[Posted by Tom Cummings]

It’s no secret that many marketers love User Generated Content (UGC) promotions.  And really, what’s not to love?  Toss up a website with a ‘submit here’ link, let your audience handle all of the creative, let the fans decide their favorites, then sit back and let the word-of-mouth go to work.   In exchange for a small prize and 15 minutes of fame, your community members will do all of your work!  At least, that’s the theory. 

Some promotions aim to just get fans involved.  CNN.com allows “iReporters” to submit pictures and videos that occasionally are featured on the frontpage.  Good Morning America invites viewers to submit videos of themselves on the “I Say GMA” section of their website.

Other promotions raise the stakes, offering cash or prizes.  Dance like a fool for the Pussycat Dolls, and Samsung might just send you a new K5 MP3 player!  Team blogmeister Jeremy Owyang has posted a few times about Dell’s “ReGeneration” campaign, in which original pieces of artwork created with Facebook’s Graffiti application were submitted for the chance win an environmentally friendly Dell Monitor.

In these contests, community members provide original content to be used only within the scope of the contest.  But a recent Coldplay contest called “Opening Band” was different:

The aptly named contest had bands submit original music videos, with the winner receiving $2,000 and the opportunity to open for Coldplay at a stop on their Viva la Vida tour.  Any aspiring musician would be a fool not to want to participate, right?  Except, as the rules were originally written, an artist’s entry was also a tacit agreement for Capitol Records to own the rights to the song in any and all forms in perpetuity, as well as the rights to the artist themselves.  Thanks in part to a ‘Groundswell’ of uproar, the terms were eventually changed.

But the question remains:  will the day come when a submitter of UGC challenges the ‘ownership’ of intellectual property?  Will a company step outside the spirit of their contest and use the submitted content in a legal, but unfair, way in an attempt for further profits?  A monitor from Dell is a great prize, but would it be enough to satisfy an artist if Dell decided to use the image as their new corporate logo, with billions of dollars in associated brand equity?  Likewise, a $2000 cash prize and a chance to open for a multi-platinum band may be a large compensation for an unknown musician; until that band sells 10,000,000 copies of the song and licenses it as a theme-song for a new television show.

Is intellectual property something that marketers who deal with UGC have to worry about?