure deal with Twitch to exclusively stream on that platform.
One day he logged into his account and discovered that he had been permanently banned for no apparent reason. His subscriber’s subscriptions had all been refunded. Now, there’s a lot of back and forth, settlement talks, and trying to figure things out behind the scenes, because that’s a lot of lost income. Twitch makes 75% of the live streaming market, and being unable to stream on the platform could have a significant impact on Doctor Disrespect’s profits.
Tiers of Creators
Twitch has three different tiers of creators. A regular creator is someone like you or me who creates a Twitch account and streams for fun. You must meet certain criteria in order to become an affiliate. When you sign up as an affiliate, your content is monetized and you earn ad revenue. People can start subscribing to you, sharing “bits,” which is a currency on Twitch, and you can start making money.
Everyone receives the same affiliate agreement, the same percentage of subscription revenue, and the same ad revenue. If you become extremely successful, you can apply for Twitch’s partner program, which has individually negotiated contracts with each of their partners in which they can negotiate for a higher percentage of subscription revenue exclusivity with the platform. These partners are at all ranges of income levels, but there are exclusivity agreements for seven figures with the platform, and things can get intense.
Live Content Exclusivity
It’s critical to understand that the affiliate agreement and the partner agreement are not the same things. The affiliate agreement cannot be negotiated. If you want to be an affiliate, you must agree to their terms and sign an adhesion contract. There isn’t much you can do about it. However, observing these terms can provide insight into what Twitch finds important.
You can’t upload any video of your live streaming content for 24 hours in the context of the affiliate agreement, which means you can’t upload a VOD to YouTube for at least 24 hours after posting on or streaming on Twitch. You also cannot multi-stream to multiple platforms, which is a popular practice among streamers until they reach the affiliate level. That is something to keep in mind.
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2.2. Live Content Exclusivity. Solely for any live audio-visual work you choose to provide to us as User Content (your “Live Twitch Content”), starting from beginning of the Initial Broadcast of any such Live Twitch Content, and continuing for a period of twenty-four (24) hours following the end of the Initial Broadcast of such Live Twitch Content (the “Exclusivity Period”), such Live Twitch Content is exclusive to Twitch (even as to you). During the Exclusivity Period of any Live Twitch Content, you will not, nor permit or authorize any third party to, broadcast, stream, distribute, exhibit and otherwise make available such Live Twitch Content in any manner. Notwithstanding the foregoing, you have the right to make any Live Twitch Content available, during the Exclusivity Period, solely via the Twitch Services. After the Exclusivity Period of any Live Twitch Content, the license to such Live Twitch Content will become non-exclusive and you will have the right to broadcast, stream, distribute, exhibit and otherwise make available such Live Twitch Content in any manner and format desired by you. The “Initial Broadcast” means the initial broadcasting, streaming, distribution, or other exhibition of Live Twitch Content via the internet, whether such Live Twitch Content is broadcast on a real-time, live basis as the subject event is occurring or such Live Twitch Content has been prerecorded and is being initially broadcast for the first time via any manner or method of streaming. |
It is critical to consider how you want to formulate content exclusivity language in a partner agreement. For example, we have Nick Mercs, Ninja (previously Tim the Tap Man), Dr. Disrespect, and Dr. Lupo who are making a lot of money and being compensated for their exclusivity in not having that content anywhere else.
Exclusivity is going to be a huge point of negotiation in formulating partner contracts on Twitch. - Hannah Baker #ContractTeardown Click To Tweet
Limitation of Liability
Recently, a streamer named Phantom Lord was involved in some income-control litigation. In 2014, he was a Twitch CSGO streamer. Twitch was in its early stages before being acquired by Amazon. He was a top eight streamer on the platform, earning at least USD 10,000 per month, which was substantial at the time. He had a partner agreement with Twitch, and they permanently banned him from the platform in a manner similar to Dr. Disrespect.
Except for this time, they alleged his involvement with a CSGO skin gambling website and made some ultimately found to be unsubstantiated allegations against him, and yanked his ability to stream on the platform, despite Twitch having a 75 percent market share in live streaming. If you can’t stream on Twitch, you’re losing a significant portion of your available income. You’ll never be able to reach the same audience that you would if you could take advantage of the platform.
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13. Limitation of Liability.NEITHER WE NOR ANY OF OUR AFFILIATES OR LICENSORS WILL BE LIABLE TO YOU FOR LOST REVENUE, LOST PROFITS, LOST BUSINESS, OR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES) ARISING FROM OR RELATING TO THIS AGREEMENT OR THE PROGRAM. FURTHER, OUR AGGREGATE LIABILITY TO YOU, UNDER ANY THEORY OF LIABILITY, IN CONNECTION WITH THIS AGREEMENT AND THE PROGRAM WILL NOT EXCEED THE FEES PAID OR PAYABLE TO YOU UNDER THIS AGREEMENT IN THE TWELVE MONTHS IMMEDIATELY PRECEDING THE DATE ON WHICH THE EVENT GIVING RISE TO THE MOST RECENT CLAIM OF LIABILITY OCCURRED. |
So he sued and eventually won. What was interesting was that there was a hearing regarding the liability limit during the course of this lawsuit. His partner agreement limited Twitch’s liability for any issues arising from the contract to USD 50,000, despite the fact that he was earning at least USD 10,000 per month. If something were to happen, there wouldn’t be much to recover in terms of his income, especially given that it would jeopardize his ability to secure sponsorships and endorsements in the future, not just direct Twitch revenue. In an unexpected decision, the judge ruled that the limit on liability was unconscionable and did not apply in the hearings because it was far too low given the income.
Is Arbitration the Right Solution?
There are so many different ways to make money with affiliates. Section 4.1 discusses payment terms. Affiliates are not paid until they have accumulated at least $100 in their account. Affiliates are sometimes only paid twice or three times a year. So you have people at the very bottom who aren’t making much and probably don’t have much at stake.
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16. Arbitration. Any dispute or claim relating in any way to this Agreement, the terms thereof, or your participation in the Program that arises between the parties (including the parties’ respective parent, affiliate and/or subsidiary entities) will be resolved by binding arbitration as described in this paragraph, rather than in court, except that (a) you may assert claims in a small claims court if your claims qualify, and (b) either party may bring suit by submitting to the courts in the aforementioned jurisdiction and waiving such party’s respective rights to any other jurisdiction to enjoin infringement or other misuse of intellectual property rights. There is no judge or jury in arbitration, and court review of an arbitration award is limited. However, an arbitrator can award on an individual basis the same damages and relief as a court (including injunctive and declaratory relief or statutory damages), and must follow the terms of this Agreement as a court would. For you to begin an arbitration proceeding, you must send a letter requesting arbitration and describing the claim to Twitch’s registered agent, Corporation Service Company, 2710 Gateway Oaks Drive, Suite 150N, Sacramento CA 95833. Arbitration shall be conducted by the American Arbitration Association (“ AAA ”) under its rules, including the AAA’s Supplementary Procedures for Consumer-Related Disputes. Payment of all filing, administration, and arbitrator fees will be governed by the AAA’s rules. We will reimburse those fees for claims totally less than $10,000 unless the arbiter determines the claims are frivolous. Likewise, we will not seek attorneys’ fees and costs from you in arbitration unless the arbitrator determines the claims are frivolous. You may choose to have the arbitration conducted by telephone, based on submissions, or in person in the county in which you are located, or the agreed upon jurisdiction described above. The parties agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in arbitration, the parties each waive any right to a jury trial. |
When there isn’t as much at stake, alternative dispute resolution makes more sense. When it comes to seven-figure contracts, there is a lot more at stake. Alternative dispute resolution and going to court both have advantages and disadvantages. It may be in the best interests of both parties to keep things more private and confidential. It may be in the streamer’s best interests to absolutely blast Twitch in court and harm Twitch’s reputation.
Modifications
I think it's silly to have a party to a contract that has a 100% ability to change whatever they want. - Hannah Baker #ContractTeardown Click To Tweet
When it comes to modifications, there are thousands of people in the affiliate program. It wouldn’t make much sense to have a contract with each affiliate individually and get them to sign off on a modification.
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10. Modifications. Twitch reserves the right, at our discretion, to change, modify, add, or remove portions of this Agreement at any time (for example to reflect updates to the Twitch Service or to reflect changes in the law). If Twitch changes this Agreement, we will provide you notice of these changes, such as by sending an email, posting a notice on the Twitch Service or updating the “Last Updated” date above. Please check this Agreement periodically for those changes. Modifications may include, for example, changes to the Program Fees, Program eligibility, payment procedures, and other Program requirements. IF ANY MODIFICATION IS UNACCEPTABLE TO YOU, YOUR ONLY RECOURSE IS TO TERMINATE THIS AGREEMENT. YOUR CONTINUED PARTICIPATION IN THE PROGRAM FOLLOWING THE EFFECTIVE DATE OF ANY MODIFICATION (E.G., THE DATE OF OUR POSTING OF A CHANGE NOTICE OR REVISED AGREEMENT OR THE DATE SPECIFIED IN ANY EMAIL TO YOU REGARDING SUCH MODIFICATION) WILL CONSTITUTE YOUR BINDING ACCEPTANCE OF THE CHANGE. |
The main concern here is that Twitch will reserve as much power for itself as it can reasonably get away with in any of its contracts. This becomes more of an issue in partner contracts, where a lot more money is at stake.
Streamers such as Dr. Disrespect and Phantom Lord were cut off unilaterally. We can’t see their contracts, but can Twitch change them? It’s critical to remember how Twitch modifying a partner contract is far more devastating than an affiliate agreement with tens of thousands of people.
Contracts of Adhesion
Partner contracts are heavily guarded by NDAs, so there’s a lot of information we don’t have access to, which puts attorneys at a disadvantage when they go into these negotiations, trying to advocate for their clients as best they can. That’s why it’s critical to use an agreement like this to get a sense of what Twitch will want going in. Obviously, it will not be the same. However, you can see a window into what they care about and use that to your advantage when negotiating. Be armed with that knowledge of what your client is capable of obtaining, what you can bargain for, and what Twitch may be willing to accept.
The only information you can obtain about partner contracts is what Twitch or the other parties to those contracts choose to reveal to you. - Hannah Baker #ContractTeardown Click To Tweet
If you would like to know more about Dr. Disrespect and Twitch’s tussle, you can go to Case Western Reserve University’s Law Review website, Scholarly Commons, and find Hannah Baker’s note under Volume 71, issue four.
Show Notes
Some content streaming services have been known to unfairly cut off lucrative partnerships, so it’s important that creators protect themselves with an airtight contract. In this episode, attorney and digital entertainment enthusiast Hannah Baker tears down Twitch’s Affiliate Agreement, which thousands of digital content makers sign in order to stream on the platform. She explains what this contract of adhesion—along with some interesting case history—can tell us about drafting for high-earning content partnership deals.
THE CONTRACT: Twitch Affiliate Agreement
THE GUEST: Hannah Baker is a general corporate attorney with a personal passion for legal issues related to video game streaming, content creation, and esports. She went to Case Western Reserve Law School and is a contributing editor of the Case Western Reserve Law Review on issues regarding Twitch and video game streamers.
THE HOST: Mike Whelan is the author of Lawyer Forward: Finding Your Place in the Future of Law and host of the Lawyer Forward community. Learn more about his work for attorneys at www.lawyerforward.com.
If you are interested in being a guest on Contract Teardown, please email us at community@lawinsider.com.
Interview Transcript
Mike Whelan Hannah Baker, welcome to The Contract Teardown Show. How are you today?
Hannah Baker Good. Thank you so much for having me.
Mike Whelan I love episodes like this because we’re going to talk about things that my kids will actually respect me for. We are talking about the Twitch Affiliate Agreement. Before we get into this, Hannah, what is this thing? When are we going to see this kind of document?
Hannah Baker The Twitch Affiliate Agreement is the agreement that you sign when you become an affiliate on Twitch, which you can do by meeting some predetermined benchmarks.
Mike Whelan I like how you said signed with a lot of emphasis to be, like, we’re not actually signing things. We’ll dig into that. But before we do, tell us about your background. What brings you to documents like this one?
Hannah Baker So I have a vested interest in e-sports and video game streamers. And as a contributing editor on the Case Western Reserve Law Review, I wrote my comment on Twitch contracts with partners and how partners might be able to have recourse against Twitch when Twitch goes wrong.
Mike Whelan Okay, before we dig into it, I want to dig into that because most of the people listening to this have no idea what Twitch is. I didn’t know what Twitch was when my kids tried to explain it to me. It was yesterday. Okay, it was a couple of weeks ago. But anyway, I didn’t totally know what it was. So you wrote this piece, this article, that went in the law review about a specific instance. Why don’t you do me a favor and frame what Twitch is, using that story. What happened in the incident that you profiled in your piece?
Hannah Baker Absolutely. So to give some context, Twitch is a live-streaming platform. It’s very similar to YouTube, except everything happens live and different creators can have different levels of privileges where people can pay to subscribe to their content and ultimately can make quite a bit of money. The story that I profiled in my article was about a streamer named Dr DisRespect. He now streams on YouTube, but he had a seven figure exclusivity deal with Twitch to stream exclusively on that platform. And one day he logged into his account and he had been permanently banned without any reason being given. And all of his subscribers had been refunded their subscriptions. So now, behind the scenes, there’s a lot of back and forth and settlement talks and all kinds of trying to figure out exactly how to settle that, because that’s a lot of lost income. Twitch makes up 75% of the market share for live streaming, and not being able to stream on the platform anymore could drastically affect Dr DisRespect’s profits.
Mike Whelan Yeah, it’s cool drama and especially because the advice around a lot of these content spaces—and I say this as essentially a content creator—is you should not build on rented land, you should build in your own place. And what they’re talking about there is that there are platforms, and they become really powerful. And the reason they become really powerful is because we put stuff on there. We’re the product on Facebook. And so the advice is, don’t build on rented land. But it’s more complicated than that, both for market reasons and for legal reasons, which we’re going to get into in this episode. So we’re going to walk through the Twitch affiliate agreement with the perspective that this is someone who is going to be a streamer on the space. Before we dig into it, let’s talk about the background terms a little bit. What is the role of an affiliate? I don’t know. You know, I can go on YouTube right now and I can post a video on YouTube right now, but that doesn’t automatically mean that I’m monetizing. It definitely doesn’t mean that I have an exclusivity deal the way that guy did. So, like, what’s the relationship? Does everybody sign this who gets on affiliate—or on Twitch?
Hannah Baker Not necessarily. So there are three different tiers of creators on Twitch. There’s a regular creator, which would be like you or me making a Twitch account and just streaming for fun. There are certain benchmarks that you can meet to become an affiliate. When you become an affiliate, your content gets monetized; you get ad revenue; people can begin to subscribe to you; they can share bits to you, which is a currency on Twitch. So you can start generating money on Twitch. But everybody gets the same affiliate agreement, everybody gets the same percentage of that subscription revenue, everybody gets the same amount of money from the ads. However, if you become very successful, you can apply for Twitch’s Partner Program. And Twitch’s Partner Program has individually negotiated contracts with each of their partners, where they can negotiate for a higher percentage of subscription revenue, um, exclusivity with the platform. And these partners are at all range of income levels, but there are exclusivity agreements for seven figures with the platform and so it can get really intense.
Mike Whelan Yeah, it reminds me of what happened with Vine. For people who don’t know, you know, Vine sort of disappeared because their creators, there was a dozen of them that said, fine, you’re going to give a seven figure deals and we’ll post exclusively here. And Vine said no, and those creators left, and now Vine is dead. So this is really important to the business model. Let’s talk about the IP. So in 2.2, it’s the Live Content Exclusivity. There is a 24-hour period on here that the content, it says, it’s exclusive to Twitch even as to you during the exclusivity period, you will not permit, authorize any party to broadcast, stream, distribute, exhibit or otherwise make available the content in any manner. What do you think about the way they’re dealing with the exclusivity, the timeline on it in Section 2.2?
Hannah Baker So it’s important to remember that the affiliate agreement and the partner agreement are not the same. The affiliate agreement, you can’t negotiate. If you want to be an affiliate, you have to agree to their terms—contract of adhesion, there’s not really much that you can do about it. However, looking at these terms can give us a window into what Twitch finds important. So when we as attorneys are negotiating on behalf of our clients who are seeking to become partners and have individually negotiable contracts, we can use this language that Twitch has used before and figure out how we can best benefit our clients here. So in the context of the affiliate agreement, you can’t upload any video of your live-streaming content for 24 hours, which means that you can’t upload a VOD to YouTube for at least 24 hours after posting on—after streaming on Twitch. And you also can’t multi-stream to multiple platforms, which is a popular thing that a lot of streamers like to do until they get to this affiliate level. So that’s important to keep in mind. Thinking about how you want to formulate content exclusivity language in a partner agreement is important and Twitch should be paying for it. And that’s something to keep in mind as you’re negotiating. For example, we have, like, Nickmercs, Ninja and previously TimTheTatman, Dr DisRespect, DrLupo. We have a lot of streamers at the very high levels making a lot of money, and they’re getting paid for that exclusivity, for not having that content anywhere else. So exclusivity is going to be a huge point of negotiation in formulating partner contracts. So that’s really important to keep in mind.
Mike Whelan Well, especially because, you know, the point you made about, what was the guy’s name, Dr. Doobad? Dr. Doostuff?—
Hannah Baker —Dr DisRespect
Mike Whelan —that guy! [Both laugh.] You know, they made this unilateral because he’s literally building on rented land. In this case, I assume we don’t know the exact terms of his particular contract—
Hannah Baker —We don’t
Mike Whelan —Yeah, but we can pull some truths from this. And if you jump down to 13 to Limitation of Liability, in all caps it says, “We’re not liable for lost revenue.” They made the decision to pull him off, to give everybody their money back. Is 13 really a realistic way to deal with this loss of income, if they’ve got all the control on where the income goes?
Hannah Baker That is an excellent point. There was actually some litigation surrounding this recently with a streamer named Phantom Lord. He was a CS:GO streamer on Twitch back in 2014—so this is in the younger days of Twitch, I believe before Amazon took them over. He was a top eight streamer on the platform. He was earning a lot for Twitch at the time. He was earning at least, like, 10k a month, which at the time was really substantial, had a partner agreement with Twitch, and they permanently banned him from the platform in a very similar fashion to Dr DisRespect. Except this time, they alleged his involvement with a CS:GO skin gambling website and made some ultimately found-to-be- unsubstantiated allegations against him, and yanked his ability to stream on the platform. Which again, Twitch being 75% of the live-streaming market share, if you can’t stream on Twitch, that is a massive amount of your available income that is shut off. You’re never going to be able to get the same audience that you would be able to if you’re able to take advantage of the platform. So he sued, ultimately won, but what was interesting is in the course of this lawsuit, there was a hearing regarding the limit on liability. His partner agreement capped Twitch’s liability for any issue arising out of the contract at 50k and he was making at least 10k a month. So if something were to happen, that’s not very much to recover in the context of his income, especially given the fact that it would handicap his ability to get sponsorships and endorsements down the line, not just purely revenue from Twitch directly. And the judge, in a very surprising decision, actually ruled that that limit on liability was unconscionable. And it didn’t apply in the hearings, because it was far too low given the income that he was bringing in.
Mike Whelan That’s interesting. Just to call back the idea of the sponsors, you know, the sponsors are giving these people money on the assumption they’re still going to be on the interwebs later. Yeah, it’s interesting that they can just pull that. Well, speaking of litigation, if we jump down to 16 in Arbitration, we’ve talked about arbitration several times. It’s interesting in this sort of platform conversation because you’ve got a relationship like eBay, for example, where famously they do everything in alternative dispute resolution because they’re tiny transactions. And so they’ve had to build a whole system for dealing with these tiny transactions. Do you think arbitration is actually a good solution for the scope of an affiliate, but maybe not good for the higher end relationship you were talking about?
Hannah Baker I think it really depends. I think with affiliates, there is such a range of moneymaking going on with affiliates. You have affiliates that if you—I don’t know if you looked in, oh, shoot, what’s the section? Hold on, let me pull it up. In Section 4.1, it talks about payment terms: affiliates don’t get paid out until they accrue at least $100 in their account. And I personally am friends with affiliates that only get paid maybe twice, maybe three times a year. So you have people at the very low end that aren’t making that much, probably don’t have that much at stake. Alternative dispute resolution would probably make more sense when there just isn’t as much at stake. But when you get into seven figure contracts, there’s obviously a lot more at stake there. And there are pros and cons to alternative dispute resolution and going to court. It might be in both parties’ best interests to keep things more private and to keep things more confidential. And it also might be to the streamer’s benefit to absolutely blast Twitch in court and harm Twitch’s reputation, you know? So I’m not necessarily saying that all alternative dispute resolution is definitively not good to have in your agreement. But it’s important to remember that alternative dispute resolution does benefit Twitch so you can use that as a bargaining chip. I’m giving you something valuable in the event that you mess up and screw me over. So I need something in exchange for that.
Mike Whelan Mm, yeah. Well, looking at 14, The Relationship of the Parties, this is so fascinating to me. We talked about this with the Uber contract that Uber will basically make it so hard for you to not work for Uber all the time that functionally, you are an independent contractor—or you’re not an independent contractor. Functionally, you’re an employee. It seems like the same can be true based on what you just said about the range of different, you know, types of creators. It makes perfect sense, maybe, that the relationship with the parties in 14 would be independent contractor for my son deciding to go play Super Mario Brothers—I don’t know if you could play Super Mario, it’s the only video game I can think of—for hours.
Hannah Baker Oh yeah, you can do anything you want on Twitch! [Laughs.]
Mike Whelan Perfect. That seemed way too inclusive for my son. But, you know, if he wants to go do that for a while, he’s an independent contractor, he’s running his own thing, he’s making his own thing, he’s very separate. But some of these people, this is very close to a job. They do this all day, they create a ton of value for Twitch. And presumably, Twitch is using a lot of those same incentives that Uber is that makes it really hard to not be on Twitch all the time. What do you think of the way Twitch is writing up this section about the relationship of the parties? Do you think it’s well-adapted to the circumstance?
Hannah Baker I believe it is. I personally—in my note, you can see I have a huge section discussing this very issue of independent contractors and ultimately organization and how those relate to each other. Any way you cut it, when you analyze the definition of an independent contractor, being a Twitch streamer fits. Because even if you’re in a position where this has to be your full time job and this is all you do, the thing that makes you an independent contractor, ultimately, in my opinion at least, is the fact that you have complete control over your content, over what you do, over how you edit, over your schedule, over everything; which I believe is different to Uber, because Uber dictates exactly how you have to make the pickups, exactly how you pick up customers, exactly what routes you have to take, exactly when you you drive. I believe there’s definitely more of an argument there for an employee situation. But with Twitch, Twitch doesn’t really tell you what you have to do. They just give you the opportunity to monetize your content. So ultimately, you are a business that is creating content on the platform. This is important to think about, not because it’s necessarily something that you can change by contract, but it affects your bargaining power. One thing that a lot of streamers and actually YouTube content creators alike have called for is unionization of streamers and unionization of content creators. But really, based on the current labor laws, this isn’t really possible because everyone is independent contractors. You can’t collectively bargain with platforms because it creates antitrust issues. So that’s something to think about and something that you can read more about in my law review article.
Mike Whelan Gotcha. Well, on number ten, as we—as our last point here, under Modifications, I love the all caps: “If any modification is unacceptable to you, your only recourse is to terminate this agreement. Your continued participation in the program following the effective date of any modification is basically up to you,” you dumb-dumb. You get what you get, as my mom used to say, and you don’t throw a fit. What do you think about Section 10 and the modifications?
Hannah Baker I think it’s a little silly to have a party of the contract have a 100% ability to change whatever they want, and if you don’t like it, then it’s your own fault and just don’t use the platform. However, in the context of an affiliate, I mean, there are thousands and thousands and thousands of people in the affiliate program. Realistically, it probably wouldn’t make much sense to do it any other way because the alternative is what? Have—contact each affiliate individually and get them to sign off on a modification? When you have a contract where it’s with such a large number of people, that’s kind of the only thing that makes sense. My concern here comes with the idea that Twitch is going to want to reserve as much power for itself in any of its contracts as it can reasonably get away with. And this becomes a bigger issue in partner contracts where there’s a lot more money at stake. And you have streamers like Dr DisRespect and Phantom Lord, where they were unilaterally cut off. We can’t see their contracts, but is Twitch allowed to modify those? It’s important to remember how Twitch modifying a partner contract is so much more devastating, I would assume, than an affiliate agreement that is with thousands and thousands of people. So making sure that there is language in the modifications section that protects your client is super important. Maybe modifications need to be mutually agreed upon. Maybe if Twitch wants to make a modification, extra consideration needs to be there to make sure that it’s worth it for the client. There’s a lot of ways you can go about this, but it’s important to pay attention to because Twitch is going to reserve as much power for itself as possible.
Mike Whelan It’s an interesting thing. Like, how do these scaled platform businesses work if you treat them with normal legal protections? And maybe we say they don’t work, and that’s okay, because we said those legal protections matter. I think there’s a really big question in there, but I also think you’re doing something really interesting with this document that can be applied to a lot of other circumstances, which is: when you’re getting to these partner-level agreements, you’re looking at these contracts of adhesion as some kind of lesson, some kind of starting point to tell you this is what the company values. This is the kind of stuff that they’ll want to talk about. We can use this in our negotiations later. But it reminds me of when I did mediations in family law, for example, in Texas, which is a very legalistic thing, where throughout the whole mediation you would say, Hey, we’re trying to come up with something custom and something new, something adapted to you. But if this doesn’t work, then we’re going to go to court and here’s what’s going to happen. It seems to me like if you’re thinking about this as you’re negotiating partnership agreements with this document in the background, you might be rooting yourself in this document in a way that you might not otherwise if you were negotiating from scratch. What do you think about the relationship of these kinds of contracts of adhesion and a negotiated contract with similar parties?
Hannah Baker It’s so hard to know because the partner contracts are so locked under lock and key. They’re so tightly guarded. And the only things that you can know about those contracts are what Twitch or the other parties in those contracts decide to tell you. I’m sure they’re very heavily guarded by NDAs, so there’s a lot of information that we just can’t know, which puts attorneys at a disadvantage when they’re going into these negotiations, trying to advocate for their clients as best they can. But they just don’t know what they’re up against because all of the other agreements are so tightly guarded. And that’s why I think using an agreement like this to have an idea of what Twitch is going to want going in is important. Obviously, it’s not going to be the same. The way that they treat an agreement that they’re going to have with thousands and thousands of people is going to be very different to the agreement that they were going to try and draft with an individual streamer. But you can see what their priorities are. You can see a window into the things that they care about, and you can use that to your advantage to go into negotiations armed with that knowledge of what your client can get, what you can bargain, and what Twitch might be willing to accept.
Mike Whelan Yes, I think it’s so fascinating. And to your point, like, a lot of the power in that partner negotiation is not coming from this document as a base. It’s coming from the fact that it’s Twitch. But to your point, like going back to the Vine thing, you actually do have a lot of power, if you’re a creator, that they really want you to be there. You’re actually the product. You have a ton of power and you know, just drop the Vine story and say, me and my 12, my 11 buddies, we’re all going to leave and you’re all going to be broke and we’re going to go find something else. Well, I appreciate you sharing this, Hannah, it’s a really interesting example. Tell us again, where do we find the note that you created about this Twitch issue?
Hannah Baker So you can actually find my law review article on Case Western Reserve University Law Review website Scholarly Commons. Volume 71, Issue 4.
Mike Whelan And we’ll make sure to have that included at the blog post over at Law Insider dot com slash resources. And if you want to be a guest on The Contract Teardown show, just email us, we are at community at law insider dot com. Hannah Baker, thanks again. We’ll see you online.
Hannah Baker Thanks so much!