Contracting with a World Wide Web Host

10 August 1995

Graham Smith

Companies by the hundred are rushing to stake out a presence on the Internet by putting up a World Wide Web page. But have they thought enough about their contracts with Web site providers?

The Web is already a flourishing advertising and sponsorship medium, the Web page offering an electronic cross between an advertising hoarding and a shop counter which is accessible from anywhere in the world. Some Web sites are said to have cost six figure sums to design and implement. More modest sites can be created for as little as the advertising budget will allow. Whatever the type of Web site, the advertiser has to decide how to make it available on the Internet. There are two choices: hook up a computer of your own to the Internet, or rent facilities on someone else's Internet computer.

D.I.Y or third party provider?

Renting is the easier choice for a company starting on the Web. This places the technical decisions and responsibilities in someone else's hands, leaving the advertiser to concentrate on the end-product: the Web page itself. It does not take the advertiser into the nervous territory of connecting its own computer systems to the Internet. Only the host's computer need be hooked up.

Many commercial providers now offer to host Web pages. However, renting space on a Web server creates liabilities and risks and the Web host and customer have somehow to allocate these between themselves. It is sensible to sign a proper contract addressing key issues in the relationship. Some of the issues are obvious. Others are less so, deriving as they do from the particular nature of the service being offered by a Web host.

The role of a Web Host

To understand the issues that arise, first look at what a Web host is and does. The host is a computer connected to the Internet. It must provide two key facilities: disk storage space and bandwidth. The storage space is simply the amount of disk space that the customer's Web pages occupy on the host's computer. A small company's Web site might occupy up to 5 megabytes. Many Web site providers charge simply by the megabyte. However, that is only half the story. Not only must the provider supply adequate storage for the Web sites on its host computer, but it must also provide a wide enough "pipe" to handle the traffic to and from the host. The pipe is simply a telephone link to an existing point on the Internet. The capacity of the line is known as bandwidth. A typical access provider will have at least a 65kb telephone line, and may have much more. The appropriate capacity of the telephone link will depend on how many sites the Web provider is hosting and on how popular those sites are.

Currently, disk storage is cheap and bandwidth is expensive. So there is a temptation for hosts to underprovide bandwidth, causing users to encounter delays in accessing the pages. A slow Web site will damage the advertiser's reputation. Users will give up trying to reach the pages. Even if the host genuinely attempts to provide sufficient bandwidth, what happens if one site on the host becomes extremely popular? What assurances does the advertiser have that the host will manage or increase the bandwidth to allow proper access to all sites on the host computer? Drafting a provision in the contract to cover this is not necessarily simple. Accesses will fluctuate across the day, so the clause may need to deal with peak-time availability. Most providers specify a maximum number of accesses per day, with surcharges above the limit.

Bandwidth - defining the host's obligation

One way of approaching the bandwidth issue would be to oblige the Web provider to maintain a telephone link to the Internet of a minimum capacity. However, although simple this does not fully address the issue. The appropriate size of link depends not only on the traffic accessing the customer's own site, but also on the number and popularity of other sites on the same host. It will also depend on the traffic patterns of the various sites, as these will affect peaks and troughs of demand to the Web server. A 65kb line may be adequate today, but inadequate in six months' time when the provider has taken on more customers.

A better way of addressing the issue is with a service level obligation. This seeks to define the speed and quality of response from the site to someone accessing the customer's page. How the Web provider achieves that result is then no concern of the customer. This approach has its own difficulties, as response times and availability are difficult to define and test. An added complication for a site on the Internet is that the requests and responses are carried via networks over which the Web provider has no control. This means that the Web provider will (if well advised) assume responsibility only for response times at the host. Delays between host and user will then be at the customer's risk. These issues have parallels in other types of contractual arrangements such as IT outsourcing, telecommunications and telemarketing. Experience in those areas may become increasingly relevant as Web provider contracts become more sophisticated.

Downtime and backup

The customer's contract should also cover downtime and backup. A provider may specify "99.5%" availability. That needs to be tied down carefully. Over what period is the availability measured? A site could go down for a whole day, yet still meet 99.5% availability measured over a year. Is there a back up computer if the main one goes down? What if the telephone link to the Internet goes down? Is there a back up? Is telephone line downtime included in the availability obligation, given that the provider probably only leases the line from a telephone company?

'Portability' of Web pages

The customer should ensure that its Web pages are portable, in case the service provider goes out of business or does not provide a satisfactory service. So if the Web site provider is also designing the Web pages and coding them in the special language (HTML) used for Web pages, the customer needs to ensure that it has the copyright and related rights in all aspects of the pages: the design, any text specially written, any graphics, and the coded version of the pages. The customer would be wise to specify that a full set of the Web pages is delivered in electronic form, so that it has a fully portable version of the pages in case of need. The key is to have both ownership of intellectual property rights and physical possession of a copy of the pages.

Liability indemnities

If the Web provider is alert to its potential liabilities, it will seek assurances from the customer that it will not include any material in its pages that infringes anyone else's rights, is defamatory, or could in any other way result in the Web host provider incurring liability to a third party. It will probably also seek indemnities from the customer to cover any liability of the Web site provider arising out of the content of the customer's Web pages. The customer in turn should be alert to a request for such indemnities and review them carefully.

Data protection

If the page is fully interactive, users will be sending information electronically to the host, to be passed back to the advertiser or perhaps to be processed on the advertiser's behalf. The contract will need to address the host's obligations to carry out these tasks, together with the Data Protection Act issues that will almost certainly arise. The Web host provider will also be collating statistics on accesses to the site. The contract should address form, content, frequency and timeliness of statistical reports to the customer.

In this article, we have mentioned just some of the main areas to consider when contracting with a World Wide Web host. A full list of eventualities to be covered could go on at length. Generally, a Web site has some of the aspects of an advertising hoarding, some of a telebureau service and some of an IT outsourcing arrangement. A contract that adapts the key features of all three should be something near what is needed for a contract with a Web site provider.

(reprinted from New Media Age, 10 August 1995)