Web Development Series

The Web Development Series articles were written in 1997 to highlight the negotiation issues involved in web development from the perspective of the site owner and developer. The first three articles were originally published on the Institute of Continuing Education Web Site. The last article was written for the ILPN (now defunct) web site. Although the articles were written over five years ago, many of the discussion points apply equally to today's development environment.

Legal and Business Dimensions of Web Development

Originally published in 1996

The last few years have witnessed an explosion in corporate America's Internet usage. While much of the growth is attributable to e-mail and electronic research, many companies are turning to the Internet as a source of revenue or as a way to communicate with clients and customers. In most cases, this leap into the Internet involves developing a site or "home page" on the Internet's World Wide Web, an undertaking that raises numerous business and legal issues.

The fastest growing part of the Internet is the World Wide Web. Although the technology leading up to the Web was developed in the 1970s and 80s, the Web itself was invented by Tim Berners-Lee at CERN, the European Particle Physics Laboratory. It was prototyped in the early 1990s and came into its own in 1993 and 1994 with the introduction of Mosaic and other early Web browsers.

If you or your clients are considering venturing onto the Internet's World Wide Web, remember that there are a number of business and legal considerations associated with creation and maintenance of an Web site. Knowledge of the issues up front can help avoid problems and frustrations down the road.

Site Objective

The first step in Web site creation is careful formulation of the site objective. What market or class of users is the site designed to attract? Is the focus mass market "hits" or an electronic interface with customers, suppliers and co-workers? Will the site be static or offer constantly changing material? What type of content will be provided and by whom? What type of features will be provided and why? How will benefits be measured?

When developing a Web site, it is better (and more cost effective) to keep the focus narrow, at least initially. The Internet offers an almost infinite number of alternatives and no Web site can do it all. Carefully target the intended audience and try not to stray far from the principal objective. There is plenty of room for expansion later on.

Budget

Once the decision is made to launch a Web site, a budget must be formulated. The cost of the site is a function of the scope and intended objective. Costs can run from a few thousand dollars for a modest site to several hundreds of thousands of dollars for a dynamic multimedia extravaganza incorporating all of the latest features.

Budgeting for the Web site involves a careful consideration of the nature of the enterprise, available resources and the objective of the site. When formulating a budget, keep in mind that the Internet business environment is in its infancy. What works or is attractive today may be replaced by a new "model" a year from now. The budget should contemplate maintenance, upgrades and changes. Development of an effective and useful Web site typically involves more than a one time charge.

Contract Issues

The contractual issues involved in a Web development arrangement are similar to those involved in one for software development. A Web site development agreement should be in writing and should clearly spell out rights and obligations of the parties. While informal "letter agreements" may be suitable for a basic inexpensive site, such informal arrangements often ignore many critical issues in the developer-client relationship.

A well-crafted Web page development agreement should address the following issues:

• Ownership. Site ownership is critical to portability and maintaining the uniqueness of the site. Absent "work made for hire" language in the development agreement, the site will generally be owned by the developer. In such event, usage rights must be clearly spelled out.
• Timing and Deliverables. The development agreement should include a timetable for development and penalties for failing to meet milestones. The agreement should also clearly spell out the deliverables to the client (including source code and other material necessary to revise the site if a new developer is hired later on).
• Escape Clauses. Web site development projects may extend over several months or even years. Companies hiring an outside developer should attempt to retain the right to terminate the contract at any time. This right may be important as the site objective changes or in the event of dissatisfaction with a particular developer.
• Warranties. Companies using third party developers will want warranties of quality, material and workmanship, including representations as to functionality when developer recommended tools are utilized.
• Indemnities. Developer indemnities against violations of third party proprietary rights or improper incorporation of third party materials into the site are essential, particularly when the client is looking to the developer for content. Legal fees alone associated with alleged violations of proprietary rights can be staggering.
• Confidentiality. The developer and those employees of the developer with access to confidential information should be required to execute confidentiality agreements with appropriate indemnities for violations.
• Maintenance. Updating a site, correcting missing or expired links, registering with search engines and changing site functionality can all be time consuming projects. The development agreement should clearly define the extent to which such undertakings are included in the base price or are separately priced "extras."

Web Developers

Internet Web development is an occupation that did not exist just a few years ago. Aside from "professional" Web developers, advertising and marketing agencies, Internet service providers and even teenage entrepreneurs now offer Web development services. Different developers' experience with business and legal issues run the gamut. This can have significant consequences if disputes arise and rights or obligations of the parties are not clearly defined.

Web site development is a blend of creativity and computer programming skills. Developers can be located through a variety of media, including newspapers, magazines, direct mail advertisements, technology trade shows, and the Web itself. As with many service based businesses, it is beneficial to shop for a Web site developer. The Web facilitates this selection process by allowing a potential client to view and experience other sites created by the developer.

Once a developer is located, get a list of URLs (web site addresses) to other sites created or maintained by the developer. Most developers already have Web pages containing links to sites they have worked on. The developers site, as well as those of the developer's clients, can be quickly reviewed to get a feel for the developers style, creativity and quality. By comparing work among various developers, the selection process can be narrowed or refined.

Site Hosting

A web site must be located on a computer that is linked to the Internet. Such a computer is called a web server, and it is in this way that the site becomes accessible to the outside world. While some developers provide site hosting services, others may merely recommend a host server. Many organizations also choose to host sites internally. Because the host server is your site's gateway to the Internet, choosing quality site hosting can be as important as finding a qualified web site developer. Down time, lack of capacity, access, download speed and security are all significant concerns.

Host requirements are in large measure a function of the site objective. If the site objective is to get lots of hits rather than to emphasize a niche area or service a client base, capacity to handle site "traffic" is important. If clients or customers can't access the site because of overload or system down time, the objective will be frustrated. Costs of internal hosting of a high volume site needs to be compared to those associated with outsourcing to a reliable host server.

If the objective includes access to confidential or proprietary data, an outside host server may create unnecessary confidentiality and security risks. However, if internal systems containing private corporate information will be accessible via the Internet, security concerns are paramount. In such a situation, it is essential to use firewalls (software which prevents and detects unauthorized intrusion).

Finally, site portability is a critical issue in Web development whenever an outside server is used. If problems arise, the ability to move the site to another server with minimal disruption is essential. This is important in agreements with host servers as well as developers. Many developers or ISP's offering site hosting services are interested in long term arrangements with their clients. However, if costs justify a move or if you are dissatisfied with a developer or site host, the ability to move the site quickly can be crucial.

Domain Names

When developing a Web site, it is important to adopt and register a domain name very early in the process. The domain name is the site's Internet address. The registry of domain names is maintained by the Internet Network Information Center or InterNIC, a non-profit organization affiliated with the National Science Foundation. Use of a specific domain name (as opposed to the domain name of the ISP) gives the site identity and facilitates future portability.

Desirable domain names are becoming a scarce commodity and many companies are finding domain names they are interested in have already been taken by someone else. There is a significant amount of litigation surrounding domain name disputes and a secondary market for the purchase of domain names is already beginning to develop.

Domain names should be viewed as a long term identifier. Changing a domain name may be difficult as the user base becomes familiar with a particular name and links to the site or particular pages are established. If the domain name is changed, the links must change, as well e-mail address books and bookmarks of the users. This can be a burdensome and time consuming process.

Site Content

Many Internet sites are "multi-media" in the truest sense of the word. Site content may consist of text, animation, pictures, sound and video. Underlying the site interface is computer programming that makes the site function. Despite many misconceptions, U.S. copyright laws apply to the Internet. If content or programming is not created internally or on a "work for hire" basis, it generally must be licensed. The lack of a copyright notice on many sites (which is no longer mandatory under federal law), coupled with the ease in which material and site source code may be copied from the Internet, leads many erroneously to conclude that material is in the public domain or that their use of the content is permissible "fair use." Such a conclusion may have significant costs and consequences down the road.

Site content can be licensed from traditional media licensing agencies, such as BMI and ASCAP. Content can also be licensed directly from the author or creator of the material. To the extent that royalties or fees will be paid in exchange for the right to use content, the cost of creating and maintaining the site will, of course, increase.

Internet sites frequently contain material and programming created by a third party developer. Absent a written "work for hire" agreement, this material will be owned by the developer. The right to use developer created content and programming must be clearly spelled out at the beginning of the relationship. Companies hiring a developer should insist, at a minimum, on a perpetual license to use and modify content and programming used in the site. This will be especially important if the site is moved in-house or will be upgraded or maintained by a different developer.

Other web development concerns include performance, access speed, ownership and rights to data and databases, damage limitations and responsibility for claims arising from the use or access of the site. Companies should also carefully monitor litigation and legislation surrounding Web site development and operation. Mainstream usage of the Internet is such a recent phenomenon that there is little or no controlling authority for many Internet related legal issues.

Each Web development project is a unique undertaking in a new and dynamic environment. Proper planning and awareness of the issues may mean the difference between a strong, cost-effective base for the information revolution or a costly nightmare.