Advanced eMedia Management

A. Brian DenglerSeptember 5, 2012

Meet Jean Poole

Meet Jean Poole

• She started a hyperlocal site, “The Local Scoop” that covers local news in Bucksnort, Tennessee.

• She owns a nice house.

The Local Scoop

• Jean Poole hires Rex Carr to post articles for her.

• Rex writes a story that Jack Pott embezzled $30,000 from the Bucksnort National Bank.

• The story isn’t true.

Photos by Krystian_O under Creative Commons License

The Local Scoop

• Jean and Rex are sued for defamation. • A jury finds Jean liable for $100,000 for

defamation as publisher of the Local Scoop.• Jean goes out of business and loses her house.• What went wrong?

The Problem

• Jean operated The Daily Scoop as a “Sole Proprietor.”

• She did not create a corporation that would shield her business from personal liability.

• This is the reason why we begin the course with looking at business organizations.

• You don’t want to lose your shirt managing emedia.

Business Organizations

• Sole Proprietor• Partnership• Limited Liability Corporation• Corporation• Non-profit Corporation

Sole Proprietor

• An individual runs a business. • There is no formal requirement to set up the

business.• The individual gets all the profits --- and all the

liability.• The individual’s personal assets, that is, bank

accounts, property, are exposed to pay debts and liabilities.

Partnership

• Two or more individuals set up a business.• You need a partnership agreement to divide

profits and manage the business. • How can a partner get out of the business? • For any liabilities – like bank loans –

partnership assets are used first to satisfy any debt.

• Individual partners are liable.

Limited Liability Corporation

• Very Popular. Owners are “members,” not stockholders.

• You need an agreement to manage relationships among members.

• You need to incorporate with state. You need articles and bylaws.

• Only company assets are exposed to liability.• No double tax – income (profits) are up-

streamed to members.

Corporation

• Applies to large companies that sell stock to multiple shareholders.

• Incorporators need to file articles of incorporation with state, have by-laws.

• Double taxation – corporation pays income tax, shareholders taxed additionally for sale of stock or dividends.

Corporations

• Publicly traded stock must be registered with the SEC.

• Corporation must provide quarterly and annual filings on performance.

• Corporations usually managed by board of directors.

So…what’s the big deal?

Jean Poole forms “The Local Scoop LLC”

Rex Carr isEmployee of LLC

Jack Pott can recover only from Rex and LCC. Jean gets to keep her house.

What if you do PR for a Company?

• Coca-Cola wants to set up a blog that provides solely human interest stories about persons who benefit from Coke charities.

• Users are allowed to submit comments.

• Users may post defamatory comments or pictures that violate copyrights.

What if you do PR?

Coke sets up “Coke Blog LLC” to run Blog

Users upload content that may be a problem

Another entity sues for copyright infringement, etc. Coke isolated from liability.

Non-Profit Corporation

• Must incorporate as non-profit under state law.

• Must incorporate for educational and charitable purposes.

• Must file for 501(c)(3) exemption.• No owners.• Pay people.

Quiz

• Quiz No. 1 is located at http://www.proprofs.com/quiz-school/story.php?title=ksu-advanced-emedia-management-quiz-no-1-952012

• Your responses are due 11:59 pm, September 11, 2012.

• Keep track of your answers. ProProfs does crash!!