What’s the Value of Customer-Contributed Content? $1.65 Billion!

Customer-created content is good business. Letting customers strut their stuff is profitable.

Google’s acquisition of YouTube is proof that customer-contributed content is shrewd business practice. Going from zero to $1.65 billion in 24 months is an admirable accomplishment. It’s the kind of accomplishment that makes most business people both jealous and incredulous. Yes, letting customers strut their stuff makes very good business sense, indeed! The content is free. Customers flock to the site to see and be seen. Visitors’ viewing, tagging and downloading habits create a natural merchandising engine. It’s cool because others thought it was cool. I can find it easily because others have tagged it.

Customers are playing the roles of Lead Customers/Users, Contributors, Guides, and Promoters.

 
Customers’ Behaviors have Changed the Business Model for the TV Industry

Customer-led merchandising is great marketing. Letting customers strut your stuff reaps advertising revenues and free publicity.

What tickles me is how fast the entertainment companies ran around in front of the customer parade. After years of posturing and hand-wringing about intellectual property protection in the era of file-sharing and easy downloading, all of the major entertainment companies signed up to take part in the spoils.

As the Google/YouTube deal was going down, the dominos fell throughout the movie biz. According to Hiawatha Bray, YouTube deals hint of new era for Net media - The Boston Globe, Universal Studios, Sony BMG, CBS, Warner Music, et al all quickly inked deals with YouTube and Google that go something like this: “It’s OK with us if customers pirate video clips from our movies and TV programming, you (Google-YouTube) tell us about them and give us 50% of the ad revenues.”

This is “found money” – additional revenues they wouldn’t have gotten. It’s also customer-led merchandising. Customers will vote with their eyeballs and their tagging and rating, highlighting as noteworthy programming that might otherwise lag in the Nielsen ratings.

Now, what about all those home videos? Will amateurs also get 50% of the ad revenues for their amazing pet tricks’ videos?

Comments

[Patty Seybold]

Thanks, Brenda..

It sounds as if Hurley understands how to navigate this slippery slope pretty well.. He started by building a huge community of customer-generated and customer-pirated content. With no ads and no monetization but great fans, great traffic, great buzz! Having started by building traffic and buzz first, now they can offer monetary rewards for really good customer-generated content.

Google/YouTube also need to figure out how to compensate those broadcasters and movie producers whose "customer-pirated" content forms a huge part of the YouTube ecosystem. While many content providers are thrilled to have their content handpicked and posted by customers, since it provides a PR benefit, other content owners have insisted that Google either remove the pirated content or pay them for its use.

Thanks for the link!
Patty

[brenda michelson]

hi patty, did you see this yet:

"YouTube CEO Chad Hurley said today his company (now owned by Google) “is going to move in [the] direction” of rewarding video creators for their content, as part of a panel discussion at the World Economic Forum meeting in Davos."

Here's the link: http://newteevee.com/2007/01/26/youtube-to-share-revenue-with-creators/