Doesn't seem like that big of a problem, just don't give them anything you can't afford to lose control of. It's pretty fair that you compensate them with free advertising since they're giving you something cool for (otherwise) free. The deal might not be for everyone, but I wouldn't say it's a bad deal. If I was running a contest like this, I would have used similar language to make sure the program created a virtuous circle of coolness rather than applicants clamping down and keeping the experience private.
From what I've heard(my wife is a travel writer and lawyer/writes a law column for writers) there are a lot of other questionable clauses in the contract as well though I don't have specifics. One she mentioned was pretty harsh content limitations too. She was actually just telling me about it a few hours ago while we were having a walk so it was random to get back here and find it at the top of HN.
