Business Models For User Created Content David Chu Alex Dailey Thomas Goerner Kevin Lim Wojtek Poppe...

Business Models For User Created ContentDavid ChuAlex DaileyThomas Goerner

Kevin LimWojtek PoppeRichie Teo

Introduction:“Why should I even care about User Created Content?”

The Rise of UCC

Lower bandwidth costs

Lower storage costs

Higher bandwidth penetration

Source: Technorati, http://www.sifry.com/alerts/archives/000443.html

The Rise of UCC

Source: Technorati, http://www.sifry.com/alerts/archives/000443.html

The Rise of UCC

Photo

Video

Wikis

Podcasts

Source: Alexa, March 11, 2007

UCC Paradigm Change

The user is both the producer and consumer

• Control over content is relinquished • Differentiation based on platform

technology and critical mass• Aggregators (content and

advertising) bifurcate content distribution

Business Models:“Can I make money by creating videos, writing blogs?” – average Joe user“Is it profitable to be giving away all this free storage and functionality?”

– UCC provider

Business Models

USERS PLATFORM

• Ad-Supported• Direct Payment• Sponsorships• Donations• Reputation

Builder

• Ad-Supported• Versioning• Complementar

y Products• Revenue

Sharing

Advertising Supported

TechCrunch makes $120K a month from ad-sponsors.

• Popular bloggers / podcasters can have direct relationships with advertisers, sponsors.

sponsors married punk-rocker’s podcast.

“Diet Coke and Mentos” user makes $30K

provides ads for the average long-tail blog

• Long tail users can use third-party tools to get ads.

Direct Payment

• Advertisers pay bloggers directly to write reviews about their products (by using marketplaces like PayPerPost): $3-$100

• allows users to set prices for viewing videos (one-time, subscription)

• Jumpcut runs a “trailer mashup” contest for

the movie A Scanner Darkly (prize: movie premiere tickets + video editing PC)

Sponsorships / Contests

Reputation Builder

• Appeared on the Jay Leno show and the cover of Wired magazine

• Rocketboom’s offer to do ads for companies fetched $40K in an auction

Rocketboom lonelygirl15

Versioning

Basic: Free

Pro: $24.95

Basic: Free

Paid: $19.99

Plus: Free w/ ads

Complementary Products

FREE PAID

$19.99

$18.99

$19.99

$9.99

Revenue Sharing

• VOX allows users to get book and CD images directly from Amazon. When readers click and purchase these items, VOX gets 7% rev. share

Issues with Monetization of User Created Content

Concerns within Ecosystem

Platform• Lack of control over content• Faced with low switching costs• Little IP protection• Little opportunities for differentiation• First mover• Lack of control over viewers / producers

Producers• Danger of being bootlegged• Rise above the clutter• Unclear how to integrate professional content

Consumers• Find the good stuff among ho-hum content• Little platform affinity• Low willingness to pay• Hype Factor

Concerns within Ecosystem

• “Winner takes all” in most media• Low switching costs shift the competitive

advantage to technology (search, brand advertising) and critical mass

Competitors• Need critical mass• Quality of Content• One Hit Wonder• Lack of Content Exclusivity

Complementors• Merchandizing (unpredictable)• ISP (network neutrality)• Integration of products

Advertisers• Sponsorship necessitates critical mass • Lack of aggregators which cover all UCC types• Content Relevance

• PR• Long term viability of engagements• Lack of metrics

Requirements for Sustainability

• Extract signal from noise• Traditional Solution: Content producers• User-Driven Solution: Meta-tagging of

non-traditional content• Technological Solution: Analytics-based

recommendation systems

• Metrics• needed to measure efficacy of ad

campaigns

Requirements for Sustainability

• Ad brokers which deal with all UCC types

• Ability to build brand equity and not just drive purchases• “Online brand advertising is young, and

is where future growth will be.” - DB Analyst

Report

Revenue Models That Work

• Advertising

• Versioning

• Complementary Products

• Reputation Builder

Q&AUsers Platform

• Ad-Supported• Sponsorship• Direct Payment• Donations• Reputation

Builder

• Ad-Supported• Versioning• Revenue

Sharing• Complementar

y Products