Making Money From User-Generated Content

By Heidi Cohen , May 24, 2007

User-generated content (UGC) presents a conundrum for publishers. More than half of media and entertainment executives surveyed in Accenture's "Global Media Content Survey 2007" cite UGC as a leading threat to their bottom line. On the other hand, about two-thirds of the respondents believe they'll make money on UGC within three years.

The reality is UGC can vary significantly in subject matter, quality, and marketability. This is an issue for publishers since advertisers pay a premium for visitor quality based on demographics and media content. The challenge is engaging the audience to extend the experience with the brand while encouraging a quality dialogue. This is even more important for business-to-business (B2B) publishers, where the brand's strength and the audience's targeted nature are significant value factors.

Despite these hurdles, publishers are leveraging community power to enhance their offerings. Showcased at a recent Software & Information Industry Association (SIIA) panel, "Tapping Into User-Generated Content" and at an iBreakfast featuring Jimmy Wales, examples include Economist.com's use of letters to the editor, question and answer site WikiAnswers, Condé Nast's teen scrapbook site, Flip, and community site Wikia.

Publishing Priorities

When evaluating UGC's value to your site, take into account the impact of the following factors on your media offering:

• Grow the community. Avenue A | Razorfish's Jason Levin points to UGC's 1/9/90 rule: about 1 percent of users actively participate, 9 percent add a few posts, and 90 percent passively view what's there. While you can't force a community to grow, it can be encouraged:
  
  
  • Increase the quantity of content available and its suitability for being searched.
    
    
  • Leverage the connection with a larger media entity with on- and offline cross-promotion.
    
    
  • Use a community development team like ITtoolbox to provide structure and support in the early stages, and let the community take the lead as it matures.
    
    
  • Include referral and syndication tools such as forward-to-a-friend, social bookmarking, and RSS.
  
  
• Have rules for the community. Outline upfront what's acceptable for the community to post. Remember overzealous editing of negative input can hurt the site's credibility. Consider the following:
  
  
  • Must users join the community before they can read and post content?
    
    
  • Must users be transparent regarding their identity?
    
    
  • What kind of content can posts contain?
    
    
  • Can posts link to the author or his Web site?
    
    
  • Are posts reviewed before they're published?
    
    
  • Is there a mechanism for the community to please itself or report abuse?
  
  
• Determine content ownership. Clarify the content's copyright and intellectual property ownership. Outline rights in the terms of agreement.
  
  
• Keep content in line with the brand. For more established media companies, especially B2B ones, this can be a very sensitive issue. If this is true for your site, test your way into the process. Economist.com, a 160-year-old brand, started by giving additional space online to its Letters to the Editor section.
  
  
• Get editorial buy-in. There may be concerns that users aren't professional journalists. Address this issue by confining UGC to well-defined site areas. Often, journalists benefit by connecting directly with readers.

Revenue Opportunities

Advertisers may be concerned about the environment in which their advertising appears. They must be open to the fact that community members may disagree with them. Revenue-generating options include:

• Online banner advertising. Given your community's focus and quality, banners can be a very attractive venue to the right advertisers.
  
  
• Google AdSense or similar targeted contextual advertising. With this form of advertising, advertisers can target readers based on content.
  
  
• Sponsorships. This allows marketers to associate their brands with topics relevant to their target audiences.

Depending on the media entity and segment, it's possible to find additional UGC revenue opportunities. Options include subscriptions for access to the community (depending on your audience's exclusivity) and other forms of ancillary publishing revenue and affiliate referral fees.

Measuring UGC's Impact

Among the metrics publishers focus on to determine their UGC efforts' health are:

• Traffic. Depending on the media entity and how UGC is implemented, how traffic is measured may vary:
  
  
• Pageviews. This is the number of pages seen.
  
  
• Unique visitors. This is the number of people who come to your site.
  
  
• New registered users. Sites like WikiAnswers track the number of new registered users as a leading indicator of the community's size and growth. According to VP Bruce Smith, if done properly, there's a network effect that helps grow the community. As the amount of content grows, the community grows.


• Content creation. For some sites, this is a critical metric. The issue is the content's quality and its relevance to users. One option is to let users rank the content.
  
  
• Time on site. This metric helps to determine content relevance to visitors and to show engagement.
  
  
• Buzz. Measure customers' positive and negative feelings about the content.
  
  
• Referrals and syndication. Track tool use on your site.
  
  
• Revenue. As with any media site, a key metric is total revenue per period.

Adding UGC to your media entity can enhance your end user's overall experience and broaden your offering. You must be open to offering your users a variety of tools and to letting them add their opinions. It's important to decide how much you want or need to play sheriff. But there's nothing like UGC to build user engagement and targeted pageviews.

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