NET 503: ASSIGNMENT 2. POLICY PRIMER OCT 2013

By Bernadine Phelan

                           

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

What is ? Australia’s first and largest crowdfunding platform, which connects supporters with potential projects in the arts, culture, business start-ups and social philanthropy.

◦ Crowdfunding is about creative community. In its own words: “Pozible can also be a gateway for discovering and supporting inspirational projects and thinkers directly. . . project supporters become a vital part of a true creative community.

To join that community, you must become a Member and accept their Terms and Conditions, which includes their Privacy Policy.

Who is it for? Anyone. Crowdfunding is reaching out far beyond the wannabe bands, the filmmakers, charity projects and struggling artists.

◦ Crowdfunding now supports: Scientific research, independent journalism, shared workshops for city bikers who love a good latte with their lathe, and a very Australian project, crowdfunded alcohol (albeit high-end, both in aesthetic and market).

Pozible’s T&Cs have been written with their target audience in mind.

The language and tone is inclusive. The T&Cs are not over-long, nor written in obfuscating legalese.

A little bit of context Crowdfunding isn’t new.

◦ In New York 1884, more than 125,000 people donated a total of $100,000 to build a pedestal for the Statue of Liberty (Abrahams and Johnson, 2013).

But it is now a significant* contributor in the economy.

Pozible began in 2010 and has raised more than $15m AUD (Sept 2013), hosting more than 4500 individual projects. (tumblr, Wikipedia)

◦ Its largest project was raising $243k AUD for Patient 0, a multiplayer role-playing zombie game. *A US study found that, in 2012, donor

and reward crowdfunding grew 85% to USD $1.4b (Massolution, 2013)

Credit: Rakkhi Samarasekera Jan 2011.

How does it work? The Project Creator proposes a project and places the listing on site with supporting information, such as video, images and a story; all with the objective of garnering support. It is a competitive process.

◦ Creators offer a variety of “rewards” for monetary support – none of which can be for equity under Australian regulations.

◦ Pozible projects are limited to 60 days and are based on the “All Or Nothing” (AON) crowdfunding model.

◦ AON means pledged money is taken only after the Project reaches its target. Creators get nothing if the target is not reached.

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What does it take? Pozible charges a 5% fee for successful projects (not listed in their T&Cs).

The “fees must never be mentioned on project listings”. No fees are taken by Pozible for unsuccessful projects.

There are risks because crowdfunding is not protected by the usual investment rules of disclosure. Also, the scale of risk may be greater because of the larger number of potential supporters. (CAMAC Sept 2013)

Note: when you pledge support on a crowdfunding site in Australia, you are not covered by Australian Consumer Law. (Sharma 2012)

What are your rights? You are essentially carrying out a transaction using your own judgment – a point they make several times in their commendably clear, “plain English” T&Cs and Policy statements.

◦ “Pozible is not directly involved in the transaction between Project Creators and Project Supporters.”

◦ “As a result, Pozible has no control over the: quality, safety, morality, legality. . . truth or accuracy of the listings.”

Pozible doesn’t guarantee that the project can, or will, be completed – so you need to assess the level of risk you are prepared to take, as either a Creator or Supporter.

Just to be clear. . .

Any commitment you make on the site,

any information you provide,

is at your own risk.

Who is liable for what? You are, whether as a Project Creator or Supporter – for content, functionality, delivery. For Everything.

Again, Pozible draws the clear distinction that it is an online platform only and cannot be held liable for the content posted by its members or any outside parties on its site.

Who can use the service? Anyone can be a Creator or Supporter, once they have signed up as Member.

The only exception is Children under the age of 18.◦ If you are under the age of 18 years, you can use this service only in conjunction

with and under the supervision of your parents or guardians. 

◦ Note: are other CF sites which have been set up to capitalise on [i.e. exploit] the generous nature of children: Piggybackr which calls itself “Kid-friendly”, helping young students raise money.

Credit: Heleana Genaus under CreativeCommons3.0 from Rising Sun Workshop project http://pozible.com/risingsun

What you provide You are wholly responsible for your own information.

◦ “We act as a passive conduit for your online distribution and publication of Your Information. ”

They require full name and email address for membership, although you can exclude email address from publicly available information.

Again, the onus is on you to show that your content is not:◦ Misleading, false, inaccurate or deceptive

◦ Defamatory, libellous, fraudulent

◦ Infringes any other party’s copyright, patent, trademark, trade secret or other proprietary rights or intellectual property rights, rights of publicity, confidentiality or privacy

◦ Obscene, inappropriate or unlawful or contain any content that is prohibited – the test of which is at Pozible’s “sole and absolute discretion”

◦ Containing any malicious code

What they use◦ “Our primary purpose in collecting personal information is to provide you with a

smooth, efficient, safe and customised trading experience. This allows us to provide services and features that most likely meet your needs, and to customise our services to make your experience safer and easier.” (Pozible T&C 2013)

The practices they list include:◦ Tracking demographics, interests and behaviour onsite, using cookies, and

collecting other users’ comments about you.

◦ Billing address, credit card details and bank account details – to facilitate transactions

Pozible admits that it will provide *aggregated information to Partners and other parties for marketing and promotions. “We do not disclose… any information that could be used to identify you personally.”

Your data: who sees it? First, the good news: they don’t sell on your information to third parties.

Now, the not-so-good news. They give it away. Not explicitly. But they cannot protect you from what other users of the site – genuine fellow crowdfunders or not – will do with the information you provide.

◦ The same is true of most social network sites. Under Goettke and Christiana’s (2007) Privacy Protection scale, Pozible would rate as Tier Two, where there is insufficient privacy protection, even with user awareness. Pozible is just more transparent than most.

• Example: I was unable to alter more than the default turning off wider internet search of my member profile, and email address visibility, and opt out of contact.

• Despite this, trust levels on site seem high: Creators post a surprisingly detailed amount of information about themselves, their lives and their contact information.

Your data: who sees it? Pozible doesn’t promise your personal information will remain private.

◦ “. . . We may be forced to disclose information to the government or third parties under certain circumstances. . . or third parties may unlawfully intercept or access transmissions or private communications.

In light of the NSA and PRISM revelations about big data being extracted from service providers for government surveillance, this would seem a wise qualifier.

Your privacy Privacy terms are stated clearly, in plain English – an approach they take consistently across the site.

◦ “Your privacy is very important to us. You must read and agree to the terms of this Privacy Policy before becoming a Pozible account holder.

◦ “As part of the normal operation of our services we collect, use and, in some cases, disclose information about you to third parties. This Privacy Policy governs the information we collect about you and your use of information we provide to you. . .

◦ “Although this may seem long, we have prepared a detailed policy because we believe you should know as much as possible about our practices so that you can make an informed decision. ”

Your privacy (2)Their statement about usage seems fair and reasonable. Pozible says it would only use your information to:

◦ “. . .resolve disputes, troubleshoot problems, help ensure safe trading on our Site, and enforce our User Agreement.”

But they will also use it to learn from your use to improve their marketing efforts and customise the site and its services.

They warn you that other users also see your information (and you theirs – see note).

Case study: Dylan* A random name search came up with a Member profile. He is both a Creator and Supporter. He achieved his goal of reaching the international stage – but he sacrificed a lot of personal data in the process, including work, email, Facebook. Plus, the last projects he supported, including an erotic iron & strip show. Of course, he may not mind. In the same way that other Facebook users can see your Likes. But at least Facebook only shows Likes to Friends. Pozible defaults that all members see all user information.(*not his real name).

How do you get paid? Pozible prefers the use of PayPal to pay Creators their pledged amounts on completion of the Project – and recommends an upgrade to the Premium (Commercial) version of PayPal.

◦ T&Cs outline the detail Creators must give on their intended Rewards, and that they must also give their selling policies, such as shipping, payment, returns.

Supporters use Credit/Debit card and PayPal to pledge.

The T&Cs note that Pozible cannot guarantee PayPal, Visa or Mastercard’s reliability or performance. It cross-references to, and requires members to comply with, Visa, Mastercard and PayPal’s own Acceptable Use policy.

Advertiser rightsThe Advertiser grants Pozible a worldwide, royalty-free, non-exclusive, irrevocable licence to publish, and to sub-licence the publication of, the Advertising in any form or medium, online or other.

Pozible can withdraw any Advertising without giving reason (even if the Advertising has previously been published by Pozible). 

Members are not permitted to disclose:◦ “. . . the terms of the agreement, data relating to advertising budgets, pricing

and forecasts.”

Hmmm. Any T&C statements with “or other” leaves open a very wide door for all possible future usage on any platform. Is this something companies usually agree to?

Change on the horizon? The Australian Government Corporations and Markets Advisory Committee (CAMAC) released a discussion paper (Sept 2013) to investigate suitable regulations for crowdfunding operations in Australia, specifically equity-based crowdfunding , which has not been allowed there before.

◦ It notes that there are risks associated with all types of crowdfunding, particularly in how to ensure that the online intermediaries (such as Pozible) have done adequate due diligence on the projects offered.

Watch this (crowd) space. . . $

References Abrahams, N. and Johnson, D. (17 Sept 2013) Crowdfunding rules to change, help Australian entrepreneurs, smh.com.au http://www.smh.com.au/it-pro/it-opinion/crowdfunding-rules-to-change-help-australian-entrepreneurs-20130916-hv1pn.html

Corporations and Markets Advisory Committee (September 2012), Crowd sourced equity funding. Discussion paper. Retrieved 23 October 2013 from http://www.camac.gov.au/camac/camac.nsf/byHeadline/Whats+NewCSEF+Media+Release+%26+DP?openDocument

Goettke, R., & Christiana, J. (2007). Privacy and Online Social Networking Websites. Computer Science 199r: Special Topics in Computer Science Computation and Society: Privacy and Technology.

Luckerson, V. (2013) The Crowdfunding Economy Is About to Pop, Time. Retrieved 03 October 2013 from http://business.time.com/2013/09/24/the-crowdfunding-economy-is-about-to-pop/

Massolution (2013) 2013CF The Crowdfunding Industry Report. Retrieved 08 October 2013 from http://www.compromisoempresarial.com/wp-content/uploads/137356857-Massolution-2013CF-Excerpt-Revised-04182.pdf

Senaratna, A., (15 August, 2013) Sydney Businessmen Successfully Crowdfund Booze Startup, The Concrete Playground. Retrieved 22 October from http://sydney.concreteplayground.com.au/news/141674/sydney-businessmen-successfully-crowdfund-booze-st.htm

Sharma, M. (29 May 2012) When the crowd funds a flop, what next?, smh.com.au Retrieved 23 October 2013 from http://www.smh.com.au/it-pro/business-it/when-the-crowd-funds-a-flop-what-next-20120529-1zgba.html

Image credits:

Screenshots: www.pozible.com

Statue of Liberty, Rakkhi Samarasekera Jan 2011. Retrieved under Creative Commons, attributed.

Hands and tools: Heleana Genaus under CreativeCommons3.0 licence. Retrieved from Rising Sun Workshop project http://pozible.com/risingsun