User-Generated Content Getting Too Expensive

In its recent 2009 Media & Entertainment Predictions report, consulting and advisory firm Deloitte warns that the growing piles of user-generated content may become more of a liability than an asset this year.

And with limited to no monetization schemes in place, consumer engagement via content creation will become a less attractive model. "A site with tens of millions of members, all submitting content, and viewing each others' digital offerings, was regarded as a good thing," says the report. "During the coming year, that may well change, for the simple reason that while the absolute cost of creating the content may be tiny, the ability to realize any revenue from the content may be smaller still."

For video or photo content in particular, the report points out that storage costs alone, for the largest sites, could run as high as $100 million per year.

The report cites a classic bogeyman that compounds the issue: Advertiser reluctance to market next to unpredictable content. And yet, says Deloitte, the "classification of content to the degree required for advertisers may be impossible to realize."

The report goes on to suggest the tricky proposition of charging for uploading content. Further, Deloitte offers a soft prediction that even status updates will require a fee. "Individuals wanting to relay their status to their friends may have to start paying for this service, with fees possibly based on the number of friends each individual has."

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