SlideShare a Scribd company logo
Emerging business models
User generated content
Anna Daniel
Budde USG
Roundtable Mar07
UGC will impact every sector that deals with consumers……
Initially and most obviously Media
and Entertainment
Other examples include:
Consumer Products
Recruitment / Law Enforcement
Government
Telemedicine
Education
Slide 3
March 2007
UGC will impact every sector that deals with consumers……
cScape Customer Engagement Report found 42% of
companies plan to apply UGC to their websites in 2007, and
23% use it already.
% now % by 2008
UGC 23 42
corporate blogs 17 35
podcasting 18 33
videocasting 17 35
cScape.com
Sectors will restructure
Design Produce
Promote
Distribute Store Consumer
Push strategy
Let’s look at basic value chains……………….
versus …..
Slide 5
March 2007
Sectors will restructure
Consumer / Company
Produce
Distribute
PromoteDesign
ISP &/or Aggregator
Consumer
Product strategy using UGC
Consumer / Company
Promote
Design / IP
ISP &/or Aggregator
Consumer
Digital media strategy using UGC
Slide 6
March 2007
UGC Key Success Factors
Be transparent
Be proactive
Personalisation
Be frugal
Be aware of legal issues
Motivate consumers
Brand management
Trust
Build community
“People contribute because it’s fun, because they want to share,
because it’s social, or to show their expertise” (Wikipedia CEO).
Slide 7
March 2007
UGC Roadblocks
Reliability (ie. bandwidth)
Quality
Relevance & Engagement
Security
Global cultural/language
issues
Price
“If the community gets mad at us, they can just leave and take the
content with them. That alone keeps the relationship honest.”
(Wikipedia founder)
Slide 8
March 2007
UGC: what are the financial drivers?
Cost side
Viral marketing: Users do the work
‘Social’ reward
Simpler fee structures
Physical storage costs
Revenue side
Advertising
User monetisation
How is the pie carved?: carriers / content aggregators / content producers
Think of the long tail………
Slide 9
March 2007
The next killer app: plain priced mobile UGC
2 weeks ago Vodafone UK struck deals for clients to access
YouTube, Myspace and EBay via their mobiles.
Slide 9
March 2007
The next killer app: plain priced mobile UGC
2 weeks ago Vodafone UK struck deals for clients to access
YouTube, Myspace and EBay via their mobiles.

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Emerging business models: UGC

  • 1. Emerging business models User generated content Anna Daniel Budde USG Roundtable Mar07
  • 2. UGC will impact every sector that deals with consumers…… Initially and most obviously Media and Entertainment Other examples include: Consumer Products Recruitment / Law Enforcement Government Telemedicine Education
  • 3. Slide 3 March 2007 UGC will impact every sector that deals with consumers…… cScape Customer Engagement Report found 42% of companies plan to apply UGC to their websites in 2007, and 23% use it already. % now % by 2008 UGC 23 42 corporate blogs 17 35 podcasting 18 33 videocasting 17 35 cScape.com
  • 4. Sectors will restructure Design Produce Promote Distribute Store Consumer Push strategy Let’s look at basic value chains………………. versus …..
  • 5. Slide 5 March 2007 Sectors will restructure Consumer / Company Produce Distribute PromoteDesign ISP &/or Aggregator Consumer Product strategy using UGC Consumer / Company Promote Design / IP ISP &/or Aggregator Consumer Digital media strategy using UGC
  • 6. Slide 6 March 2007 UGC Key Success Factors Be transparent Be proactive Personalisation Be frugal Be aware of legal issues Motivate consumers Brand management Trust Build community “People contribute because it’s fun, because they want to share, because it’s social, or to show their expertise” (Wikipedia CEO).
  • 7. Slide 7 March 2007 UGC Roadblocks Reliability (ie. bandwidth) Quality Relevance & Engagement Security Global cultural/language issues Price “If the community gets mad at us, they can just leave and take the content with them. That alone keeps the relationship honest.” (Wikipedia founder)
  • 8. Slide 8 March 2007 UGC: what are the financial drivers? Cost side Viral marketing: Users do the work ‘Social’ reward Simpler fee structures Physical storage costs Revenue side Advertising User monetisation How is the pie carved?: carriers / content aggregators / content producers Think of the long tail………
  • 9. Slide 9 March 2007 The next killer app: plain priced mobile UGC 2 weeks ago Vodafone UK struck deals for clients to access YouTube, Myspace and EBay via their mobiles.
  • 10. Slide 9 March 2007 The next killer app: plain priced mobile UGC 2 weeks ago Vodafone UK struck deals for clients to access YouTube, Myspace and EBay via their mobiles.

Editor's Notes

  1. Sectors it impacts- any company that produces and markets. Currently UGC is used to complement professional content ie talkback, user reviews, post show webchats etc. Entertainment – Second Life, YouTube, Myspace etc. 2007 Digital Future Report by Uni of Southern California Annenberg School of Communication says 41% of experienced internet users said using the web has reduced their tv viewing. I don’t watch TV, I watch YouTube. Initially some UGC’s can play on customers vanity for 15 secs of fame (home webcams urgh). Barnako, F. 2006 ‘Researchers: User generated content is not a fad’ Dow Jones 30Nov Media & Information – Wikipedia, ‘Citizen journalism’ - users as news ie mobile phone photos of the London Underground. Reuters and Yahoo now accept and include media from users on their online news. Content aggregators – allow consumers to filter Consumer products – eBay, brands, product design, fashion. ‘viral marketing’. Ie McDonald’s www.creamaid.com/mclovers.html - users can earn $10 for blogging about their McDonald’s experience. BIG BROTHER: Recruitment firms, Law enforcement agencies are researching social network sites to identify users. Government – Second Life used to assist design the new Boston city hall. Internal – CEO blogs to which staff can respond….. cScape Customer Engagement Report found 42% of companies plan to apply UGC to their websites in 2007, and 23% use it already. Telemedicine in remote locations Education: facilties to allow students, their parents and teachers to share information and network – allowing parents to see the curriculum, the progress of their children, attendance rates, assignments, assessments, collaboration between students. As kids change schools their info will go with them.
  2. Source: Long, D. 2007 ‘Vital Statistics’ in Revolution 25 Jan p.15 Survey of more than 800 respondents undertaken in Oct-Nov06. I’m not sure of geography
  3. Caveat: this is very simplistic Emerging business models – Need to look at the landscape first – fragmentation, users are bored/dissatisfied/’dumbed down’ with current products and have shorter attention spans, globalisation. Currently UGC is used to complement professional content ie talkback, user reviews, post show webchats etc. Boring, consumer must take what they’re given Producers incur upfront costs and are not guaranteed a return
  4. The new era of C2C- Constant communication Consumers now have a voice – they can speak globally and so affect the design and promotional activities of the standard value chain. They can also influence production ie speak out against low cost manufacturing. Those wanting 15 seconds of fame and those looking to contribute to a discussion or community. The 15 secs of fame UGC content types won’t last because of their very nature, there is no loyalty. (according to Deloittes TMT Predictions) I can see people are getting bored with Myspace. Anecdotally I think the early adopters are moving on while the mass mainstream moves in. Direct to consumer – the absence of gatekeepers. As a user I LOVE the fact/perception that I can interact directly with ie a musician, product designer etc. interacting with consumers enables more diversity, potential for innovation and unexpected delight. It also exceptionally fragments society into zillions of mini-cults. For digital media production costs are minimal as to be negligible. C2C facilitators must be flexible, nimble and fast – large companies with massive infrastructure can’t be fast and lean for instance: Traditional newspapers maintain a heavy cost base from printing presses, physical distribution etc. New startup media companies do not have these fixed costs. They also have bureacracies – decision making is slow. BUT startups must be prepared for fast unpredictable growth. And the majors have $$$$. So C2C businesses are best kept as siloed subsidiaries or financed at arms length, and leveraging off the brand. This also ameliorates concern of corporate influence (ie Newscorp acquisition of Myspace). The one way message is dead. Long live continuous relationships
  5. Be Transparent - must look ‘independent’ (ie Wikipedia) to build trust and comfort. Be prepared to lose control and experiment Be proactive. It is a continuous business process – ongoing dynamic interaction. To allow users to collaborate takes a lot of intricate work ie not offending etc. Individualisation – greater personalisation= greater engagement. Users participate in product development/refinement – they can talk back – (exploding Dell example / Vincent Ferrari, a 30-year-old blogger who recorded a phone call with a rude AOL customer service representative who repeatedly refused to grant Ferrari's request - actually, at least 21 requests in five minutes - to cancel his service. Listen here. Ferrari's blog crashed when 300,000 people tried to download the audio file last year, according to Gillin. He ended up in the New York Times and on the Today Show, where the clip was played for tens of millions of people, Gillin says. AOL fired the employee and sent Ferrari a written apology, but not before its reputation took a hit. "Individuals and small groups of people have the ability to move markets that didn't exist a few years ago," Gillin said.). – in Network World Fusion 24Jan07) Find those with ‘informal power’ – style setters. Instant and constant access to sizeable targeted communities Be Frugal – money doesn’t make a community, it can take time. Ie the McDonald’s site – by paying people for commentary they seem to be saying that payment is the sole reason for contributing – which may affect the honesty of entries. Legal –the law can’t keep up, copyright violations, security of minors, privacy, defamation, inappropriate content, copyright violations. Can get insurance against UGC risks. Ie recent UK Big Brother episode that sparked riots in India – viewing figures wenbt through the roof but so did risks. In August06 Reuters withdrew MidEast photos from a freelancer after revelations that they had been inappropriately manipulated. Credit card fraud – people less wary now. . ‘Yahoo and Reuters want your news images’ CMP TechWeb 4Dec06 Motivation –A key driver of UGC is the desire by consumers for “anchorage”, a “sense of control” and anything that can act as a “filter” for unprecedented product, lifestyle and career choice (Getty Images latest MAP report as at 2Feb07). Anecdotally – I believe it is also a reaction to the predominance of reality tv which is effectively a way for studios to maintain local content quotas cheaply and dumb down free to air tv to move consumers onto PayTV. But they too are moving to the UGC model with postshow online chats, consumers can review Idol contestants online etc. But why have PayTV when we have complete freedom of choice via YouTube (and short attention spans). Maintain the Brand – brands face much more complex risks in the user generated realm. Consumers need to instantly recognise and trust the brand. Brandchannel’s Readers’ Choice Awards listed the top brands that had the most impact on our lives in 2006 – the top 5 global brands included YouTube (3rd), Wikipedia (4th) and Google (1st). Consistent yet personalised messages. If you have the brand then you have loyalty – consumers will be less willing to turn off. As brands transition into the online UGC world the brand needs to be consistent between online and offline. Be Trusting – accept that content is unpredictable, if content is questionable, use dialogues to create consensus rather than control it. “Some sites have a lot of controls to prevent bad behaviour. But they end up preventing spontaneous good behaviour” (Wikipedia Wales). Tripadvisor a UGC traveladvice site was seen to have the “most reliable information” according to a Nielsen/Netratings study. Community – “there is something about the social user community that is absolutely not professional and so the community doesn’t want it to be commercialised” Deloittes TMT Predictions McNichol, T. 2007 ‘Building a Wiki World’ in Business 2.0 1 March. Vol 8 iss 2 p 102
  6. Why do people turn off? – price , reliability and quality cited as a reason for people not continuing with mobile TV services. Feuilherade, P. 2007 ‘Mobile TV eclipsed as industry focuses on advertising, internet’ BBC Monitoring media 18 Feb Reliability: Telecom and tech companies – addictive. Enormous bandwidth required and unpredictable growth trajectories – current portals ie Myspace, YouTube require 40 Petabytes of storage (equal to the storage requirements of the world’s largest financial institutions) (therefore only the large entrenched companies (NewsCorp, Google) will be able to aggregate content?). Best, J. 2006 ‘Businesses to adopt YouTube model: At conference in Hong Kong Cisco Systems’ CEO says “in the future, it will be about producing it yourself” CNET News.com 4 Dec High cost of data traffic - new cable or expanded fiber required but at a a time when wholesale capacity prices are declining. Cisco chief John Chambers predicts internet traffic of 15 exabytes (billion gigabytes) per month by 2015. Secure (ie Myspace keeps getting phished). Quality: Power of the mainstream will diminish (it allows greater personalisation – long tail theory). Sorting the wheat from the chaff – a lot of garbage in there. The value of UGC lies not in the quantity of contributors but the number of people who find the contributions engaging. Deloittes describe bloggers with their camera phones as ‘digital eyewitnesses’ as opposed to journalists who are trained to analyse and interpret unfolding events. Many content aggregators may find their most popular content is user selected rather than user created. Deloittes believe the camera phone will be a vindication of professional journalism. YOU CAN’T REPLACE QUALITY. A similar example is the TV network chatboards after topical current affair shows. Local vs global – According to Universal McCann study siloed, branded websites with no clear benefit will be overlooked as users embrace social, collaborative platforms ie YouTube, Myspace and Cyworld. (in ‘Asia leads the charge into the world of Web 2.0’ Campaign 2Feb07 p.15) Global far more interesting but language constraints. I constantly have google or altavista translators open. Localised brands become confusing and costly if they have global ambitions because it demands organisation structures that can deliver – international marketing objectives, cross border budgets and communications across languages. McNichol, T. 2007 ‘Building a Wiki World’ in Business 2.0 1 March. Vol 8 iss 2 p 102
  7. Content Aggregators:Advertising: Informa forecasts the mobile advertising market will be worth US$11.3bn by 2011 (is this US only?) . ‘User Generated content nad mobile advertising will top the agenda 3GSM world congress. Key players want to reinvent the industry as a mobile entertainment business’ Telecommunications International 9Feb07 Increased personalisation using data mining: my Myspace example of contract dairy milking in the UK. Viral marketing: (cut costs of boring widespread push content but increased costs of ‘conversations’), viral marketing is relatively low cost and highly targeted compared to direct mail etc. But there are additional costs in terms of managing the conversations/content. As it becomes mobile need a new form of advertising ie if I’m using my mobile to look at a website I will get annoyed waiting for an ad to download. One operation model I like is that consumers can choose which ads are placed onto their pages/linked with their content. Content Producers: Financial drivers – participation and revenue sharing. ‘Social’ Rewards: Reuters and Yahoo encourage citizens to contribute their news media. Scott Moore head of Yahoo media group said “It’s not like anybody is going to make a living doing this” and they intend to compensate users by ‘social reward’ ie allowing them to show it on their online profiles, but where it is used in a Reuters/Yahoo story they will be compensated but details are vague. ‘Yahoo and Reuters want your news images’ CMP TechWeb 4Dec06 User monetisation (ie users can sell photos (iStockPhoto), music (Myspace) and are paid by the download or clickthrough rates on mobile) ie my nephew has a blog and everytime someone clicks on it he gets 3c. Carriers: Also phone companies getting a cut every time someone uploads video to web via phone. M1 (Singapore telco) introduced a service which allows users to upload or download videos for SG21c (assume per video) and of that customers whose video was downloaded receive SG5c in phone credit. Sylvers, E. 2007 ‘’Content’ gains new ground – videos and blogs invade mobile phones’ New York Times International Herald Tribune 12Feb p. 3, 8 Producers: Storage costs : JIT Manufacturing, no carrying of stock KSF: simpler fee structures between content and carriers (ie Apple model of flat rate plans and clear pricing),
  8. Asia is the hotspot:Universal McCann global study into web use found the greatest activity of UGC was occurring in Asia. 36% of Australian users regularly engage in participatory media including blogging, RSS, social networking or podcasting (Nielsen/Net Ratings Australian Internet and technology Report 2006-7). UGC is the hotspot: Netcraft found the internet grew in size by 20% over 7 months of 2006 and attribute it to UGC. We need the means: I am sick of carrying around my camera, Ipod and mobile phone. I want a device that has ca5megapixels camera, ipod to store music, photos and video (downloaded off YouTube), mobile phone, organiser and can surf web, check hotmails. All plainly cheaply priced. Apple simplifies pricing structures and makes mobile web surfing doable by pinching the screen to resize to readability Sources used:Deloittes TMT Predictions Sylvers, E. 2007 ‘’Content’ gains new ground – videos and blogs invade mobile phones’ New York Times International Herald Tribune 12Feb p. 3, 8