Are there legalities to pay "royalties" to the authors of creations on my website/platform?

Question

Some context:

• I am developing a website where users can create posts (i.e. stackexchange, reddit, etc.)
• These posts generate ad revenue from page visitors
• I want to add a feature where I take a portion of the ad revenue and give back to the author of the post(s) depending on how much ad revenue was made

To me, this is similarly following the model of YouTube, where YouTube pays creators as ads are shown on their videos. Another similar example that comes to mind would be steemit.com, where the website pays authors in the form of a cryptocurrency.

What I am wondering:

• Is this completely fine to do out of the box?
• Do these websites (YouTube, Steemit) require special permissions/regulations, even if payouts are small (i.e. less than $100 a month)? Is there a threshold?
• Does the payout currency/method matter? I.e. if we choose Paypal payouts or simply send cryptocurrency like steemit does, would this be better?
• Perhaps specific terminology and details of how the system works matters a lot; if this is the case, how should this payout system be "framed" to users of the website?

I guess my worry is that, to authorities who might eye this website, they may assume there can be fraudulent activity involved while there is no regulation making sure the authors are fairly compensated by the owners of the website. I tried looking around online but could not find any information on this topic. Any help or further direction would be appreciated.

Answer 1

I cannot possibly give you a complete list of the problems, but consider at least the following:

• Records and taxes for your business. Paying your authors would be an expense, and you need to document that. Not knowing exactly who they are will complicate this.
• Taxes for your authors. Depending on where your company is, and where your authors live, you might have to report their income to the tax office. Using paypal or cryptocurrencies could significantly complicate your accounting.
• If you use paypal (and have no other payment data), you will depend on having a working paypal account. What if they block yours?
• Records on copyright holders. The laws on copyright, and the transfer of it, vary significantly from country to country.
• Reporting requirements to your authors about how much they are due, and how you are tracking it.

In summary, I wouldn't even think about revenue from user-generated content without a competent lawyer on staff.