Traditional Media Struggles to Monetize User-Generated Content
Reuters has details of a new report from Deloitte that looks at media trends for 2007. Part of the report focuses on how successful mainstream media will be at integrating user-generated content. The biggest problem appears to be how they’ll make money from user content.
Howard Davies, a director of media strategy at Deloitte explains why it’s tough to make money from social media.
“There’s something about the social user … community that is absolutely not professional and so the community doesn’t want it to be commercialised,” he said about advertising around Web sites dedicated to the content.
That certainly seems to be the case with many popular social media destinations. If you look at those that are highly successful – Digg, YouTube etc – they’ve managed to grow their user-base by not ramming ads down their throats. It’s a good approach for a young company, looking to build its audience – sacrifice profits for users and hope that Google acquires your company before you run out of cash. Unfortunately, at some point, those networks do need to figure out how to make an income. If they’re lucky, they will have sold out before that time, leaving the problem for their new owner to tackle. If they don’t grab their sugar-daddy in time, they’re forced to start monetizing their content in order to survive, which usually starts alienating users.
What do you think? Any social media sites out there that have successfully managed to monetize their content without sacfricing user-growth?