The above the fold headline in this morning's Financial Times:
AMATEUR SITES TO GET JUST 15% OF ONLINE AD BUDGET
This news is based on a study released by Screen Digest -- a research firm specializing the movie business. Screen Digest predicts that, by 2010, 55% of all the video market in the US will be based on user-generated-content (UGC) but that only 15% (which, I suspect, is a high percentage) of all online video revenue will be generated by this UGC.
The reason for this dramatic disparity? As Arash Amel, Screen Digest's Senior Analyst, told the FT:
"No single user-generated [video] site has really instilled a business model yet.”
What Amel failed to say that user-generated video (or music, text or creative) has no business model -- not now, not in 2010, not in 2050. As Web 2.0 booster Guy Kawasaki admitted, even A-list bloggers are struggling to make more than (total annual advertising revenue of a paltry $3350 for a blog ranked #45 on Technorati). As I suggested on Friday, user-generated advertising content simply leaves massive amounts of money on the table.
This is particularly true in video too. The really interesting video start-ups like Joost, Babelgum and Brightcove are all focusing on the professional rather than amateur videographer market. Last week, at CES, I did an afterTV interview with Dimitri Schapiro, the incredibly smart CEO of Veoh, and he is clearly moving away from the UGC YouTube model toward providing technology for the professional creator of video.
Peter Chernin, News Corp President got this UGC nonsense right:
“We do not see big advertisers advertising with YouTube or MySpace. They have concerns about the content ... and there is no scarcity value for the content ... so there is very little ability to monetise video advertising on user-generated video.”
Exactly. UGC has no scarcity value. But the real danger is that it devalues the economic worth of traditional content -- so that consumers take it for granted that everything is free. Music piracy has already done this to the music business and the movie pirates are threatening to do the same thing to Hollywood. UGC compounds this by providing consumers with a seeming cornucopia of free content.
Only that cornucopia is actually an infestation of crappy content. UGC really stands for user-generated-crap. Crappy content and crappy economic value -- ubiquitous crap. The future of an increasingly democratized media.