The intent is to provide access to the source code for no more than what you charged for access to the service itself. It doesn't mean that you necessarily will be out of pocket.
Putting your changes on GitHub or the equivalent and providing a link would satisfy the requirement completely. This is not exactly an onerous requirement unless your intent is to keep your changes secret.
The "That seems ... bad" part, really depends on your point of view, I guess. Letting all my temps, vendors, and contractors have access to this code means that any of them can inspect it for problems, learn from it, fix bugs, improve it for themselves and help others improve it.
That seems ... good ... to me, anyway.
At worst, they'll do nothing and I won't be any worse off. Of course, if I'm relying on secret source code to obfuscate my security holes, then perhaps I'll be in trouble, but I'm not about to do that. At best, I've turned my users into collaborators.
Perhaps you can enlighten me as to why you think this is bad.
You can't see why a Google lawyer would think it 'bad' for a temporary member of staff to be able to receive the full source (with licence to use and redistribute) for Google search, adwords, gmail etc etc?
Why would it be? Employees having access to modifications to open-source software the company made surely wouldn't materially affect any aspect of the business. It doesn't mean they can change the code running on your servers, or peer into other people's accounts.
Sounds like a non-issue.
Seems rather clear cut to me how contractors are handled. Since we are talking about legal risk and risk is measured in likeliness of an event happening, and as a lawyer you were expected during training to find and provide legal precedence as proof for legal reasoning, how high risk is there that this would not cover internal systems, temps, vendors, and contractors who access those systems? Has there been any cases involving that kind of employee status, having access to source code with similar licensed agreement, and the court finding a decision which support your conclusion? If you worked for a insurance company, how much money per month would you advice them to charge for this "risk", and would you then in good-faith advice companies that it is a good deal rather than shouldering the risk themselves?
This is a fairly nasty difference from the standard GPLv3 that I don't think enough people appreciate. As you point out, companies that modify GPL code for internal use don't have to release the source code and aren't affected by most of its provisions, and this is intentionally one of the freedoms it gives users. This isn't true of the AGPLv3.
DannyBee said the word "access", and technically that would then be "read only" access. While I could conceive a situation in which a disgruntled contractor plus the original author could in theory make a case, read-only access is a odd thing to create a court case around and a judge decision could really go anywhere. I don't think anyone would be willing to test it or feel that the court costs would be worth paying for the privilege.
Most legit AGPL projects I've seen by the way don't really try to trap you like that anyhow... for instance, you can re-theme mediagoblin etc. And if you're going to hack on the core... would it really be so bad to upstream the code?
Is that tested in court? Because that was one of the scenarios described as potentially problematic before to me by a lawyer (Applying a corporate theme to an AGPL system, breaching the contract with the designer of the theme that doesn't allow you to re-license the design, only to use it)
Outside software, there doesn't seem to be a clear legal precedence either. I commonly see news paper include CC-share-alike images in articles without adding the CC license to the article, website or the news paper itself. The question about copyright almost exclusively end up being about distribution rights of the work in isolation, or the right of the author to have the work associated in a specific context.
Which is exactly the point. Don't modify the source code or use a different product if you don't want to accept the license.
http://gcn.com/Articles/2007/07/23/GNU-version-of-GPL-gives-...
The remote network interaction clause makes no differentiation between internal and external users. They are all just users[1]
As such, you owe all them all source to modified versions.
Why does this matter?
A lot of companies have internal systems, and temps, vendors, and contractors who access those systems.
If those systems are (or are linked to) modified AGPL software (no matter how small the modification), they owe the temps, vendors, and contractors access to the source code to those systems.
That seems ... bad :)
[1] "if you modify the Program, your modified version must prominently offer all users interacting with it remotely through a computer network ... an opportunity to receive the Corresponding Source of your version ... at no charge ..."