Please: If this story is too long for you, just scroll down to the “Opt Out of Arbitration” section. It’s near the bottom. You only have until 2023–08–24.
I’ve read some damning stories about Etsy. Here’s a good one on Medium. Note the year: 2017. So Etsy has been getting flack for years. Ever since it became a publicly traded stock in 2015, it has slowly lost its way, as seemingly all “feel-good” companies do after an IPO ushers in alternate priorities. Still, it’s a go-to place, just like a busy highway… You don’t want to be there, but it’s the best option.
All along, I’ve been an occasional shopper there, usually for some holiday gifts. Although I’ve never had the misfortune of being a seller, I can confirm that it’s been getting harder to be a buyer. It simply takes more time to sift through the noise and clutter of knock-offs and importers/retailers in order to find original products from true artists and crafters.
Last month, there was a crafter success story about hand-decorated cowboy hats that went viral after Beyoncé featured one of the glittery lids that she bought on Etsy. Well, it started as success, but then devolved into a nightmare of scammers that comprise the darker side of Etsy.
Etsy doesn’t seem to care if original art or craftwork is copied. Maybe that’s just healthy competition. However, Etsy also doesn’t care enough if original product descriptions and even photos are directly copied from its site, and used to sell knock-offs. Right alongside the original listing, and even higher in the search results.
Read the full Washington Post story about the hat crafter’s experience. Or try a non-paywall version.
Lots of copycats quickly offered cheaper poor quality versions of the same hat design, but posted the original crafter’s own photos to sell them! Apparently it is up to the seller to find and report scammers (“infringers”) to Etsy. To be fair, Etsy apparently does act to take down a scammer. But it’s clearly a game of whack-a-mole, in other words, humanly impractical.
Only Etsy itself has the access to easily scan for copyright infringements as new scammer accounts post new listings.
But they don’t look for scammers with knock-offs that copy original photos or content. Clearly they don’t want to. Policing their system is an expense, and reducing scammers’ sales reduces Etsy’s revenue.
The New Terms for User Content
Today, one month after those cowboy hat stories hit mainstream media, Etsy announced some edits to its Terms of Service. I’m not a lawyer, but I often read legal documents. So I took a look at the new Section 5, which covers user content. That is, anything that sellers or buyers post to the Etsy system.
First, let me say I was pleasantly surprised to find a lot of very simple language instead of dense lawyer boilerplate. That easy language seems to indicate that Etsy has only a limited intent to use your content. Their examples include using images to promote your products in their marketing. OK, that seems helpful. Here’s the start of Section 5:
Content that you post using our Services is your content (so let’s refer to it as “Your Content”). We don’t make any claim to it, which includes anything you post using our Services (like shop names, profile pictures, listing photos, listing descriptions, reviews, comments, videos, usernames, etc.).
They don’t claim to own anything you post. Great! But soon, there’s an ominous foreshadowing:
You understand that you are solely responsible for Your Content.
Well, of course I’m responsible for my stuff. But that also implies that Etsy is washing its hands of any responsibility for what happens to it while it’s in their system. Keep that in mind. Next Etsy not only wants your “cake” but it will eat it too.
By posting Your Content through our Services, you grant Etsy and, as authorised by Etsy in its sole discretion, third parties, a licence to use it. We don’t claim any ownership to Your Content, but we have your permission to use it to help Etsy function and grow. That way, we won’t infringe any rights you have in Your Content and we can help promote it. For example, you acknowledge and agree Etsy may offer you or Etsy buyers promotions on the Site, from time to time, that may relate to your listings or other listings on Etsy.
Here, Etsy reiterates that they don’t own your stuff. But they get to do whatever they want, because you automatically license it to them, without fee or restriction. Um, sure, I guess that’s OK, because they use it to promote my stuff, right? Well sure, maybe. But no promises. And also no limits to whatever else happens while it’s in Etsy’s system.
Finally, the legalese appears. To summarize, they can do anything. Including profiting from your content, e.g. via “sub-licensing.”
By posting Your Content, you grant Etsy and, as authorised by Etsy in its sole discretion, third parties, a non-exclusive, worldwide, royalty-free, irrevocable, sub-licensable, perpetual licence to use, display, edit, modify, reproduce, distribute, store, and prepare derivative works of Your Content. This allows us to provide the Services and to promote Etsy, your Etsy shop, other shops and listings, or the Services in general, in any formats and through any channels, including across any Etsy Services, our partners, or third-party website or advertising medium. You agree not to assert any moral rights or rights of publicity against us for using Your Content. You also recognise our legitimate interest in using it, in accordance with the scope of this license, to the extent Your Content contains any personal information.
Check out the line I emphasized. Yikes! Morality is literally not welcome here.
And strangely, in the age of ChatGPT, Grammerly, and simple spell-checkers, they managed to include some spelling mistakes: “authorised,” “licence,” and “recognise.” Or maybe that’s normal spelling in whatever location Etsy outsources their legal work. (Hades?)
After that legalese paragraph — which is the only paragraph that seems to carry any real legal weight — they soften up again with a few nice examples, e.g. translating your written content to help sell your stuff in other countries. Yup, that’s good. That’s great! But why didn’t they limit their rights to just an itemized list of purposes like that in the legalese part? (Hint: The nice examples are only meant to disarm suspicions, without actually limiting anything.)
Section 5.D (“Reporting Unauthorised Content”) is a special slap in the face. I trimmed out the fluff.
Etsy has great respect for intellectual property rights, and is committed to following appropriate legal procedures to remove infringing content […]. If content that you own […] has been posted to [Etsy] without your permission and you want it removed, please follow the steps listed in […]. […] we will take appropriate action […].
Remember, only Etsy has all the access necessary to efficiently scan new listings for content stolen from other sellers. But it puts the onus on sellers to somehow scout for infringements. As the cowboy hat crafter explained, it’s just not humanly possible. Etsy is simultaneously acknowledging the problem and essentially stepping aside.
If YouTube can automatically scan and take down audio/video copyright infringements, Etsy can certainly scan some photos. They know it’s impossible for users to manually police the system on their own. Why does YouTube seemingly care more? My guess is that for YouTube, the infringed parties are big media companies with ferocious legal departments, as opposed to Etsy’s tame “hat crafters.”
Could a seller sue Etsy? Could a lawyer bring a class action? No. The new Section 11 requires private arbitration. And eliminates class actions. (I can’t speak for other countries, but the U.S. legal system and U.S. capitalism have been great for America, but not always great for Americans.)
What Can Be Done?
It’s up to the sellers to protect themselves. But what if some clever programmer were to create a tool that could browse a seller’s listings, then automatically download all other Etsy listings to search for any copies of text or photos that match the seller’s own listings? The seller could supply a few keywords to begin the search, then let it run.
That would take a lot of CPU time and bandwidth. But to the seller, it might be worth it to let their home computer churn away all night while they sleep. They might catch some thieves by morning. If the software automatically reported the infringements to Etsy, even better. It’s apparently what Etsy is daring sellers to do.
If many sellers used the tool, then Etsy’s store may get cleaned up quickly, and everyone would be happy. Well, everyone except Etsy.
They’d be forced into policing their system after all. Ouch. And processing all the reports would be an expense. Double ouch. To do otherwise might be seen as a breach of their own Terms of Service!
Maybe they thought of that. Remember, new Section 11 requires private arbitration, and eliminates class actions.
But you know, all those sellers scanning the Etsy site all the time is probably inefficient. Etsy’s web servers would be strained. That would cost Etsy more. Big ouch.
The best solution for Etsy? Out-compete the seller’s scanning program. Now that’s good ol’ American competition! Etsy just has to do a better job scanning for scammers, then no one will use the inefficient scanning program, and Etsy will save money. And face. And maybe it will survive another scandal, another quarter, another annual shareholders’ meeting.
But first sellers need the scanner app. What do you think? Some coders might be reading this. There are over seven million active sellers on Etsy. Selling a scanner program for even just a few dollars could put some significant digits in a programmer’s bank balance. Hey, good ethics and good revenue are not mutually exclusive! Oh, and it would be sweetly ironic if the hero programmer sold the software on Etsy, ha.
What About the Long Term?
Etsy’s terms are stifling. I think the only thing that can penetrate an agreement like this is embarrassing press coverage (limited success so far)… Or the law.
The U.S. Federal Trade Commission (FTC) or the U.S. Congress could limit or eliminate the use of binding arbitration clauses in all non-negotiated contracts. I’d love to see that. It would affect nearly every agreement you are forced to “blindly” accept as a consumer. Then, any bad behavior (i.e. failing to protect sellers’ copyrights) could trigger class action lawsuits that force Etsy to act in the seller’s interest, instead of feigning ambivalence and ultimately benefiting the infringers.
I believe corporations are not evil by nature. They just follow the system. Currently, the system rewards only profits and penalizes for nearly nothing. If governments were to slightly change the rules, corporations would quickly adapt and re-balance to the new system. Corporations like Etsy could still thrive, but so could its artists and craftspeople. Even the copycats will survive, but they’ll have to work a little harder, and I think that’s OK too.
Systemic change won’t happen soon, but it’s not impossible. For example, non-compete clauses that have long benefited corporations are currently under attack by the federal government. So there’s hope.
Politics
Consider that entrepreneurs and self-starters (i.e. artists/crafters) try to make honest income in a dangerous environment. Think of the right to use the court system (sue) as a gun in the “wild west” of e-commerce. And that world is clearly full of poachers and “hat rustlers.” Forced arbitration is a set of handcuffs. That’s not a fair fight! Occasionally remind your representatives how you feel.
Right Now: Opt Out of Arbitration!
Existing users (sellers or buyers) have until August 24th, 2023 to opt out of binding arbitration. Do it now, to protect one of the few rights that you can! Section 11.G explains how in detail. In summary:
Send a timely email to arbitrationoptout@etsy.com with your name, the email address for your account, your username and your shop name (if applicable), and a request to opt out of arbitration.
Personal Thoughts
I used to imagine growing a company to the IPO stage. I thought that was the definition of success. Now I think it’s more like selling the soul of a company.
I hope Etsy cleans itself up. (But I seriously doubt it can.) Otherwise, I hope another incarnation comes along… clean, shiny, and new. But if so, I really hope they grow organically, and plan from the start to stay private. It would be great for a “mom and pop” business to run the platform needed by millions of “mom and pop” businesses. I have a feeling it would endure as a nice place to do business.
It can happen. Craig’s List is one example. Freecycle is another. I’d love to hear if you know of others, or if you think I got something wrong here.
