OnHollywood: Consumer Generated Media - What is it worth ?

The last panel of the day – Consumer Generated Media: What is it worth – just started. Moderated by Howard Kaushansky, the CEO of Umbria, it is an assembly of startup CEOs in the user generated content space (from right to left):

• Ron Bloom, Cofounder and CEO, PodShow
• Cynthia Francis, CEO, Reality Digital (parent company of ClipShack)
• Mary Hodder, Founder and CEO, Dabble
• Chris Klaus, Founder and CEO, Kaneva
• Mika Salmi, Founder and CEO, Atom Entertainment
• Steven Starr, Founder and CEO, Revver

The first question is whether user generated media is now mainstream, and which metric is used to establish the answer. Ron Bloom asserts that within 5 years over 50% of content consumed by end user will be user generated.

On value attributed to user generated content, Mary explains that the equation is not only how much money is mande directly from “content sales”, but revenue opportunities generated because of the content – as in the reputation, credibility and visibility. Therefore only a very small subset of user generated content producers will be able to make a living out of advertising, but a lot of people will get jobs, gigs, book contracts, etc. because of their blog/podcast/vlog. This is not a new argument by the way, since it was already discussed and agreed upon at BloggerCon3.

On cannibalization of mainstream media, Ron Bloom explains that podcasters actually become a new distribution and promotion channels for licensed content like music, and he points to increased sales of music CDs following podcasters playing them on their show. In that case, podcasters reported the fact that they played the music to rights holders but did not pay for it.

On direct monetization, Mary Hodder points to Revver’s model to share advertising revenue with content publishers, and expresses her surprise that to date none of the other large media sharing sites have implemented a similar approach. The issue however is that Revver needs to generate a ton of traffic in order to make that concept work for themselves - and their publishers. And today the YouTube approach of distributing unmoderated content is generating an 80X difference in streams being served (even though it is starting to backfire on YouTube).

Tags: OnHollywood

Comments

[Andrew Fife]

It will be interesting to see how whether not YouTube goes the way of Napster and KaZaa but regardless, I certainly think they are about to face a wave of increasingly stiff competition. In fact, I think that Blog Cheese (http://www.blogcheese.com/) is already a much better site for distributing video content anyway.

[ouriel]

i can already testify that without blogs i would not have accessed to my new job for sure

[Lawrence Coburn]

I would echo Mary Hodder's surprise.

Web 2.0 is moving inevitably towards revenue sharing with contributors. It has to.

Part of this shift will be a function of the need for attention competing start-ups to differentiate themselves, and part will be driven by the fact that a high traffic site that is made up entirely of user generated content should have fat enough margins to allow this model.

It is tough to make the economics work sufficiently to make it interesting for your site's users - but not impossible. However, for an economically rational consumer, why would you ever leave a book review on Amazon where 1) they own your review; and 2) you don't earn a dime, when you can leave the same review elsewhere and retain ownership of your content and make some money? I don't think the money part has to be especially significant to provide a compelling value proposition.

In terms of logistics of user compensation, currently the options are to manage all the tracking and micropayments yourself, which adds to your cost base, or to outsource it to a program like Adsense or YPN. Neither YPN or Adsense are properly set up for this model yet - both because of the absence of APIs, and the floor payout of $100, which is a very steep hurdle for micro publishers within an existing community.

My sense is that servicing aggregators of user generated content is a real opportunity for either YPN or Microsoft (or someone else) to make some headway against Adsense. Unless of course, Adsense solves this problem first and gets to introduce their program to a whole new generation of publishers.