That social media account is valuable, until you try to transfer it.

Wikimedia The Scream by Edvard Munch 1893 Nasjonalgalleriet

The internet is is a social-media driven marketing platform, driven by technologies which seek to move consumers to specific branded content and humans who try to corral that technology as best they can. Billions of dollars are spent in the chase to build an online brand, and those brands are feverishly protected. What happens, then, when the time comes to cash in? The problem is that most of the drivers behind online brands aren’t really under the control of the brand owner, and for all of the money invested in those online brands there’s a surprising lack of clarity as to how (and if) those brands can be transferred. In some sense, social media accounts are like a piece of stolen artwork – incredibly valuable, but difficult to cash in on.

While lawyers here in the US often refer to social media accounts as “property,” that property right is limited by the provider’s right to limit your use of or control over that account. In many cases, the provider’s terms of service do not permit the transfer (or “assignment” in legal-speak) of those accounts without their consent (or, in some cases, at all).

So, for example, if your company has an instagram account which is key to the product’s marketing, your company’s rights to that account are limited to the rights granted in their terms of service. That’s where things get interesting – according to the terms of service with Facebook (owner of instagram) you “cannot transfer your rights or obligations under this agreement without our consent.” If you make that transfer anyway, by simply passing on the password and user id, instagram could suspend or terminate the account, leaving you with a whole lot of nothing.

There are often other terms which are disadvantageous to business transfers, including terms prohibiting the commercial use of the account (as is the case for Tik Tok, for example). Most if not all of those clauses allow for immediate termination, meaning any valuation in a transfer is pretty much a house of cards that could be destroyed at any time.

There aren’t really many workarounds, either, and none are foolproof. You could, for example, have the original owner keep the account, but sign an agreement which allows you to control of the account (so it would basically be that owner’s account in name only). That’s probably not a great option for either party, though, since the original owner has clearly decided to exit the business and doesn’t necessarily want to be saddled with obligations going forward, and you probably don’t want to be dependent on them for an eternity. That may also run afoul of some provider’s terms, which often prohibit sharing passwords and ids. Another alternative would be for the old owner to terminate the account and for you to register it, but even assuming you succeeded in obtaining the new account, you’d have to start from scratch in terms of followers which destroys the value of the transfer.

If the entire business is to be transferred, you have another option. Instead of purchasing the assets of the business, which would require a transfer of the contract with the provider, you can purchase the shares in the target business. You can then continue to run the account under the original business, even if you clear out all of the assets after the sale. That, however, may give rise to other unpleasant risks going forward, since a purchase of the shares brings any open liabilities with it as well.

The problem is that under regular property law principles you can own the account, but on the internet that ownership right is subject to the whim of the provider. As a result, the value of that ownership right is limited and unpredictable, since all of the above options could result in termination under the terms of most social media providers. That said, for many it seems to be a risk worth taking.

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