User-Generated Video Grows Up, Gets an Allowance

The meteoric rise of user-generated content (UGC) has been one of the biggest ongoing stories in 2006. Some would say the high point for this nascent market was YouTube's $1.65 billion payday courtesy of Google. Yet, in terms of impacting the overall market, the more significant announcement may have come more recently, when Google unveiled its plans to share advertising revenue with EepyBird, producers of the infamous Diet Coke and Mentos viral videos.

While this wasn't the first time Google agreed to share revenue with a content producer, it was with a "user-generated" producer (of course, where the line should be drawn between "professional" and "user-generated" is a topic in and of itself, as that recreation of the Bellagio fountains was hardly amateur).

Adding to the significance of this deal was another announcement on the same day by Metacafe.com unveiling their Producer Rewards program . Though not a direct ad revenue share per se, Metacafe now offers its uploaders cash based on how many times their videos are viewed, with payments starting at $100 for twenty thousand views and going up $5 for every thousand views thereafter.

Not the First Kids on the Block
Of course, Google Video and Metacafe aren't the first kids on the UGC revenue-sharing block. Not with companies around like Revver.com, which launched a year ago with a model whereby a post-roll ad was inserted at the end of videos and uploaders were paid a 50/50 revenue share based on however many viewers clicked on that ad. Their original claim to fame was that they were "the only video service that rewards content creators and owners for their original work"; it still says so on their Press Room page, though everywhere else it now refers to them as "the first viral video network that pays."

Although if imitation is the sincerest form of flattery, then Revver must be mighty flattered indeed, as 2006 has seen a spate of similar announcements regarding other UGC sites taking the lid off of the revenue-sharing honey pot.

In May, Blip.tv unveiled a pilot revenue-sharing program that offers a 50/50 split with uploaders based on the revenue generated from post-roll ads.

Around that same time, a new UGC site called Panjea.com launched, promising anywhere from a 50 to 85% split on ad revenue, as well as the ability to earn points simply by visiting the site and enjoying content.

And in early July, the omnivorous UGC site Eefoof.com went live enabling uploaders to profit from videos, funny images, games, and other rich media content by sharing in the ad revenue from text and banner ads through a somewhat more complex formula based on how many hits a particular piece of content gets, the total number of hits the site receives, the total ad revenue generated by Eefoof, and their expenses.

And if that weren't enough, it's not just the uploaders who are benefiting from this burgeoning rev share market. It's also those individuals who are sharing content and helping to drive that traffic. Guba.com offers $5 for every hundred leads brought to the site. Revver has joined in on this game by doling out a 20% of their ad revenue generated by the videos a user shares.

Growing Up Fast
The ongoing chorus surrounding UGC sites in the news has long been focused on the lack of high-quality content. When it comes to encouraging high-quality content, is there any better way then by putting money on the table?

The power of the revenue sharing carrot has already been on display by high profile migrations of popular producers, like lonelygirl15, from non-paying sites like YouTube to paying sites like Revver.

What's been so amazing, though, is just how quickly this market has evolved, especially considering it didn't really exist as recently as a year ago, at least not anywhere near its current level of popularity.

We've gone from most people not even knowing these sites existed, to some sites generating enough traffic to garner a billion dollar price tag, to the producers uploading this content benefiting from their hard work, all in the span of less than a year.

Sure, the market's still a long ways from maturity, and has a potentially troublesome adolescence to go through as the market steels itself for the potential spate of copyright lawsuits and the ever-shifting whims of a fickle audience, but the fact that internet giants like Google are stepping up to the plate and realizing that to compete in a UGC world they have to reward those users who are generating the content bodes extremely well for the future of this market.