February 14, 2005

Group Blogs As Partnerships

Steve Bainbridge has been prompted by this Volokh Conspiracy post to contemplate the topic of group blogs as partnerships. Eugene Volokh's post discusses the addition of a tip jar to VC, and makes this key statement: "we've ... worked out a way of splitting the loot." As Steve notes, partnership statutes use the sharing of profits as the most important indicia of partnership. In this instance, the Volokh Conspiracy is almost certainly a partnership.

That was the easy part. Steve then ups the ante by asking, "How do you suppose they are 'splitting the loot'?" Although equal sharing is the default rule for partnerships, the Conspirators probably have weighted their respective shares to reflect their relative contributions. In constructing the compensation system, Steve is worried about incentives, but Larry Ribstein suspects that "the complexity of administering a precise incentive/reward scheme" might argue in favor of a simple system. I agree. Keep it simple, at least until the bucks get really big.

Liability is also an important consideration. Partners are personally liable for the obligations of the partnership, including obligations incurred as a result of torts by one of the partners. Steve suggests forming a limited liability company, which seems like sensible advice. The prospect of liability makes me wonder if they have a system of pre-screening (monitoring) each other's posts. While such a system might decrease the likelihood of posting something libelous, it would also increase the likelihood of personal liability for each participant in the system. And it would slow down the posting of blog entries.

UPDATE: Paul Caron has an interesting post on tips as "income" from a tax perspective. It looks like the Conspirators might need a lawyer.

Posted by Gordon at February 14, 2005 10:58 PM | Blogs and Blawgs