I’m selling my business. Can my business social media account form part of my assets?
With more than 1 billion users on Facebook alone, it is no wonder that more and more businesses are using social media to promote the name of their brands and engage with customers about their goods and services. It is a way for a business to generate goodwill at low cost and to target particular groups.
Whilst businesses are generating their goodwill in their social media accounts, when it comes to selling their business, can the social media account be sold as part of the business assets together with the domain name and other intellectual property? This may be particularly important to both a prospective buyer of the business and the seller if the company’s revenue stream is heavily reliant on followers and fans on social media platforms. For example, the seller would wish to sell the account for its work in developing a solid social media presence whereas the buyer wants to ensure they purchase the social media account to have access to the social media pages and the followers and subscribers of the relevant account.
This may seem like a simple question although the answer differs on the type of social media account the business has. For the purposes of this article, I have considered the four main social media platforms: Facebook, Linkedin, Twitter and YouTube. The summary of whether or not the account holder of a social media account may transfer its account to another third party for each of these social media platforms is set out below.
a. You must obtain prior written permission from Facebook if you wish to transfer your account
b. You must not share your password or let anyone access your account
c. You must not transfer any of your rights or obligations under the Facebook statement to anyone else without Facebook’s permission.
a. All right, title and interest in and to Twitter services including the Twitter accounts are and will remain the property of Twitter
b. Twitter also has a restriction and prohibition on the creation of multiple accounts. If someone creates multiple accounts, Twitter may permanently suspend all accounts
c. You are responsible for safeguarding the password that you use to access the service.
a. A LinkedIn Group account may only be transferred with the written approval from LinkedIn at its sole discretion.
a. Any rights granted to you by YouTube, including the licence to use the services, may not be transferred or assigned by you and you must keep your account password secured
b. You must obtain YouTube’s prior written approval for the sale of access to the service.
In summary, each of these social media platforms grants a non-exclusive and non-assignable licence to the account holder to use the services of these social media platforms. Some, as set out above, enable the account holder to transfer the accounts with the prior written permission from the relevant social media provider. However, the process for this is not contained in the relevant terms and conditions.
Are there any possible alternatives?
If the social media account of the seller is important and it is unable to sell its social media account by way of an asset sale, are there any alternatives?
The difficulties raised above in the transfer of the social media accounts may be avoided by a sale of shares rather than a sale of business. In a share sale, the shares of the company are sold to new shareholders and company stays the same. From the social media perspective, in these circumstances the social media account remains with the company and so long as the account holder remains the same, there seem to be no issues in the account holder continuing to use the social media accounts.
From a Twitter perspective, in 2010, CNN demonstrated a possible way around the transfer of the Twitter account. In that case, CNN obtained access to the Twitter account of James Cox by hiring him as a consultant for the company. Twitter did not suspend James’ account and allowed the Twitter account to remain open, suggesting that there is a way around the restrictions placed by Twitter - that is, by offering the current account holder a consultant position within the business so that the business can have access to that account. This arrangement will rely heavily on the consultant and the business maintaining a positive relationship and the arrangement being properly documented.
Another alternative may be to require the seller to de-active its social media accounts so that the buyer can create a new account in the same business name and start new pages with new followers and subscribers. However, this is the last resort as the issue with this is that all of the followers and fans would be lost and the buyer would need to start from scratch. This would defeat the purpose of the buyer gaining access to the social media accounts if there is value and goodwill in the original accounts through existing social media pages and followers and subscribers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances if you wish to sell or buy a social media account.
For more information or assistance with buying or selling social media accounts or buying and selling business assets please contact our Parramatta Commercial Lawyers on (02)9895 9200.