Does anyone remember that show Project Greenlight? It came out of LivePlanet, the 1999-era dot com started by Ben Affleck, Chris Moore and Matt Damon that aimed to use the Web to transform traditional entertainment. It was user generated content before we had an over-used buzz-phrase for it.
The premise of the show was that would-be writers and directors would submit their work via the Web and the guys would pick the most talented person and produce his or her movie. It was an entertaining show, but the movies always flopped. In the later seasons, I remember a scene where a frustrated Matt Damon says something like, “Are we saying we were wrong and all the talent is already in Hollywood?”
Welcome to the catch-22 of User Generated Content. And guess what? It hasn’t changed with time. We all know there are talented people who never get their lucky breaks, so democratization works in theory. But there’s a problem: It doesn’t make money. Users don’t want to pay subscription fees for something aspiring writers, singers, and actors are uploading for free, and advertisers don’t want to be next to dodgy and unpredictable inventory, no matter how gaudy the page views or streams.
In the LivePlanet-era, costs and excesses ran fledgling UGC companies into the ground. But this time around, with more people online, greater access to bandwidth, a more established online advertising ecosystem, and far lower burn rates, there was reason to believe the monetization nut could be cracked. After all, there was a time when no one thought you could make money off of search. Tim Koogle reportedly used to brag at Yahoo analyst meetings that search traffic was going down, because how could you possibly make money off people leaving your site?
Then, the financial world blew up the economy for us. And the most rosy-eyed optimists have come to realize that even though Web companies didn’t cause the meltdown this time, they’re still getting hit. Companies need revenues and in a duck-and-cover economy, it seems UGC isn’t going to get them there. Across the Web 2.0 world, we’re seeing a quiet-but-knee-jerk shift away from UGC in favor of professional content.
I wrote about this idea back in February when Slide—a company that’s long championed the marketability of individual expression—did a deal with Ashton Kutcher’s Katalyst Media. But in the last few weeks, there’s been a better example: YouTube. Last week, news leaked that YouTube was close to locking Disney up in an exclusive deal for long-form content, and now, we hear of a potential deal with Sony Pictures.
One of two things has happened: Either YouTube has spent years trying to work on deals with Hollywood,and they all happen to be closing at the same time; or the biggest champion of the user generated content revolution is changing its game plan.
Of course, YouTube won’t say it’s turning its back on user generated content, the same way Max Levchin said calling UGC a loss-leader was “too harsh” a few months ago. (Never mind, he had just described it as a great way to bring in users but not a great way to make money….you know, the definition of a loss leader.) That’s because smart entrepreneurs realize user generated content still matters, it just doesn’t directly translate to revenues. UGC is the core of why so many people are on these sites and without the eyeballs, the tech platforms don’t have as much negotiating leverage with Hollywood. Without Hollywood, it seems, they may not get revenues anytime soon.
It’s an interesting catch-22 for entrepreneurs and executives. Web 2.0 companies need to shift their emphasis away from UGC, without seeming like they are. In other words, they can’t abandon the soft, fuzzy ROI of UGC, as much as the immediate need to make money is pressing down on them. Otherwise, they risk driving users away and opening the door for the next wave of Web upstarts—the same way Web 1.0 did when its leaders stopped chasing eyeballs in favor of premium services and subscriptions.
Great post Sarah, but I think the nut can be cracked and will be. I have a lot of thoughts on this. I’ll see if I can write a follow up post response.
Cyan, please stop accosting Sarah with your nuts.
Isn’t web 2.0 over? Why are you still using that term? You guys keep killing it and bringing it back. http://www.tech...eath-of-web-20/
Someone NAME THIS ERA!!
UGC is still going to be a huge traffic driver in the coming years. But perhaps it will be limited to 140 characters… or less.
UCG is worthless. There is tons and tons of noise, and barely anyone has anything interesting to show. Until there is a solid way to filter the good UCG from the bad, it won’t make money. Just look at sites like http://www.anonboard.com for example. All UCG goodness.
If you define UGC as non-professional versions of old media content, then hell ya, it is terrible and will fail. But that’s a narrow definition the is coming through the prism of traditional media biases. The reality is that companies like Twitter, Yelp, YouTube, MySpace, Flickr, and Facebook are almost entirely comprised of UGC (blogs, reviews, videos, photos, etc…), and they are doing well, and have found ways to make money. And on top of that they are cannibalizing time and eyes from traditional media.
I think everyone really needs to tighten their belts. If “excesses” are avoided, it’s possible to create a great UGC site at the moment, that makes a profit. But the costs really have to be kept down wherever possible.
Tim O’Reilly said that web2.0 needs to go from the web to the real world. And that it needs to go from entertaining to solving real problems of the developing world. It is quite frightening and shocking to imagine a future where the US dollar is not the chief global currency, but that is just what a few honest economists are talking about. Wait. Listen me through. That, coupled with the fact of the US economy, would bring the US down from developed to not-so-developed despite its huge technological advantage. So if we use web2.0 and UGC to actually solve real problems, maybe starting with the US itself, that would ensure engagement – sharing solar or electric car hacks is more economically sound than sharing Facebook-Poop-Throwing hacks, after all. Websites with UGC that solve problems of that kind, IMO. This model is already picking up in pockets all over the world. The Chinese and Japanese are probably leaders at these kind of things. But we need Silicon Valley to do this to really kickstart the next version of the web. I’m not saying more things because no one likes being called a nutjob.
(that was the lofty accusation, after all)
There’s a lot more, but I won’t disrupt the arrow of time
Thanks (
) for listening.
Interesting insight Sarah,
UGC as a pathway to fame & riches seems to have been the dominant idea and certainly a driving factor in the rise of massively multiple media makers.
For me, it always boils down to a signal – noise evaluation, any channel that delivers more noise then utility, will eventually get ignored and bypassed for filters which serve our interests more accurately and completely.
I think that forming niche markets for UGC will be the next step, instead of fighting for eyeballs on youtube with the smorgasboard of popular entertainment driven by years and millions. It’s not an even playing field, when you’re working with dollars and hours, UGC has to make it’s own channels to be heard.
Sarah,
You are spot on, as a founder (we just sold our site today) of a UGC sport site it is clearly a problem to generate real revenue from UGC by itself. Having a passionate community is very important in many ways but to grow from a niche player to a more sustainable long term business there has to be integrated with other more traditional media businesses.
Ze’ev
How do you define UGC? Sites like 99designs, elance, etc, are doing just fine thanks to corporations outsourcing specific skills to the masses (and they’re finding that the talent is just as good, if not better in the world at-large).
If you’re just talking about Hollywood, they’re generally last to change anyway. As an entrepreneur in the entertainment space (who is gambling on UGC prevailing in the end), I’m willing to bet that Hollywood will feel the pinch eventually – or so my bank account hopes. No one wants to finance films anymore, so studios and indie producers alike are going to have to cut costs. UGC (be it scripts, shorts, etc.) is a great way to get there.
Sarah,
When you say UGC, does that include Twitter? Because users generate practically all the content there and I don’t see them having trouble monetizing that in the future.
I love the way you write
That ugc (I guess you are mostly referring about video) content is no money-maker is a long-known fact. The guys at Blinkx have noticed it a long time ago, and Youtube has been working on cleaning up its act for a long time now. They can finally work deals with Disney and Sony because they have successfully 1. separated pro content from ugc content, and 2. developed a technology that spots clones on the fly.
the problem is the business model; which we’ve solved. u can sell your original content; and those who buy it either give part of the profits to a friend; or they can re-sell it ad make money.
i shouldn’t even mention this but we have some technology, not just the website, which monetizes almost everything for customers.
the problem with web 2.0 and UGC is it’s basically lets fck the little people then make deals with the big boys. Why is anyone going to create something then post if there’s no reward other than 5 seconds of fame.
one other thing; we started with the business model first and strapped on the social networking; twitter stuff afterward. most web 2.0 company just build something then go… oh, what about making money.
Your website will fail. And the spam is tiresome.
yeah, you wish. love your personal site though; do anything in life besides suck…
you have no idea.
No, Lewis is right. Your website is pretty crappy, in look alone if nothing else.
Take a hundred bucks and hire someone in a college web design class. The ROI on that alone will triple the face value of your site. Or, alternatively, come up with a game plan that doesn’t sound like a marketing pitch developed during a Dale Carnegie class.
yeah; cause it not 2.0 graphic; we’re not doing 2.0 apple/twitter graphics cause it’s over; has been; done.
i know you guys don’t know what your talking about cause if you joined you’d know you can style it the way you want. colors; graphics and all.
no programing.
all you’re doing is nay-saying cause you have no clue;
what if i said… hey, they website, might not be the end-all. it might just be…umm…. step number 1.
actually register and fck with it before you say something.
after you joining you’re publisher, artist, consumer. try changing the colors… see what happen….
that’s why i think it’s funny that you say it’s crappy; when, if you’d joined and played around; you’d see you have complete control over the interface.
you guys are so dumb; you do nothing but look at the front page; and the graphics; and yet have no idea. it’s amazing.
i had, a famous blogger, review another product of mine; and they never tried it out. i got a good review; but they never actually did anything.
Dale Carnegie is for the masses; so am i.
Feast was a (the first?) Project Greenlight movie and it was pretty awesome =)
just sayin
Arin
Finally some common sense! I’ve been saying for a long time that there is no business model in the abundance of UGC, and UGC creators don’t want their content exploited by corporations and entrepreneurs. When bloggers and other UGC creators choose to create content for free they are classic bad competitors: they destroy the commercial value of information while maintaining its intrinsic or social value. Corporates need to listen to the voice of the community: we are the media now and we no longer need you.
Really great post Sarah! I like your writing style.
One thing to note from both the comments above and the post itself, is that we’ve reached a point in the internet where UGC just doesn’t explain anything — it’s too generic.
After all everyone is a publisher now… Everyone.
I’d argue that Web 2.0 isn’t abandoning UGC, it’s built by it. The cost to produce content is dropping drastically and although the revenue model is still emerging, enough people are flocking to the internet for entertainment reasons that I’m confident that talent will eventually back out to $$$.
from @d_rey
Authority. Curation. Editing. Value. Time. Direction. Discovery.
There is a psychology behind how humans prefer, enjoy and enact the process of finding information. In general and on the web.
The social technology behind today’s web has gone to great lengths to lower communication thresholds which, obviously translates to lots of UGC. What we haven’t seen is a strong, connected and invested community that is managed properly. Proper management in terms of the words I mention above (direction, authority, curation, editing, etc). There needs to be a double-reward when it comes to UGC to complete the cycle.
User submits content, community or editor filters content, creates hierarchy of value and people assume that the circle of life continues but what eventually happens is you’re just filtering stuff from the filterers and everyone else is left out. They leave.
UGC isn’t broken. The systems are broken and the gatekeepers are lazy.
Spot on: the problem isn’t really UGC, but in how we manage it: filter, curate, serve and consume.
Will users ever abandon UGC? No; we won’t stop creating or consuming UGC.
Will companies stop using UGC? Doubtful as long as the transaction costs of accessing and providing UGC are low enough to justify serving UGC as a marketing and “engagement” expense.
I do believe we’ll see a temporary shakeout among UGC aggregators misjudged the revenue potential and costs of serving UGC, but the underlying market dynamics will bring UGC back.
Sidenote: Why does UGC have to make money? People create, share, distribute and promote for much more than just money.
I second this. We have to remember there exist ‘experts’ in technology and communication. People who can manage and curate UGC. Sometimes these people have fancy degrees, others are just intuitive. Whatever the case, the common submission will always need a revision or two, just like an author needs an editor.
I think it’s a lot harder to understand social currency and put a definitive value on it. As humans, we’re so caught up on definition of value. A “click” equals xyz. Assume that and life moves on. Although, attention is becoming the new currency. Someone shared something with someone else? It might not make you a million dollars right then and there but think about the interaction that just happened. Someone took their TIME to invest themselves into something that came from your brand. It was a commitment, mindshare, etc. Sometimes that is a lot more valuable than a few cents of CPM.
User generated entertainment content failed to monetize so far, but not all UGC failed. In some cases it was so successful that it threatened traditional media and in others, new markets were created. iStockphoto, a user created stock photography site succeeded and was acquired by Getty Images after becoming a serious player in the field. Their secret was reliance on selling, not advertising and on a target audience similar to (or the same as, in many cases) the creators as well as clear guidance and quality thresholds.
Etsy, Spreadshirt and Ponoko are another examples where much was invested in understanding the creator community and relying on an audience that is similar or one and the same as the creators.
Other UGC, open source and collaborative projects, such as Wikipedia and Blender do not measure success in the money they make, but rather in the benefit they bestow on the community.
more about UGC:
http://bit.ly/ugc
Thank you for this post. It’s great to see someone get their head out of the grossly over-hyped world’s of lifestreaming and motley UGC content clots into some hard and fast economic truths.
I wrote about this a couple months ago — http://tinyurl.com/6hbjyy (Full text of post below if you don’t trust a TinyURL)
There’s a good post at LINK REMOVED BY POSTER about the fading promise of big-time celebrity driven solely by the web. (Which, much to their credit, they never called a “web-lebrity.”) Basically, the piece talks about how difficult it is for someone to make money purely as a web celebrity.
But it is also another small indication of the welcome move away from all things user-generated. Not so much because of the source, but because of the quality. 99% of user-generated content is garbage.
I couldn’t help chiming in in the comments.
From the post:
Advertisers only value authenticity when it’s carefully scripted; the actual surprise of live broadcasts — violence, profanity, and sheer weirdness — is not a value proposition for them.
To which I responded:
“You nailed it. I think that this is another step in the welcomed collapse of all things user-generated. The initial appeal of perceived authenticity is fading fast. We’re over it – now that we’ve all done it. Creating and producing quality (consistently watchable) content is beyond most people’s ability. Entertaining is hard work. And advertisers – and viewers – are done settling for sloppy, incoherent, self-referential fanboy dreck. We are all not nearly as cool as we think we are.
I couldn’t resist commenting again a couple hours later:
User-gen is done.
Good music, art, film, landscaping, cooking…anything of VALUE takes time to create, nurture and produce. Current “content” suffers from a thin and shallow respect for the artistic process. Art takes time. This stuff ain’t easy.
Advertisers were attracted to the commotion of it all – not the quality. And now that the hype is waning, advertisers will take their $ elsewhere.
This was predictable a year ago. I know, because we predicted it (see here)
http://www.slid...type=powerpoint
What amuses me is that a year ago we were totally reviled by much of the Web 2.0 community for saying it.
web 2.0 is dead; i’m so glad
This is a timely post as we get set to try something new. I have been involved with a number of crowdfunding sites that never worked as a result of the web 2.0 group not knowing what happens after you reach the financial goal of funding a project online. I think from our research most people out there want to collaborate and own a part of something bigger as a group. I think the idea or term UGC should be redefined as User Defined Content (UDC) where the crowd gets involved in the shaping of the outcome by helping the big boys with their decisions.
We believe that this will work and i invite all of you to visit and preregister with our site as we go into beta over the next 6 weeks.
Ownership and collaboration is the next piece to this puzzle and I think using the crowd to create the currency for those larger projects is essential.
d.
the key is to provide the right algorithms to boil the good UCG up. MOG as network of thousands of music blogs, gets 5000 blog posts a week. some incredible, some terrible. the art is in the filters.
close; but…how do you do money….cause i know.
Sometimes is take a crisis to step back and crack the nut!!
The “UGC Nut” won’t be “cracked” by a “company” because they are all run/owned by people that are grasping at the fading american dream.
UGC will take over when UGC is ubiquitous and news comes from people instead of from bought and owned (2 party system political) media companies. Only then can we shovel the remaining clumps of the creativity blockers into the sewer where they belong.
blah; same ole fight the machine attitude. money has to be involved otherwise no one will do it. money means corporation; means start-up.
if you’re not paying, why should i tell you; you’re just another reatrd to me.
and if you think different; you’re young and dumb and haven’t realized its all one big sell. u
reatrd?
yeah; why should i care about you; suppose i have great info, something you’d want, like; why would i give it to you. thats where money comes in.
I think in the future there will be found a good hybrid model. Really its just the natural evolution of a UGC site over time.
Its not too hard to sift through the UGC and have a content editor pick out, clean up and promote the gems as “featured” content. Certainly much easier than taking a web 1.0 editorial site and then tacking UGC into it (and I’ve been involved in doing both).
A site like YouTube just wouldn’t have the dominance as a platform had they not been entirely UGC for the first years of their existence. There’s a lot of loyalty to be gained from your audience when they can contribute, and they’ll keep coming back when they see you’re paying attention to the quality of content.
interesting Sarah, now you need to write your next post explaining what “the next wave of Web upstarts” will be?
The next wave will be composed of all the people from TV, print, and so-called traditional media outlet professionals that now have the tools to create without being ultra-uber-nerds and early adopter addicts. They have the chops and now the technology and infrastructure has reached levels that would have given the most underfunded zine, b-movie, or creative output all the polish that the big houses can muster today.
These are folks that could fight it out for the 20-25 slots of top tier celebrity within top tier broadcast mediums. Instead, they will focus on reaching 100s of thousands instead of 100s of millions.
They’ll reach the groups that will matter. Fans.
It might be like the farm leagues of major sports franchises. Or, it might just be “stars” that need to make enough to follow their passions using systems that link to their fans discretionary income.
mine, not urs
oh yeah french dude, your ex-employees think your an asshole. glad to see you see-what working out.
“I am the most popular blogger in FRANCE!!!”
the only people that matter in tech are the programmers.
everyone else is a wanna be.
we create it;
you suck it.
At our company we are working on a project that will bring UGC and Hollywood together. We already have a well established connection list to help push this through.
Sarah,
Great post…(and great book).
UGC is just getting started. It’s all about strategy. What kind of content are you asking for? And from whom? Then how do you use that UGC? Bazaarvoice has been in the UGC business for nearly 4 years and now host UGC for over 360 international clients. They are inviting their customers to write reviews, answer questions and tell stories. We are amplifying the content for SEO, to portals, to retail sites, to mobile phones. This UGC is helping the READERS (prospects) make purchase decisions. The failing strategies are those that are focusing the content creation and consumption to the minority. Walled garden community sites are good for some things, but mostly to the minority of visitors using them. How many UGC / community sites do you belong to beyond facebook? What about your mainstream relatives and friends? The key is to get the contributors to contribute content that helps the readers make decisions. To persuade them to action. To help them making a purchase decision! You’re not exploiting the contributors either. KellerFay research suggests 90% of contributors who write reviews write them because they want to help others. And it does help others. On our site we’ve published over 40 case studies of conversion, SEO traffic, average order value, lower returns, higher customer satisfaction, reduced calls, and other impacts to the P&L. Our growth is 100% due to the fact that UGC delivers results. It’s just many Web 2.0 companies — and some brands in social experimentation — are pursuing the wrong strategy for UGC.
Great thought starter, Sarah – definitely agree that the UGC is an extremely broad overarching term (the world wide web itself is UGC, right?), and that effective monetization requires niche content.
Just in the same way that the big web portals are struggling more and more to bring advertisers, any broad UGC portal (like YouTube) is going to have that same challenge.
The advertising community is snowballing down a slope of ever more precise targeting, and content providers with a more narrow focus be it UGC or PPC will most likely see greater revenues in the future
just my two cents
This post is a bi misleading. There is not problem with monetizing UCG as long as it is not video. Blogs, Tweets, Pictures you name it do just fine. Even in non-US markets the CPMs are high enough to pay for picture viewing bandwidth.
This is a terrific post and a subject that has so many unanswered questions. The fact is that UGC will NEVER go away and it will eventually be monetized. This may take a few more years, but the value added for UGC has a great deal of potential if it can be harnessed properly.
The big problem today is a shrinking economy with ad revenues drying up in step. My wife works in the newspaper industry and they are expecting ad revenues to decline by 50% over the next seven years. Some of this will no doubt move over to the internet, making a profitable 2.0 business more likely, but I often wonder how sustainable fully ad rev dependent sites can be over the long haul.
Many questions, few answers.
In a way, google search results could be seen as user generated content (they are). If google found a way to monetize that, I see no reason why other methods that are more suited to different forms of content can’t be found in the future. It’s only a matter of time, I think.
yeah… it is. it’s the ultimate UGC; the internet.
Sarah,
I completely agree with you as your post is about entertainment UGC. Entertainment is for talented people not for “Users”. At the same time i don’t think the solution is to bring in hollywood people used to deal with big screens. The cognitive behaviour of internauts is quite different from that the remote control people are used. I think we will see new authors creating interactive contents on software platforms providing all the right tools and not just the video upload button.
ciao,
Youtube was never really about “user generated content” — there’s some tiny percent of users — what, 1 or 2 percent? — who actually create anything from scratch for the rest of the viewers to see.
Most of the YouTube content you might call “user stolen” — music videos, movies, professional content — that in fact some companies have aggressively tried to protect, and good for them. So Google cuts a deal with content providers to be able to go on offering some of this.
I’m still hazy how Google really makes any money off YouTube but I guess they sell the ads.
Now, you might really call all of this “User Accessed Content” or something to stress how it is “on demand,” not the push of old TV, but an offering of a huge variety of stuff that users select and “like”.
The platform needs to keep the flexibility of those 1-2 percent to go on posting their stuff, some tiny percentage of which then breaks through to professional or at least so widely “liked” that it can sell ads, I guess.
Sarah Lacy doesn’t really grasp yet the importance of UGC in virtual worlds. Now there’s multi-millions of dollars coming and going that she isn’t validating because the cool kids keep saying it’s not cool, but Second Life isn’t going anywhere, it continues to make money, as will other worlds like it. The big companies will then be back trying to figure out how they can get a piece of this.
they don’t; youtube lost 400 million; see wallstreet journal
Sarah’s on fire. Couple days ago it was the metacafe is a failure, now it’s “Web 2.0 companies need to shift their emphasis away from UGC”. Riiighhht. Laughable.
Important too is the impact on creative professionals who see reduced return on their efforts. Photographers for example are facing severe competition from amateur, part-time sourced UGC (witness iStock and Flickr/Getty).
The trouble comes when content distributors reduce the economic return to less than the cost of production, at which time professionals will no longer provide the high-production value imagery. Signs are that this is already happening.
Sam Decker is right–UGC is just getting started. There are a number of folks who are finding ways to filter and use UGC in new ways. To see UGC through the lens of old media is also false. Those of us who create UGC (an awful, condescending term, to say the least) in some way aren’t always doing it to make money. We’re doing it for reasons that lead to other enterprises that make money. So to see the creation of UGC as a means to an end isn’t the whole picture of UGC.
Perhaps, Sarah, it’s that you’ve never really been on the creating end of UGC to see it from the producer’s side? I’m just sayin’….
Good post here Sarah. I think the Youtube news is interesting in that they seem to be trying to be more different things to different people. If they truly do not wish to go away from the UGC that has made them popular, they need to protect it against traditional media. I don’t know if both models can work at once.
Something to consider, back in 1999 bandwidth was still a major issue. Maybe Ben and Matt should come back and crash the “Web 3.0″ party. Just like the good ole days. Filtering the noise could be a good thing for video. Just look at what it does for music and American Idol. Kind of… oh well, at least it monetizes ;O)
If people keep pointing to YouTube as the example, user generated content looks doomed. However, if you look at the thousands of other examples where exposure, unique viewers and a return users have been generated by campaigns that have incorporated UGC it is hard to say that it is a dying trend. If anything, it is just warming up.
Agree with poster above re: calling YouTube UGC. It is mostly illegal uploads of copyrighted material (in various forms). Advertisers and Google dont/cant want any part of that.
However, there is obvious potential for generating knowledge from the distillation of UGC. Twitter’s search capabilities are the best example.
What FB and Google need to realize with respect to this value is that size is not that important. Twitter at its current size, or even 1/2 its size is a representative sample for a UGC search function to adequately represent “what’s current” in the internet user population.
BTW: I am running the debugging version of Flash, and every TC page generates the following error. Could you TC techies please track this down an fix it (I believe it is related to your Flash code, but am not 100% sure). Thanks.
Error #2044: Unhandled NetStatusEvent:. level=error, code=SharedObject.Flush.Failed
The two most important posts here are from David Sanger and Derek Rey.
The term UGC is too broad and talented people, no mater how they define themselves as Pro or Amateur, can make money producing content.
I believe a “marketplace” environment for digital content is the clear solution. In a Marketplace, money is the filter not some editor “deciding what is good and bad” content. The money will flow to quality talent that meets the needs of the user.
To make this work, the user needs to know that they can request or choose from the best available content and content producers need to know that they will get paid for their efforts.
In this environment, the term UGC does not matter. If there is enough money “on the table” to entice a producer, any producer, to take a chance and create the content then they will make the requested content.
The revenue model simply becomes, as in any marketplace, the fees associated with hosting and managing the marketplace.
exactly… “I believe a “marketplace” environment for digital content is the clear solution. ”
that’s what we’ve done/doing… a social network for users to by and sell between each other; the key is to reward the buys by involving them into the business model; when you buy something from the web, you get to give the sales commission to a friend/ or yourself if you register twice; if you use our p2p module, you make money redistributing it. the artist/publisher still makes the royalty.
The market for content in general is not working UGC shares this space and is quite rightly affected by it, CD sales down, Ad revs down, high price downloads, poor broadband speeds, piracy.
There does seem to be a flight to safety away from UGC towards the majors, as the majors carry with them metrics that give advertisers the confidence to spend, and at the same time the mayors get to dip their feet in two ponds, traditional media and digital media while monetising in both.
I’m counting on UGC to win through in the end, once the current state of flux has been negotiated.
if your business is based on advertising; and you’re not google, you’ll fail.
the advertising model for web 2.0 start ups was always hype to get investors money.
As some one in an earleir post had said web 2.0 has to follow the marketplace paradigm if UGC has to translate to $$$.
Market place is a value exchange portal. Unless web 2.0 sites can generate ugc of value, they cannot sell their sites (read: service commission.) Ad revenue should be seen as a secondary source of revenue.
Hey Sarah! Spectacular post, even if I disagree. Some problems. First, define UGC. Second, explain why so many social networks are doing well: Twitter, MySpace, Facebook, etc. I think the focus should be on HOW the effort was designed. Some projects have one-source revenue website, like ads, and avoid affiliate marketing — bad. The bottom line is one can’t argue with eyeballs. The reason Disney signed with YouTube is not that UGC is dead but that Disney wants to play in the YouTube space, where they can reach their demographic. Hey, some money is better than no money at all.