User-Generated Content Getting Too Expensive
Deloitte study says UGC too costly with no ad model in sight.
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
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."