Why does Jon Udell dislike the term "user generated content?" For the same reason I did. When I spoke at Google's Zeitgeist conference last fall I heard all the CEOs and important people speaking of how they were going to make gigantic new profits: user generated content. What is User Generated Content? Well, when you blog. Or add photos to a photo sharing site. Or when you tag some info or Digg it. Or when you leave a comment on a forum. Or, post an ad to Craig's List.
You see, lots of people out there think that you're gonna do all the hard work and donate it to companies so they can put advertising next to it. Only you don't get to keep the money from that advertising, no no no. You don't understand your place in this world, do you?
No, they are gonna take all your content AND take all the money that the advertising generates.
Even when you build your own thing on your own domain and spend time building your own audience they'll only give you 20%. Don't believe me? Come to any bloggercon and compare notes and see just what percentage of the revenues folks are being offered. I've done that and it isn't pretty.
I think this whole system is vile. Why? It's not sustainable.
Easy. I've learned that "users" (I hate that term too) are smarter than me. Richer than me. More powerful than me. More connected than me. Cooler than me. Funnier than me. And are right more often than me.
They will figure out they are getting screwed and they'll move elsewhere as soon as there is a choice.
Stockholders will know this too so won't reward companies with high valuations because they know it could disappear as soon as someone else offers them 30% instead of only 20%. Google, on the other hand, has a high valuation because they aren't making most of their profits off of UGC, but instead put ads next to their search engine results which are far more profitable than UGC.
But, Scoble, aren't you joining a company that's hoping to make a living off of user-generated content?"
Maybe. (Right now PodTech makes most of its money off of corporate sponsorship of professionally-produced content, but I'd be lying if I said we weren't considering a UGC-based business).
Like I said, I'm studying this problem from both angles. As someone who develops content as well as someone who is — starting July 5 — going to be paid to make money with content, ala podcasts, blogs, vlogs, and Second Life experiences.
So, why is the Long Tail easily screwed?
Or, lack thereof.
Here, let's compare numbers. I'm supposedly an "A list blogger" and last week I had more than my fair share of good PR (way more, actually). I only saw about 200,000 new people last week and my average daily numbers are settling down again to about 20,000 daily readers, plus 29,000 RSS subscribers.
Sounds impressive, right?
They aren't if you want to sell advertising (something I haven't done on my blog).
American Idol, America's most popular TV show, had something like 60 million (I seem to remember they said that when I watched, but I'll have to look up the exact numbers and get back to you) and that show is part of a network of shows that has huge audiences, even their worst show has many times more audience than my blog does.
And, remember, I'm supposedly on the top tier, right?
So, if you start a blog, or a podcast, or a vlog, you probably will have much smaller numbers than I have. The tiny get tinier. Tiny things don't have power to argue about price with bigger companies.
The point of these small numbers means that we — as a group — don't have much negotiating power with advertisers.
Why? Advertisers don't want to deal with us individually. They aren't setup to do that. They need only a few places to get all their advertising, which is why the network model is so interesting as a business and why the VC's are spending so much money trying to get something going (ala PodTech).
How do the small content developers get a bigger percentage? Band together into an audience group in order to get advertising business. We know those groups as Yahoo, Google, MSN, and a few others. But, that means the group gets rich because it added the value while the individual starves for resources
These networks know we have no power. So, they are quite willing to give us pennies on the dollar to distribute their advertising (and, some aren't even willing to discuss just the percentage of the dollar that they are handing down the chain).
The Long Tail is getting screwed and there's nothing we can do about it.
Or, is there?
I'm wondering if there's a way for you to keep 100% of the advertising dollars, minus maybe a small transaction fee, that you generate. You bring your audience, you keep the moola.
But, let's say you join an audience and advertising aggregation network. Let's say that network sends you 50,000 people and you natively have 20,000 readers. Now, you keep 100% of the ads shown to your 20,000, but to the new 50,000 that you didn't have before, well, then you share revenue there of something like 80% going to the network.
Why does that work? Well, the network only gets paid if they add value above and beyond what you're capable of. Also, everyone gets the added power of volume. Obviously this would require a network that gets popular fast and has a good advertising distribution network, right?
Could such a network succeed? Or, are we going to continue to see the screwing of the Long Tail?
Or, is there something we could do to add enough value so that advertisers would deal directly with us instead of the big companies like Google, Yahoo, or MSN?
What would make you interested in joining an audience-and-advertising-sharing network?