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Streaming 101: The Business Side

In this post, I’ll be continuing my discussion about streaming. Last time, I focused on copyright considerations. As much as I love to ramble about copyright, I’d be remiss if I didn’t touch on an equally important part of streaming: the business stuff. Streaming properly and professionally lends credibility and legitimacy to the industry. I mean, you focus so much on getting your emotes, overlays, and stream persona just right – why not take that polishing all the way?

Terms of Use a.k.a. Terms of Services a.k.a. Terms and Conditions

When you sign up for a streaming service, you automatically enter into a contract called the “terms of service” (or something similar). The terms are found on the streaming services’ website and tell you what you can and can’t do on the service, rules about licensing, copyright, and trademark, termination, and how to resolve disputes. If nothing else, be sure to read and understand (1) what kind of content you’re allowed to stream/upload, and (2) what content/conduct is prohibited. Violating the latter can get you booted from the service.

Bottom line: Always, always, always read the terms of service – it’s boring and sometimes the language is convoluted, but it’s super important.

Incorporation

You’ve decided to take streaming to the next level as a side gig or even as a full-time pursuit. First off, congratulations! I’m excited for you. Second, you might want to think about incorporating. You can set up a corporation yourself, or get a lawyer to help (some folks like yours truly make it really easy!). There are, of course, pros and cons to incorporation, and your particular circumstances should be taken into account. Generally, the two main benefits of incorporation are limited liability and tax benefits.

Limited liability: Incorporation puts a force field between you/your assets and liability. Without a corporation, your personal assets (house, car, gaming rig, etc.) can be taken and sold to satisfy the debts of the business. But with a corporation, your personal liability is generally limited to the amount you put into the company.

Tax: Despite the name, fan “donations” don’t count as charity. They will count as personal income. Having a corporation lets you hold the money you make from streaming in the corporation and take your income piecemeal. This gives you more control over how much personal income you make from streaming, which in turn lets you minimize your tax return (we call this a “tax deferral”). The money that you leave in the corporation will then be taxed at a lower rate than if you were receiving it personally.

Marketing

You might have the opportunity to get sponsored by a brand. These can be one-offs, like showing off a product or participating in early-access, or a longer-term deal. Sponsorships are wonderful opportunities to work with a brand you love and earn some extra dosh while you’re at it.

Two things to look out for here:

(1) Contracts: You might not need a contract for a one-off, but for a long-term sponsorship, there will likely be a contract between you and the brand. Be sure to review this carefully before signing (maybe even have a second pair of eyes on it too) and note what your obligations are going to be: How frequently do you have to stream? Are there specific terms or copy that the brand wants you to say? Are there competitors that you can’t work with anymore? Also, know your rights! When and how will you be paid? And how can you terminate the agreement if necessary?

(2) FTC Guidelines: The US Federal Trade Commission has rules on how to promote sponsorships properly online (Canada doesn’t quite have the same set of rules, but similar ones can be found in the Competition Act). The brand may coach you on how to disclose the sponsorship online, but either way, you can stick to the following principles:

  • Disclose clearly: Make it very explicit that your stream is being sponsored by the brand. Saying something like “Shoutout to Doritos, they’re awesome!” is not enough. Instead, say something like “This stream is sponsored by Doritos, they’re awesome!” (Full disclosure: This post is not sponsored by Doritos…)
  • Disclose obviously: Give your spiel about the sponsorship at the start of the stream, periodically throughout, and at the end. Also, place “#ad” in the title of your stream, in the description, everywhere you can.
  • Be truthful: Don’t make up claims about a product, don’t say you loved a product if you didn’t, and don’t talk about your experience if you haven’t used the product.

Note: this disclosure requirement applies to all other social media platforms as well. So if you take to Instagram or Twitter to promo your sponsored stream, also include “#ad” for safe measure.

Dealing With Others

There are many ways you can interact with other streamers, but a couple can land you in hot water.

Say there’s a popular streamer you look up to and think their endorsement might boost your views. As much as you may want to name-drop, you can’t say someone is your fan or has endorsed you when they actually haven’t. A made-up endorsement basically amounts to false advertising.

Now say there’s a streamer you don’t get along with and you want to roast them. Don’t. There’s a chance of getting carried away and saying something “slanderous” (a fancy word that means knocking someone’s character and damaging their reputation based on false claims).

It’s always better to deal with business problems upfront. After reading this post, hopefully you’ll agree to some extent. Responding to a complaint or lawsuit after the fact is way more stressful and can be much more expensive. So if you need someone to assess your stream situation, give us a shout!





Alexandria Chun

Alex is a Lawyer at Spark LLP. Having joined the firm as its first articling student, Alex spearheads the firm’s video game and esports practice. 

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