Who Owns User Generated Content (UGC)? Understanding Ownership and Legal Concerns

User-generated content (UGC), and more specifically, 3D UGC is taking over the digital landscape, transforming the way we create and consume content online. From building add-ons like new levels or worlds, to sharing and selling original works on dedicated marketplaces, UGC is empowering creators and democratizing the creative process. But with ownership rights and legal concerns at play, it’s important to understand the foundational principles and ownership structure of UGC.

What is User-Generated Content (UGC)?

UGC refers to digital content created by users and contributed to online platforms, games, experiences, or marketplaces. Examples of UGC can be as simple as social media commentary, creating and posting a video on YT, or as complex as  3D models, textures, animations, and other types of 3D assets. Popular UGC platforms in the 3D space range from marketplaces like the Unity Asset Store, TurboSquid, the upcoming Fab Digital Asset Marketplace from Unreal, Sketchfab, Artstaion, and Quixel, to social gaming and Metaverse experiences like Roblox, Fornite, and even Minecraft, among many others which offer tools and resources to help creators monetize their work.

Royalty programs, licensing agreements, and other such opportunities are a new and impactful way to maximize the amount of content entering a platform while also increasing the time users spend online. UGC has transformed these industries, empowering creators to bring their visions to life and connect with audiences around the world while collaborating in exciting new ways.

To sum up this effect, a16z’s Joshua Lu and Robin Guo aptly explain the rise of UGC using two key platforms (Roblox, Fortnite) and the factors that set them ahead of competition:

1.     The creator-content-player flywheel. Both games benefitted from a strong flywheel of players who converted into creators that would make content for new players. There are strong network effects as the platform accumulates more great content and creators.
2.     A powerful toolset. Minecraft and Roblox built a strong toolset for creators over many years, which enabled a diversity of new rulesets and game loops to be tested and built. Creation became a form of play. Even now many of the most popular Roblox games like Adopt Me! are iterations on top of popular genres like pet-oriented games.
3.     The importance of social, organic growth. Minecraft and Roblox both benefited from strong creator adoption both from a developer and social standpoint. Many of the top YouTubers like Dream and Flamingo grew and promoted the ecosystem.
4.     Rich creator / developer ecosystems. Both games have community forums, tutorial videos, textbooks, and wikis, often fan made, that help newcomers acclimate to the game and help with the player-creator conversion.
5.     Live-service attention. Roblox and Minecraft were both consistently updated by their developers, adding new tools, creatures, biomes, etc. as well as fixing bugs and glitches and engaging the community.
6.     Robust Moderation. Given the target audience and the proliferation of potentially NSFW content, both Mojang and Roblox have moderation teams to monitor the types of content being created and protect the ecosystem.
7.     Financial incentives. Both games have Developer and Partner programs that allow creators to monetize their creations, incentivizing high quality, popular content.

Ownership of UGC

The ownership of UGC can vary depending on the terms and conditions of the platform or website where the content is created. In most cases, the ownership of UGC is retained by the creator who made it. However, the platform may have certain rights to use, reproduce, and display the content on their platform or website.

In the Web 2.0 era, the general rule is that the creator of the content owns the underlying material. Nonetheless, to utilize this content on online platforms, such as a website, the creator must grant a license to the website, allowing it to post and use the user-generated content as it desires. While you may own the content, the website owns the platform where it is displayed, and you have agreed to allow the website to use the content however it chooses.

A website’s terms and conditions of use usually include a user agreement, which enables the website to obtain rights to your work. The legal jargon in the user agreement often states that by posting or submitting content on the website, you grant the website a non-exclusive, worldwide, perpetual, irrevocable, unrestricted, royalty-free, fully paid-up, transferable license, with the right to sublicense (through multiple tiers), to use, copy, publicly perform, digitally perform, publicly display, and distribute (through multiple tiers) your content. The website can also modify, create derivative works, and incorporate your content into other works for any purpose, whether commercial or otherwise, without compensation to you.

In short, creators never lose ownership of their Intellectual Property (IP), but they do lease it out for selective use cases, upon uploading to platforms that accept UGC. The real risk comes into play once content lives online, where it is vulnerable to bad actors seeking to profit from others’ work.

What’s at Stake?

It may seem inconsequential when UGC items get ripped from one platform and resold elsewhere. How much revenue loss could really occur? The reality is… A lot — and it hits creators the hardest. Take Warframe creator FrellingHazmot, for example. During a time of economic stress, the sales associated with a wearable scarf exclusively available for Warframe, through Tennogen, saved Frelling from succumbing to student loans, and living expenses. As the item became increasingly popular, they were able to pay off over $250,000 in debt. That’s a lot of virtual scarves.

Frelling’s Teplo Syandana, which became his most popular Warfame cosmetic item

If you’re still dubious, further examples of the profitability UGC can generate are available on any UGC platform, or marketplace. All you have to do is scan the number of sales an asset has accumulated. Microtransactions are often denied credit due, they have proven to be successful drivers of increased revenue, and engagement, across the board. Seriously, in 2021 Roblox paid out over $500million to creators who made purchasable items for in-game use.

Protecting UGC

We know that UGC is in-demand. We know that it has revolutionized the 3D space. What we don’t understand is why lax moderation practices still continue to be the norm, allowing for widespread fraud, asset manipulation, and toxic content to flood in and devalue otherwise thriving artists’ work. Our solution (did you think we’d take you on this journey without one?) is pretty simple.

You may already be able to guess where we’re going with this… We need better 3D content moderation tools to help regulate a system that holds so much value, and potential, for everyone involved – creators, businesses, brands, platforms all stand to gain from adding proverbial guardrails that can hold up against cybercrime.

Let’s not forget about regulation, either. Without a clear, enforceable, understanding of what is, and isn’t allowed, it’s near impossible to prevent the latter. We’ve seen this with Generative AI borrowing from artists who did not consent to their work being used, and we’ll continue to see this pattern broaden if legal copyright, and IP law doesn’t catch up to modern technology.   

Ultimately, the growth of the creator economy and the success of UGC platforms is in the hands of those willing – or unwilling – to safeguard it. As content becomes easier to create and distribute, so does it become simpler to swipe, and re-sell. Now is the time to decide whether we value creative rights enough to protect them or are prepared to watch the collapse of a monetization structure that enables millions around the world to profit from their creativity.