work-for-hire conflict-of-interest
Is Medium at risk of legal action?
<p>Medium is sort of a content facilitator that charges its users for premium content and passes on part of that fee to authors, when the reader interacts with their work. However, over recent months, Medium has become increasingly focused on their own partnerships and internal publications, to the point where it's hard to argue that there is not an ethical conflict of interest. My question is whether there's a legal conflict of interest.</p>

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<p><strong>General Idea</strong></p>

<p>To put it into general terms, consider three parties, A, B, and C. Party A offers party B and C the opportunity to profit from an operation, where parties B and C are in competition with one another for a finite amount of revenue in a given month (the total available from subscription fees in this case). Further suppose that the operation relies on party C for success (it seems easy to argue that Medium would have trouble surviving if only their own content was on the platform), and that party A provides biased support to party B. Finally, B and C are paid by A, from the revenue generated by the operation, rather than B and C obtaining the revenue directly from the operation's customers.</p>

<p>In such a scenario, there seems to be both an ethical issue and potentially legal issue. However, I am not familiar with any specific civil statutes that may come into play. Does it appear that the above scenario might violate any specific statute? The one potential reason why Medium might be saved from a valid lawsuit is that an author does not have to pay for the service. However, they are providing support, in their aggregate, through the massive volume of writing that they provide to the platform, without very much chance of being able to actually generate revenue. Precedent from cases involving pyramid schemes may apply here.</p>

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<p>Michael Seifert raised an interesting question: "How would this be different from Publishing House A promoting a more profitable Author B instead of a less profitable Author C?"</p>

<p>The difference is that the publishing house does not rely on C's work for sales. To continue this analogy, consider a situation where the publishing house put in a request for chapters for an anthology, where the majority of the chapters came from C, and a few came from B. Further suppose that the publishing house paid its authors based on how many sales the respective authors generated, but almost exclusively promoted author B's website that sold the anthology. Even though readers likely would not purchase the anthology, without the chapters provided by C, because of A's disproportionate support of B, C would receive very little of the revenue stream.</p>

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<p>BlueDogRanch made a point that Medium's terms of services "says nothing about being fair, or ethical." Agreed. Its terms of services say nothing, and therefore it does not say that they reserve the right to unfair, unequal, or unethical, biases. If the terms of service stated that Medium reserves the right to unequal promotion of work regardless of whether it reduces the potential revenue by other authors, then Medium would have a greater chance of winning in court, and greater justification for their actions. However, without such statements, it becomes less certain that one should assume that a content facilitator that provides revenue streams as part of a <strong><em>partner program</em></strong> would engage in actions that disproportionately shift revenue streams towards their own content. </p>

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<p>A final point. It seems that in California, an individual must pass the "ABC" test, at least when it comes to wage orders. Specifically, Medium's authors do not pass B: <em>the worker performs work that is outside the usual course of the hiring entity’s business</em>. It seems that, contrary to the suggestion that Medium's authors are subcontractors, they are, at least as far as California law is concerned, employees.</p>

<blockquote>
  <p><em>Is Medium at risk of legal action?</em></p>
</blockquote>

<p>They are, in as much as anyone or any company is due to the nature of civil law, i.e. just about anyone can take anyone else to civil court. That is where "legal conflicts of interest" are worked out. But I'd assume that Medium's lawyers have covered the bases in terms of adhering to state and federal laws that govern their business, their business model of paying authors and changing their business model; and ensure that they have a strong terms of service document for the site, and that document is legally binding for Medium's users.</p>

<p>Now, a disgruntled author could file against Medium, alleging fraud, uncompetitive practices, unfairness, conflicts of interest or anything else and attempt to recover damages for what they allege is a skewed payoff to authors or Medium's self-serving policies. That said, authors and Medium are bound by the <a href="https://medium.com/policy/medium-terms-of-service-9db0094a1e0f" rel="nofollow noreferrer">Medium Terms of Service</a>. The TOS says nothing about being fair, or ethical, and it clearly states that </p>

<blockquote>
  <p>By using Medium, you agree to these Terms. If you don’t agree to any
  of the Terms, you can’t use Medium. We can change these Terms at any
  time... If you don’t agree to them, you should delete your account
  before they take effect, otherwise your use of the site and content
  will be subject to the new Terms.</p>
</blockquote>

<p>and</p>

<blockquote>
  <p>Limitation of Liability. Medium won’t be liable to you for any damages
  that arise from your using the Services.... This includes all types of
  damages (indirect, incidental, consequential, special or exemplary).
  And it includes all kinds of legal claims, such as breach of contract,
  breach of warranty, tort, or any other loss.</p>
</blockquote>

<p>That's the contract that the author would have to fight in court, and they will lose. They agreed to the terms of using Medium. Their only option, within reason other than a lawsuit, is to quit using Medium. An author could still file a lawsuit, but how far are they going to get? How much money do they have to spend to go up against Medium?</p>

<h2>Any business is free to subcontract on whatever (legal) terms are agreeable to them and their subcontractors</h2>

<p>There is no legal obligation that the terms to different subcontractors be the same (unless the difference is solely due to discrimination against a prohibited class) or that they subcontract at all rather than doing the work ‘in-house’.</p>

<p>The same holds for suppliers and employees.</p>

<p>As I understand it, Medium has posted content by various authors, some employees of theirs, and some indep4endent. it charges members of the public a subscription fee to access (some of) this content and it pays outside authors a fee based on how often their work is accessed by subscribers. So far nothing illegal. </p>

<p>The OP claims, if I understand correctly, that Medium has been promoting the works of their employees, more than those of outside contributors, presumably in a bid to increase the share of the subscription fees that they retain. </p>

<p>I scanned the posted ToS and various linked documents, but I did not find the contract that people wanting to participate in the "partner program" amnd be paid for their postings must agree to. </p>

<p>Medium is free to advertise which ever of its offerings it chooses to, unless it has specifically agreed otherwise in its contracts. It is under no obligation to advertise in accord with the nu,mber of postings, or thei popularity, or any estimate of the revenue each contributes. It may advertise the postings that will bring it the most revenue, if it so chooses. That may or may not be smart business, but it is fully legal <strong>unless</strong> it has promised otherwise.</p>

<p>Not of the documents that I read, nor that were quoted in this thread, include any promise or implication on how Medium will distribute its promotional efforts, or indeed even if it will make any.</p>

<p>OP has drawn an analogy to a more traditional publishing house. Such publishers often promote some authors more than others. There have been cases where such publishers received a disproportionate share of their revenue from a single author or a small group of authors, but promoted more heavily other authors who it felt gave the house greater prestige, or better long term prospects. I do not know of any court case holding such practices illegal.</p>

<p>Unless there is language in Medium's contract with its posters promising equal or in some sense "fair" distribution of promotional efforts, it has no obligation to do so under any law that I know of. An author may choose to withdraw his or her work at any time if dissatisfied with Medium. An author may also publicly denounce any perceived unfairness and try to persuade others not to participate or not to subscribe. An author can try to negotiate a better contract. That is, I think, the limit of an author's rights in such a matter. Of course, anyone can sue for just about anything, but i see no plausible basis on which such a suit could succeed. </p>
