Facebook Covers Legal Risk for Giveaways; Maybe Opens a New Revenue Stream?

The day is fast approaching for the current social networking darlings, Twitter especially but also Facebook, to continue their transformation into media properties. The name of the game is making money while keeping their user base largely happy and mitigating risk that would put the business in jeopardy.

Here are some of the recent changes which you should know about:

FACEBOOK SWEEPSTAKES

Facebook, while never being particularly friendly about sweepstakes and giveways, is now downright hostile. Last week Facebook published a set of rules outlining how sweepstakes, contest, competition or other similar offerings. This is probably mostly to mitigate the risk by Facebook from a myriad of rules governing these types of promotions across the states and around the world.

You cannot require:

• Content: Make an entry in the competition contingent upon a user providing content on Facebook, such as making a post on a profile or Page, status comment or photo upload.
• Fan: Administer a promotion that users automatically enter by becoming a fan of your Page.
• Notification: Notify winners through Facebook, such as through Facebook messages, chat, or posts on profiles or Pages.

You can use:

• Third-party applications: These can also require the entrant to upload content. For example, you may administer a photo contest where a user is asked to upload a photo through a third-party application to enter. But you can only do this with PRIOR WRITTEN APPROVAL from Facebook.
• Fan’s Only Tab: Only allow fans of your Page to access the tab that contains the third-party application for the promotion.
• Collect an address or email: But only through the third-party application for the promotion in order to contact the winner by email or standard mail.

In addition, Facebook is requiring prior approval through an account representative (advertising sales) if you DO decide to run a promotion on a third-party application. I don’t think that they will require payment for this, but I suspect they hope upsell you on some ads? I am wondering if they see this as a future source of revenue?

While you can’t require people to sign up for a Facebook account to participate, you can send them to the third-party app, which effectively requires them to have a Facebook account. This is an interesting skirting around the law.

The rules also say that you do not need our prior written approval from Facebook if you are publicizing a promotion that is administered completely off of the site, like a blog, etc. You can read the new Facebook rules on giveaways, promotions, drawings and sweepstakes here and a great write-up about them on Inside Facebook, which also has a nice list of third-party vendors that can run promotions.

Lots of companies, individuals and brands have run these kinds of promotions in the past. Maybe the continuing restrictions from social networks will drive a revival of blogs and blogging? – how positively old fashioned.

What do you think? IS this a good move for Facebook? How do you think you will comply with the new rules and get the results that you need?