January 24, 2007
User-Generated Content Expected to Continue Growing While Corporate Revenue Surrounding It Questionable

News broke last week that user-generated videos have been the primary force of growth in the number of online videos available, currently estimated at being 47 percent of the videos that are found online, launched through the popularity of YouTube and other video sharing sites.

The statistics, made available from Screen Digest, leads to a prediction on their part that 55 percent of the online videos viewed in the U.S. will be user-generated by 2010, which would account for approximately 44 billion views.

However, Screen Digest emphasizes in their report that, while the amount of views is bordering on half for user-generated content, the portion of revenues generated from this content is significantly smaller, although their predict that revenues generated from advertising surrounding user-generated content will expand from the $200 million estimated for 2006 to a 2010 total of $900 million, which would still be only 15 percent of the total online revenue, at a time when they predict 55 percent of the online video content consumed will be user-generated.

Of course, the growing popularity of viewing user-generated content coincides with the industry's major question marks over how to consider YouTube, especially considering user appropriation of copyrighted material for their content in many cases. Specifically regarding the posting of copyrighted material, much of which will not count as user-generated, there was a recent New York Times article by Laura M. Holson that looked at the industry ambivalence in Hollywood over whether YouTube "hurts profits by distributing unauthorized movie clips or helps industry by creating buzz for films"--in other words, may YouTube be the future of movie marketing? (Part of this has to do with creating a legal distinction between quoting and piracy, which the industry has been unable to do so far.

These questions are being raised at a time when models are being sought out to monetize user-generated content, both in creating specific niches related to official properties (see the user-generated content solicited for Conan O'Brien, Turner's Super Deluxe, and CBS' "15 Seconds" campaign) and through finding potential models to pay the generators of user-generated content to encourage quality content, such as with Metacafe.

Regardless, 2006 was considered the year of user-generated content by some, and we have to question now what that means for the future of online media going forward. Will monetization of user-generated content increase its visibility and quality or commercialize and trivialize something whose power defies capitalist nature? I think both, that the vast majority of user-generated content is not good enough or aimed at wide enough of an audience to be monetized, while some content is seeking a wider audience and can only benefit from improved economic models, but the industry will certainly strive to find ways to incorporate user-generated content into their business models moving forward because one thing is clear: this trend is not a blip on the map.

In their press release, Screen Digest says "the honeymoon period" for user-generated content is over and that revenues will be slow to develop, but there's no question that this will be a marriage with the Internet and users that will exist from this point forward, and the industry has to figure out what it's long-term relationship with non-commercial video production will be (both how it can be commercialized and how much of it defies making any substantial revenue).