The growth in popularity of social-media sites has been astounding. It took four years for the Internet to reach 50 million users. Facebook reached 50 million users in six months and added 200 million users in less than a year.

As of June 2010, approximately 60% of Canadians had a Facebook page, and while it is easy to think that most users are likely young Canadians, the latest Facebook statistics show that the greatest increase in users was among females 55 to 65. If the global population of Facebook users was a country, it would be the third-largest country in the world.

These are startling statistics and reveal that social media is fundamentally changing the way that people and businesses interact. Social media can turn a little- known person, product or company into an overnight sensation.

The seemingly ubiquitous tween sensation Justin Beiber (ask your children) was discovered a short two years ago as a result of a video his mother posted on YouTube.

However, just as social media is capable of rocketing a person, product or business to phenomenal success, it also has the power to quickly destroy and do enormous damage. Stories of United Airlines breaking guitars, of Dominos Pizza employees doing unfortunate things to pizzas, of Air Canada breaking a disabled child’s wheelchair and similar incidents litter the social-media landscape, along with the sometimes-tattered reputations of the companies involved.

While some businesses shy away from social media, it is a reality that should not be ignored. It is important to recognize that employees in almost any business are likely to be active participants in social media and may use company facilities to do so. Accordingly, businesses need to be aware of the potential for their employees to publish defamatory comments about a person, organization or their goods and services.

The ease with which personal information can be acquired and disseminated creates risks for invasion of privacy. Using someone’s name or photo without permission is a common problem. Unauthorized use or disclosure of confidential information is a serious concern. In one case, an employee of a publicly traded company in the United States “tweeted” details of an anticipated merger to friends before the information was publicly disclosed.

Other legal concerns relate to copyright and trademark infringement and plagiarism. While these exposures existed previously, with the pervasiveness of social media and the speed of the Internet, the task of controlling content and of containing the spread of information can be an impossible challenge. Once this particular horse has left the barn, there is no chance of corralling it.

However, a properly drafted social-media policy can at least minimize these risks by setting out clear guidelines for the use of social media by employees, agents and contractors, both at work and outside of work. Among other things, a social media policy should address:

  • who may use social media and when. Usage restrictions need to be tailored to be appropriate considering the nature of the business. For example, a more traditional “bricks-and-mortar” business might restrict social-media usage to only those employees directly engaged in marketing. On the other hand, it is not unusual for technology companies to allow all employees almost unfettered access to social media for business purposes.
  • which social-media outlets can be used. Not all social media are the same, and many cater to different market segments. The available outlets should be evaluated against marketing and public relations priorities.
  • the nature of permitted interaction using social media. Consider whether employees who are engaged in using social media as part of corporate marketing and public-relations programs should be required to properly identify themselves as authorized representatives. Conversely, if employees are restricted from using social media except on personal time, the policy should prohibit any reference to the company, its competitors, products or services.
  • external legal matters, such as laws of defamation, the criminal law, securities law and the terms of use of the various social-media sites that are being used. A social-media policy should stress that users of social media do so at their own risk and are personally accountable for their actions.

The social-media world represents a significant opportunity for companies to communicate with the public in new and innovative ways. A well-prepared company can take advantage of the leverage that social media offers while minimizing the significant risks associated with such a revolutionary phenomenon. Those who fail to address the risks proactively face potentially devastating consequences.