Google was way ahead of MySpace, YouTube, and Facebook in disrupting the content business — Google acquired Blogger in early 2003 to accelerate the rise of “user-generated content,” otherwise known as people publishing content online with free, easy publishing software (as with “blog,” I use that phrase as an unfortunate consequence of wide adoption). But how would this explosion of online content benefit Google? Why own the platform? The answer arrived soon after with the launch of AdSense, which provided this legion of new publishers a way to monetize their content, thereby embedding Google in the exploding economics of online content.
Google’s approach was radical back then and, it seems, still now. Instead of monetizing Blogger sites by controlling the ad space themselves, Google put the monetization tools in the hands of the users, allowing them not only to share in but also optimize the monetization. Of course, Google had the advantage of tapping into its already wildly successful AdWords program, which funneled advertisers by the thousands into AdSense. The reason Google’s approach still seems radical today is that none of the other successful platforms has followed this lead — MySpace, YouTube, and Facebook all still control the ad space on the sites (with Google’s acquisition of YouTube, this may change, of course).
This difference has lead to much debate over the “exploitation” of user-generated content. In a recent post, Nick Carr argued:
What’s being concentrated, in other words, is not content but the economic value of content. MySpace, Facebook, and many other businesses have realized that they can give away the tools of production but maintain ownership over the resulting products. One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few. It’s a sharecropping system, but the sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money, and, besides, the economic value of each of their individual contributions is trivial.
What’s really going on is a recognition that not everything needs to be paid for in monetary terms (which isn’t a new concept). It’s not that the users are somehow being “exploited” by being tricked into giving up value in exchange for attention. They are making the choice and recognizing the benefit. The attention is a benefit to them. It is payment — not exploitation. This is the same mistake that others have made in claiming that Google is somehow exploiting sites by organizing and pointing people to those sites — while making money in the process. Once again, that’s a case where Google is providing some benefit (traffic, or if you must, attention) to those sites.
The missing element here is that, unlike most recipients of Google search traffic or bloggers running AdSense, most users of MySpace, for example, don’t have a means to convert the attention they receive into cash — and most probably aren’t interested in the relatively small amount of cash that their share of attention is worth. But — I think Mike is dead wrong when he argues that users are “making the choice and recognizing the benefit.” The vast majority of participants in the user-generated content economy are completely ignorant of their participation. Again, for most, that ignorance is bliss — Nick is right that “sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money.” But there is not yet a system in place to ensure that everyone who wants to participate in the cash economy around them is given that option and made clearly aware of it.
This issue has played out across the “social media” landscape, e.g. Revver (with its ad revenue sharing) vs. YouTube, Netscape (with its paid Navigators) vs. Digg. While I do believe there is an ethical right and wrong to this issue, that is tempered by Nick’s observation that the economic value of each individual contribution is “trivial.” Nonetheless, I think Mike put his finger on the key issue — CHOICE. I’d guess that many people using the YouTube platform aren’t aware that they can choose instead to use Revver and share in the ad revenue (although the management shakeup at Revver may be indirect evidence that there’s still not much money to be made yet). The majority of those people would likely stick with the social rewards of YouTube — or they are already “monetizing” their efforts by burnishing their reputations as video producers. But YouTube never explicitly says to its users, “Hey, thanks for all your contributions and your support of our ad revenue ambitions — if you want a piece of the action, unfortunately we’re not in the position to share at the moment. But we hope that you continue to enjoy the free service.” Again, this may change under Google ownership.
The reality is that the economics of a service like MySpace are not so different from the economics of free web mail — users get a free service, and owners of the service get to serve ads.
The key issue in my mind is how the explosion of user-generated content will affects over the long term how the finite pie of media attention is allocated. If media consumers start to spend more time with user-generated content (i.e. content that is produced “for free” by users of open platforms) than they do with “professional” content (i.e. content that is expensive to produce — think Hollywood), then this issue of allowing users to choose to share in the cash economy will come to a head because the cash value of each user contribution will increase over time.
User generators of the world, unite and takeover.
Scott Karp writes about the convergence of media and technology at Publishing 2.0.