UGC services need to treat users as co-developers

SINGAPORE: User-generated content services are impacting the media landscape in a variety of interesting ways. There is an increasing convergence of UGC and professional content. It is important to bear in mind that the traditional media players who come out on top in this space will be the ones who treat users as co-developers. The winners will also provide rich user experience.

The point was made during a session of BroadcastAsia by Spectrum Strategy senior manager Joe Colgan. The impact of social media on media markets and players is manifold, he notes. Ad revenues are shifting online causing media companies to evaluate business models.

That is what is happening with the likes of Viacom and Discovery. Also illegal use of content has led to content being made more freely available forcing traditional players to embrace these new avenues.


UGC sites and online communities represent new distribution platforms and content sources changing business models and stimulating merger and acquisition activity. Companies are increasingly turning to the Internet to listen to and engage consumers.

Social media sites will continue to provide strong competition across platforms. "User-Generated Content (UGC) and Online Communities are forms of social media. It encourages contributions and feedback. It also encourages voting, comments and sharing. Social media is a two-way communication. It allows communities to form quickly and thrives on links. Examples include Youtube, Flickr."

He stressed on which is a video sharing site based in China that allows users to upload and share videos online. It has six million registered users. The site shows some 4,000 videos a day. Closer home Rediff Connexions is a business networking service for Indians. The site‘s motto is "find success through friends". It has more than 1.4 million registered users, with a vast majority from India.

"What one is also seeing is that increasingly, social media sites are spread across countries and continents. Last year MySpace entered into a 50-50 joint venture with Softbank to bring MySpace to Asia. MySpace already boosts an increasingly global network, which includes the US, Britain, Germany, Australia and Ireland. Social media use has exploded over the last two years across Asia thanks to technology. There are 588 million net users in Asia this year compared to
308 million in 2004. Advanced mobile services are expected to reach 318 million in 2011 compared with 158 million in 2005. The rise in social media is leading to a migration of ad revenues as well as to illegal use of content," said Colgan.

Advertising is the main source of revenues for many online communities is China‘s most popular social-networking site. Its revenue is advertising and it currently ranks among the top 10 Chinese internet sites in terms of ad revenues.

China‘s online ad market is expected to total just $800 million in 2007 versus $19 billion in the US. TV is expected to lose the most ad share to the Internet followed by newspapers."

The issue of copyright infringement and illegal use of content have proliferated. He gave the example of Baidu. It is the largest search engine in China with 52 per cent of the market share. In 2005, Baidu was sued by the IFPI for pointing users to illegal copies of music. Although Baidu won the case, IFPI plans to appeal. However, as a result of this some content owners have responded by making content more freely available. Baidu formed a strategic partnership with EMI Music to launch an advertising supported online music streaming service in China. The two companies also agreed to explore advertising supported music download services.

There is an increasing convergence of UGC and professional content. Sites such as MySpace and YouTube are bidding to become distribution arms of traditional media. Companies are putting money behind the idea of people mixing amateur and professional material. Warner, CBS, Sony BMG, Universal are distributing content via YouTube and sharing ad revenues.

In Singapore, national daily The Straits Times launched an online portal, Stomp. Readers can engage in citizen journalism by exchanging views and posting news clips. There is an economic impact in that online currencies are emerging. In Cyworld, Acorns can be used to buy digital items such as furniture and pets and are sold for hard cash in the real world The company makes $300,000 a day in revenue from selling digital products and services.

Consumers are making purchases through social media sites. Mixi is the biggest social networking site in Japan with 5.7 million members. Users can rate and review books, DVDs, electronics and other items. Clicking on a product takes you to the relevant page on Amazon Japan. Online sites also benefit from viral marketing is making a great impact. Without spending any money on advertising, has grown virally to attract more than one million users since it was launched in 2003.

"This is prompting companies to use social media as a tool to engage consumers. Coca-Cola launched a UGC site where people can express their opinions about the brand. Chevrolet asked Web users to make their own video spots for the Tahoe. Social media sites in Asia are growing through funding from foreign investors. For instance Social-networking site in China got $48 million investment from US-based General Atlantic. MySpace co-founder Brad Greenspan has invested in over 20 Chinese sites and are expected to become stronger players as they leverage on external resources."

Moreover, Colgan notes that Social media is also moving into the mobile space. A social networking site in China WangYou focuses on promoting UGC. Users can send photos from their Web pages to Handsets. WangYou gets a cut of the call charge from the phone company. A Silicon Valley firm has even said that sites that target PC users may lose out to companies who have worked harder on social networks through the cell phone. Social media is expected to extend into the mobile space over time.

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