The move by ManiaTV.com to get rid of user-generated content on its online video site makes some interesting statements through their actions that need to be looked at.
Let's look first at a statement that ManiaTV's chief marketing officer Peter Clemente said about including user-generated content on a site: “Hype doesn’t necessarily equate to profitability, [UGC] may lead to a bunch of traffic, but not much loyalty."
He's saying there that user-generated content can't be branded. He adds that the success of ManiaTV has been its professionally produced shows, and most agencies and brands have no interest in user-generated videos. He's right there, that's been proven already.
From the viewpoint of advertisers and brands, there is a famine of good online video to put their products beside or within. There is a lot of money sitting on the sidelines for this very reason. The risk for companies is too great to allow their advertising content to float freely out there and be put next to whatever is available - it's not going to happen.
Have these changes hurt the ManiaTv.com? Not at all. Not only has their traffic been growing strongly, it's also getting a lot of word of mouth to go along with it. Just two years ago, according to comScore, the company had 280,000 unique users, today it's grown to 4.6 million. It's one of the fastest growing online sites comScore says.
What's happening here? While user-generated content brings visitors, it doesn't bring money with it. Most online video companies start out with the illusion that drawing eyeballs is enough, but it doesn't take long before bandwidth bills and other operational costs bring them to a quick reality.
Doesn't YouTube (GOOG) contradict this? No, in fact it reinforces it. The only thing that's hiding the gargantuan monthly operational losses for YouTube are the deep pockets of Google. If it hadn't been acquired by them or another big company, the weakness inherent in the business model would have been easy to see.
The reason why YouTube isn't doing anything is said to be the usual lame excuse of not interfering with the user experience, but users have already said they don't mind being interfered with if they can watch online video for free. I think what it is, is that YouTube isn't able to get big companies onboard with the content they offer.
Is this the end of user-generated content? No. But it is the end of it being thought of as a legitimate business model.
Don't agree? Look at who starting to get the deals in online video content: Rocketboom, Wallstrip and Lonelygirl15. All of them are professionally created content.
Now what needs to be understood is this doesn't mean that this will all go back to traditional media companies (although they are going to take a piece of the action), what it means is people with decent equipment and scripting ability will be able to do good online in the right niche and demographic. And good equipment is very affordable.
I think what's going to happen is there will be a continual move toward professionally created content. Then once that's established, there will probably be places for users to interact and comment on what is offered, similar to user-generated content today. AOL has just done this with their news site I mentioned in the last post.
User-generated content will stay, but I think it's going to gradually move to a lesser role online as more professionally created content is made available. Again, I'm not talking here only about major media, but smaller companies and individuals that are able to put together higher quality video productions that interest targeted groups of people.
This isn't something to be discouraged at, it's in reality a time of great opportunity.
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