As web 2.0 hits full stride and mashup ventures attempt to extract additional value from Web 1.0 properties, there has been much talk about how user generated content (UGC) fits in. With the heightened pressure of an economic crisis, UGCX programmed panels on monetizing user generated content through communities and mashups. it’s clear that many consumers are currently willing to produce  content without compensation, and in most cases without the hope of future compensation. It’s less clear if/when this content has value. And, if/when it does, how do we extract it?

Some Context

Let’s look at mashups first, they are taking a cut of existing business by adding efficiency and turning up new business opportunities. They add efficiency by supporting relevant/targeted marketing opportunities, subscription, lead generation, etc … while driving down costs through improved conversion rates. On the other hand, the value of UGC seems balanced between direct revenue and the possibility of increased competitiveness. In the first case, communities can sell their content through an online marketplace. In the second, they can be leveraged to promote products and services while offering significant input to the product/service development process, which ultimately leads to more competitive products.

How It Might Play Itself Out

With this in mind, imagine a future web experience that would allow you to take your social networks wherever you go. This shouldn’t be to hard considering the recent announcement by Google about Friend Connect. So now, as you look for a movie on Netflix, you can review not only aggregate Netflix data, but also data from your friend-set. It gets even more interesting though when you have a mashup that helps you understand how your community differs from others. This information should have some value for you, and has obvious value for marketers. Perhaps there is a social pact that underlies consumer generated media, which states that companies must use this information do deliver more relevant marketing and better products and services?

I suppose, companies that don’t use it will simply be less competitive when it comes to the experiences they offer. That said, I do see a potential problem with UGC networks. Part of what would allow such a system to work is it’s ability to relate your desires with those of your friend-set on multiple dimensions. It assumes that you’ll be interested in the films that your friends are interested in, and that there are relevant similarities and differences in your preferences. Perhaps this is possible, but I’m not so sure that pulling patterns out of my friend-set will be more relevant than aggregate market data based on transaction history. I’d love to see some data on preference similarities among friends. Intuitively, I would imagine there are shared values but then I also wonder what role geography plays? Perhaps the answers will come out of web 2.0 ventures.

If you follow this thread, I sense that it eventually leads back to a question about how consumer generated media will relate to professional journalism? Even if there are preference similarities in my community, I’m still not sure I would trust them over a professional journalist whose reputation rests on his/her research and integrity. I wonder if we’re not experiencing a pendulum swing towards the production of UGC, which will continue until the next wave of monetization models play themselves out?

The world of UGC is still the wild west, and I don’t think consumers have really established what return they want from their UGC investment. For some it’s simply recognition, for others it’s making a buck. Until we have more experience working with this content, and understanding all the dimensions of it’s value, I suspect that consumers will continue producing with abandon. I predict a point, however, at which the pendulum will stop swinging in it’s current direction and the market will demand greater reliability and quality. In a growing stream of UGC there is a need to establish credibility that hasn’t been figured out yet. I don’t think that the friend-set proposition resolves this UGC challenge, though I could see it as a component of a solution. I’m concerned that communities will foster the viral transmission of ideas because they will be relying on each others recommendations without anyone conducting an in-depth analysis. And, if someone did do the work, how would you distinguish it from everything else?

The Value In UGC

  • Democratizes sharing of information
  • Distributes content efficiently
  • Fosters dialogue and diverse perspectives
  • Enables crowd-sourcing and problem solving
  • Provides large data-sets for analysis

Another thing that will probably play out is an understanding of where having our community really makes a difference. Considering what kinds of value are held within UGC is obviously the issue here. For consumers, extracting value may require being open to marketing messages based on your community. For marketers extracting value may mean providing the community with tools to foster social engagement and enable more relevant marketing. In other words, consumers will continue generating content if companies are able to demonstrate that it will improve their products and services in a tangible way.

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One Comment to The Value of UGC

  1. […] There are excellent third party tools available for doing this, such as Get Satisfaction, and FixYa. Alternatively, you can offer these services through your own site. Either way, it’s important to keep your eye on consumer generated media because it can be the most cost effective way to listen to your community and manage satisfaction issues. Many issues simply bubble up from the community and don’t require formal research. Most importantly, it’s a dialogue, which means you have to share your research outcomes and intervention plans with the community. By doing so, you return value and increase the likelihood of ongoing participation. I’ve written about The Value of User Generated Content here. […]

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