Money in shared content

28 Jun 2006

'I feel pressure, you feel pressure.' This declaration by 'Bus Uncle', an irate senior citizen caught on camera in Hong Kong and posted on YouTube, could also apply to media owners.

They have been largely caught unaware by the growth of such sites as Flickr, YouTube, OhMyNews and MySpace. Their growth stems from both better broadband availability and the increased scope for tribalism, identity expression and personalization that user-generated content provides.

Paul Saffo of the the marvellously titled Institute of the Future notes that this could herald in a Cambrian explosion of creativity: a flowering of expressive diversity on the scale of the eponymous proliferation of biological species 530 million years ago. So what does this trend mean for wireless carriers‾

Opportunity for operators

We believe UGC over mobile will take two principle forms. Firstly, consumers will increasingly maintain connectivity with their Web community or blog readership using their mobile phone. This is happening now: CyWorld customers in Korea control the settings and appearance of their avatar via their mobile phones, and bloggers post 'facerolls' to their blog using camera-phones.

Yet there is also scope for the operator to manage, host and police user-generated content, providing the community and search structure required to make it appealing. The most successful example so far has been developed by 3 UK, with its See Me TV service. Users pay 50 pence to post a video, and viewer downloads are charged at 10 pence each, of which 1 pence is returned to the originator of the content.

See Me TV has been popular: '3' has recorded an average of one million downloads per month, paying out a total of 10,000 pounds to creators of the content and recording a tidy gross margin of 90%. And of course there are few other parties in the value chain to take a cut. Compare this with the model for music downloads, where the online store, the artist, the record label, the copyright royalty holder can all legitimately claim a slice.

Yet much of the value of user-generated content stems from the extent to which like-minded souls can access the material and form communities. YouTube, with six million viewers watching in excess of 40 million videos per day, has the critical mass to do this, and users have self-segmented to incredible degrees.

To take one example, an early band of foot fetishists has split into those who prefer tickling, different types of toe, or simply the pure aesthetics of the shape of the foot. No mobile operator has the user-base to promote this level of self-selection in the long-tail of consumer preference. However, it is easier for some operators than others: 3 UK has a strong appeal to the 16- to 30-year-old segment, and thus a wider base of users to whom See Me TV would appeal.

UGC does have implications for the shape and feel of the operator's portal. We expect it to become more of a stock-exchange as opposed to a shopping mall. UGC will primarily be organized (as online) by tag and by viewing popularity, and the role of the operator will be minimal. Potentially, media owners and aggregators are sidelined, and the operator reduced to the bit-pipe provider. However, such services are a useful adjunct to a high-profile licensed media model that is taking time and money to build.

This said, YouTube was created by the two founders after noticing how difficult it was to share videos on mobile phones at a dinner party. Much of the opportunity with user-generated content depends on making it as easy as possible to share and view the content that users increasingly want to view.

Neale Anderson is a senior analyst with Ovum Asia Pacific

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