Strategic Alliances and Privacy Policies

Forming strategic alliances online is a time-tested method for producing positive revenue results. Such alliances, however, have to jibe with the legal promises you make to users of the site including those in the privacy policies.

Strategic Alliances

Strategic alliances are very common on the web. Indeed, the classic affiliate partnership arrangement is nothing more than a strategic alliance. The partner provides the product, and the affiliate provides the traffic. Both parties benefit from the combination, a classic win-win that makes up the desired result of the alliance.

Slow Down There

Forming a strategic alliance can be extremely exciting from a business perspective. Better than sex? No, but it isn’t all that far away. The reason is the potential of the relationship is often huge.

Imagine you are a site selling an iPad carrying case for skateboards. Your product is unique, but you just can’t afford the marketing costs involved in getting in front of an enormous number of iPad users.

Things change, however, when you work out a deal with the number one ranked site on Google for the phrase “iPad Accessories”. That site pulls in over a million visitors a month, the exact market you are looking to access. If just one percent of those visitors buy your product, you are talking 10,000 sales a month. That is a healthy number for most small businesses.

Given the numbers, it is no surprise many online businesses charge ahead without thinking about the promises they have made in their terms and privacy policies. ThisĀ approach leads to problems where the actions associated with the alliance violate the promises made to site visitors.

Email Lists and Privacy Policies

A few strategic alliances run into technical legal problems because they rush forward without thinking about the implications of doing so. The privacy policy can be one area where things go terribly wrong.

Let’s assume we have a classic situation where one party has built up a healthy email list of 100,000 followers. A second party approaches them regarding promoting a product through their email list. ThisĀ venture can be problematic because most sites promise not to “share, sell or rent” their email lists to third parties in privacy policies. One has to be very careful when considering whether such an alliance constitutes sharing the email list.

End of Alliance

Another issue to consider is what happens when the alliance ends? Which parties get what information and does the property split constitute a violation of the terms or privacy policy for the sites in question? For example, both sides will often want to take the email list with them. As you might imagine, neither the people on the list nor the FTC is all that happy with such an approach.

In Closing

Let me be blunt. Most site owners develop a privacy policy and terms of use in one go. They then more or less forget about them moving forward. Don’t make this mistake. Your terms and privacy policies act as contracts with your visitors. If you violate those contracts through a strategic alliance, you could be sued. That pretty much defeats the purpose of the strategic alliance in the first place.

Richard A. Chapo, Esq.

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