As MySpace climbs the ranks of most-visited Websites and YouTube becomes a hub for amateur video, traditional publishers have begun experimenting with ways to tap into people's inclination to share what they think, know and can create.
But here's the problem: No one has figured out how to make a profit based on user-generated online content. There's certainly some money being made -- especially by the founders of MySpace, who collected $580 million when Rupert Murdoch bought the site last year. But while a publisher might salivate at the idea of content that arrives without need to pay for it, it's proven devilishly difficult to find the formula for business success.
MySpace certainly hasn't figured it out yet. Under Murdoch's News Corp., the site is trying to position itself as a place where marketers can build communities of "friends" around their products. Time will tell if this produces sufficient revenue to overcome users' aversion to commercialization of the site. The site's future growth is far from preordained. MySpace has to retain loyalty among its young adult audience as they age, and also outmaneuver other sites seeking to reach the fickle age cohort a few years younger. Friendster, the MySpace of a few years ago, is an example of a site that didn't manage to pull this off.
YouTube also faces enormous challenges. Just this past week, the IDG research firm predicted that YouTube will have a hard time building a business around its large and growing audience. Users will object to advertisements and won't be willing to pay for video content on YouTube, said IDG analyst Josh Martin.
MySpace and YouTube are sites attracting millions of users a month, and it's not clear they can build a profitable business. What are the chances of success for a smaller site -- say, one focusing on a local community? Many local newspapers, as well as startup companies, are trying to find out. Experiments seem to fall into the following categories:
Web-only publications relying exclusively or primarily on user content. Example: Backfence.com, which is building a network of sites in suburban communities.
Web-only publications relying primarily on a cadre of regular contributors. Example: Baristanet.com, which was founded by former New York Times columnist Debbie Galant.
Traditional publications that host discussion boards. Examples: FredTalk from the Fredericksburg (Va.) Free Lance-Star and the forums at Advance Publications' newspaper sites such as NJ.com and Cleveland.com.
Traditional publications that encourage user comments on articles. As this is probably the easiest way to solicit user-generated content, there are many examples. One company that has embraced this approach wholeheartedly is Lee Enterprises, which seems to have article comments enabled on almost all of its newspaper sites.
If you're looking for quick business success, it seems clear that the most promising model right now is the Web site with a print edition. All the sites I listed above are generating significant new revenue for their companies -- most of it in print advertising. These publications also benefit from the fact that the costs of content creation are relatively low since much is submitted online.
What remains to be seen is the extent to which user-generated content can generate incremental online revenue. In part, that's because local merchants are among the last businesses to move their ad dollars to the Web. Also, an active online discussion may be just the place where an advertiser doesn't want to be. For one thing, it's generally assumed that the response rate is lower for ads adjacent to conversations than for those next to articles. For another, online conversations have a tendency to go off topic, to use colorful language and to degenerate into "flame wars."
For all these reasons, it may be wise to look at user-generated content not as a new line of business but, instead, as a means for connecting with, engaging and learning from your audience. For a community publisher, encouraging user-generated content can drive audience engagement even if it never becomes a source of profits.
For some ideas on how to encourage user-generated content at your news organization, here's a fine Editor & Publisher column from Steve Outing, a new-media authority who recently started his own citizen-media company: How to Make Your Web Site More Conversational.
By Rich Gordon (richgor@northwestern.edu) Rich Gordon is Associate Professor and chair of the Newspapers and New Media Department at Medill School of Journalism, Northwestern University.
