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Report: User content a boon, not threat, for old media January 5, 2007

Posted by grhomeboy in Media.

While traditional media companies are well-positioned to add user-generated content to their lineups, they’re unlikely to generate much cash this year from video, blogs and other such offerings, according to report from Deloitte’s Technology, Media and Telecommunications Industry group.

User-generated content good for old media, report says > Traditional media companies are ideally placed to benefit from the explosion of user-generated content and should see it as an opportunity and not a threat even though the potential revenue is limited, a report says. The phenomenon of consumers contributing their own photographs, video and blogs took the media industry by storm in 2006 through Web sites such as YouTube and according to a report by consultancy Deloitte on media trends for 2007, that is unlikely to change.

The trend prompted headlines that the traditional media was losing sway with the consumer but Howard Davies, a director of media strategy at Deloitte, said print and TV had been wise to stand back and see how the practice developed.

“(They) are very well positioned to adopt some of the technology and some of the emerging social practice … but incorporating it alongside traditional media channels to create an overall richer product,” he told Reuters.

Davies said user-generated content could be split into two categories with one for people looking for “five minutes of fame” via the likes of YouTube and MySpace and the other for people looking to contribute to a discussion or community.

“The one group that has made the most hype is the so-called ‘five minutes of fame’ and I’m not necessarily convinced that that will continue to grow,” Davies said.

“In fact you might find people start to get bored with it (but) the less glamorous use of the Internet as a form of creating user generated content is part of society now.”

News channels including the British Broadcasting Corp. and BSkyB have shown user-generated content including footage taken on mobile phones from events such as the 2005 London bombings. Web search leader Google last year agreed to acquire YouTube for $1.65 billion in stock.

Davies also cited “Runner’s World” magazine which has created forums for group discussions as a success story and said broadcasters could use the medium to gain feedback on programmes or create a buzz before they were launched. However the report by Deloitte’s Technology, Media and Telecommunications Industry group said the potential for generating revenue was likely to be limited.

“There’s something about the social user … community that is absolutely not professional and so the community doesn’t want it to be commercialised,” he said about advertising around Web sites dedicated to the content.

“It’s so easy to set up a rival offering and there’s very little loyalty to these sites and you can move to another one fairly easily and if you want to avoid adverts then you will.”

Looking ahead for 2007, Deloitte said another major topic for media companies would be the desire to “crack” China. Deloitte said China was a challenging market for foreign media companies due to government censorship and restrictions on foreign ownership and said the other major factor to deal with would be piracy.

However head of media research Paul Lee said there was huge potential in China with the Olympic Games to be held in Beijing in 2008, a fast-growing middle class who would be looking to buy genuine goods and a strong desire to see Chinese brands become global.

He said companies needed to be patient and form positive relationships with Chinese business partners and government agencies rather than trying to rush for market penetration.

“The Olympics will force the hand of the Chinese to be more open,” he said in an interview.

“(But companies) need to understand the history and have the patience to grow with China. It’s such a massive beast which cannot change overnight but will change over decades. It may be that the investment you’re making now will be reaped by your successors.”

The full Deloitte report on media predictions will be released later in January.

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