Legal Tips for Operating and Hosting a Podcast – Business Formations, Contracts, and Disclosures
By Justin M. Jacobson, Esq.
Building off a previous article, with the rise of individuals, professionals, and businesses hosting, creating, and distributing their own podcast shows or series, it is crucial that a podcast operator is aware of the some of their mandatory obligations as well as some legal protections available to properly protect their personal and business interests. As a result of the commercial and public relationship, podcasts are subject to a variety of legal rules, including Federal Trade Commission (FTC) endorsement regulations as well as disclosure requirements for any paid “on-air” and social media advertisements. Additionally, it is crucial for a “for-profit” podcast to ensure that they comply with any applicable state, federal and international laws to avoid potential liability. Furthermore, as a podcast grows, proper agreement structure is extremely valuable, including executing written documents with any co-hosts, guests, and any other individual involved in the editing, production, or creation of a podcast.
Podcaster Tax Liability and Business Protections such as Corporations and LLCs
It is important to be aware that once a podcast generates revenue, the operator is “in business,” whether they earn money through the sale of on-air advertisements, sponsorships, or even something as small as an affiliate code or displaying a paid banner on the podcaster’s website. Specifically, the act of receiving income by publicly distributing a podcast imposes several legal obligations on the content’s proprietor.
Considering these requirements, a podcaster might contemplate forming a formal business entity, such as a corporation or a limited liability company (LLC). These entities shield and protect the owner from personal liability for any claims related to the podcast’s operation. This fact means that the company, not the actual owner of it, is liable for the podcast’s debts and contractual obligations. As a result, any potential podcast creditors generally can only recover money from the business and not from the individual owner’s personal assets, such as their bank accounts, property, cars, stocks, or other personal holdings.
While protecting a podcast creator from personal liability is an important advantage of forming a business, another one is that having a separate business entity permits the podcast to open a business bank account in the entity’s name. This option facilitates easier tracking of the podcast’s expenses and permits the potential deduction or “writing off” of relevant, properly documented business expenditures related to the podcast’s operation. These business entities also provide streamlined management over any podcast owned intellectual property (i.e., trademarks, copyrights, logos, podcast episodes, podcast anthems, podcast artwork) as well as any physical property (e.g., recording equipment, microphones, pop filters, lighting). Additionally, if there are multiple owners of a podcast, the creation of a business entity enables its owners to create a written contract that outlines how the podcast network will operate. This document is usually in the form of an LLC Operating Agreement or Corporate Shareholder Agreement. These documents generally states each owners’ share of any profits/losses as well lists each persons’ ownership rights (if any) in the podcast assets, such as the finished podcast, the show’s creative assets (logo, artwork, animations), as well as the network’s social media, website, and promotional assets. This information is in addition to many other contractual provisions related to the operation and management of the business.
Finally, since a podcaster is earning revenue from their venture, even if it is a small amount, the operator must be aware of and pay any federal, city and/or state corporate tax obligations owed on any income that the podcast generates. Furthermore, a podcast may be required to obtain a business license or some other formal authorization to legally operate their podcast in a particular area or state. Since these requirements vary by jurisdiction, it is important for a podcast owner to understand the applicable statutes that their company must adhere to. Failure to follow the required licensing requirements as well as the failure to file and remit the required corporate taxes can subject a podcast owner to potential liability, including for monetary penalties and fees or worse.
Written Agreements with Podcast Co-Hosts, Guests, Producers, Engineers, and Editors
In addition to forming a business entity, it is best practice for a podcaster to execute a written document with any party that produced or contributed to the creation and publishing of a podcast episode. This procedure is beneficial to ensure that the podcast network possesses all the necessary rights, consents, and clearances to utilize the finished podcast for commercial and non-commercial purposes or in any other way that the podcast operator chooses. This protection is particularly important when more than one party is a host of a podcast as well as if there are any third-party guests on the episode. Similarly, it is beneficial to ensure formal documents are signed by any third-party involved in the editing, production, or creation of the final podcast. It is also important to create agreements with individuals involved in making any other creative assets, such as any producers, video or sound engineers, music or video editors, logo and podcast cover artwork creators, and authors of any introduction songs, animations, or any other copyrightable works so that the podcast network possesses all these individual’s rights in their contributions. Furthermore, as discussed above, if a podcast network has formed a corporation or LLC, it is prudent to ensure that any created agreements are executed between the business entity (not the individual podcast host) and the creator to ensure that the podcast owner receives the protections afforded by the formal company.
Guest Appearance Release Forms and Co-Host Appearance and Release Documents
While the content of every agreement differs, it is important that any podcast that features more than one host or incorporates any guests or notable hosts receive the prior written consent to utilize each individual’s “name, image and likeness” rights as it relates to the publication, monetization and promotion of the podcast. This permission could include a license to the party’s right of publicity as well as consent for the podcast network to utilize the individual’s recorded voice and performance included in the content. In addition, a guest or co-host written release form could include language whereby the individual consents to participating in the podcast and for their recorded interview and contributions to the podcast to be reproduced, distributed, and promoted by the network. Similarly, a podcast release form might contain a clause permitting the podcaster to incorporate the guest or host’s recorded content into any podcast compilations or promotional advertisements, including giving them the ability to create derivative works based on the originak recorded episode. A podcaster’s release document might also include a provision wherein the guest and any hosts waive any “droit moral” or so-called “moral rights” that they may have in the podcast as well as provide any required rights or licenses to any music that the guest is playing or that is aired during the podcast. Finally, these agreements might also possess indemnification clauses to protect the podcaster against any liability or monetary losses as a result of the guest or host’s actions or omissions, including any unauthorized musical use as well as any on-air defamatory or slanderous comments made by the participating talent.
In addition to a validly executed written document, another prudent step is to create a recording of the guest verbally acknowledging and agreeing that the podcast network can use their podcast performance as the podcaster desires in “any and all media, everywhere, forever.” Finally, a podcast network should create written contracts with any show advertisers and sponsors as well as with any other similar paid relationship to protect all parties involved. These agreements should outline the duties and obligations of the podcaster and the sponsoring brand to ensure that all interested parties are on the same page, including the payment terms, the compensation, the podcaster’s “deliverables,” and any non-compete or other contractual provisions that might apply to either party. However, additional details of these sponsorship agreements are outside the scope of this article, but some related information is available here.
Required “On-Air” Disclosures for Endorsements and Paid Podcast Ads
Furthermore, a network that incorporates paid advertisements into their podcast must adhere to several regulations. For instance, the Federal Trade Commission (FTC) requires that the podcast host does not state any “false” or “misleading” information in any “on-air” advertisements or paid social media posts, including refraining from mentioning facts that are intended to mislead or deceive the podcast’s audience. This fact means that anything the podcaster states in any paid advertisement must be true, factual, and accurately represent the podcaster’s views and opinions. As a result, a podcast host cannot supply a paid endorsement or “testimonial” when they have not used the product or if the information that is provided by them is untrue.
Additionally, a publicly aired podcast must include appropriate on-air and written disclosures that might state that the provided information is a paid advertisement or that the podcast is “brought to” the listeners by a specific sponsor. In fact, there are a series of FTC issued guidelines related to public endorsements and testimonials, including directives focused on proper disclosures for paid social media posts and sponsored live streams. Furthermore, in instances where a podcast network uses a third-party podcast hosting service or any third-party service provide to distribute their content, it is crucial to be aware of terms and conditions of the relationship. This includes a proper understanding of what rights the podcaster receives to their distributed work, what the service provider’s written obligations to the podcaster are, the fees associated with the services as well as any additional information on which party is legally responsible for ensuring the appropriate disclosures are included in the podcast. The failure to provide the disclosures required by the FTC could subject the podcast operators to potential legal liability or other issues.
No Defamation of Other Individual, Inclusion of Disclosures for Medical, Financial or Legal advice
In addition to refraining from making false statements about a product or service, a podcaster and their guests should be aware of what and how they speak about other companies and individuals. In these cases, it is crucial while speaking on a podcast that the host or guest does not lie or commit any other acts of defamation or slander of another person or company’s character or otherwise attempt to damage a third party’s business or personal interest. A podcast participant should also be aware to not reveal any secret, classified, “confidential” or privileged information as this disclosure may violate another person’s right of privacy as well as be treated as an ethical or legal violation. As a result, these actions could subject a podcast to liability for potential infliction emotional distress or for some other personal tort if another individual is affected by these types of actions. Therefore, a podcast network could include language in a host or guest’s appearance or talent agreement requiring that the individual only make truthful and accurate statements on the show and mandate that they do not disclose any private or confidential information while participating in the episode.
Finally, in cases where a podcast is hosted or features a licensed professional as well as on episodes where any sort of professional or business advice is provided to the listener, it is crucial that relevant verbal disclosures and disclaimers are provided at the beginning and/or end of a podcast episode to inform all prospective listeners of it. For instance, this guideline might be applicable in situations where a person is providing any legal, financial, dietary, psychological, or other professional advice during a podcast. In these cases, the podcaster should state that the information is “not intended as financial advice” or “as legal advice” so the audience is aware of this fact. Specifically, some professions have enacted rules related to publicly providing advice or distributing any educational materials. For example, a licensed attorney hosting or acting as a guest on a podcast must disclose that the information is for “educational use only” and that the lawyer’s statements during the podcast are “not intended as legal advice.” Some podcasters might also include additional written disclosures, including stating in the podcast’s written description that the podcast is not “intended as financial advice” or that the recording is “attorney advertising” (which must be labelled as such).
In conclusion, once the airing of a podcast transitions from an unpaid hobby to a for-profit venture, the podcast operator is subject to a myriad of new legal obligations and regulations which can impact the show’s profitability and operation. As a result, the proper adherence or lack thereof could potentially subject a podcaster network owner to personal liability for their omissions. Consequently, it is evident that the proper organization and understanding of a podcaster’s legal duties are crucial to the podcast’s success as the lack of appropriate disclosures, proper rights structuring, and other similar protections could be the difference between a successful project and one that misses the mark or worse.
This article is not intended as legal advice, as an attorney specializing in the field should be consulted.
© 2022 Justin Jacobson Law, P.C.