Is User Generated Content a Financial Albatross?

Connor Kyle pointed me to an interesting article on Slate.com about the very high costs of running a user generated content site.  Not surprisingly, YouTube is blowing through cash and not able to make enough ad-revenue to turn a profit.  In fact the article points out that YouTube’s anticipated $470M 2009 loss is more than 5 times than that of the struggling Boston Globe with an $85M loss.

User generated content sites that depend on ad sales as their primary revenue stream are classic two-sided platform networks.  Typically there is a start-up problem for revenue generation on these sites; the site must have enough users in order to attract big-spending advertisers.  However, once the magical user threshold is reached and advertisers come knocking, so much money has been invested in developing the technological infrastructure and operating costs are so high to maintain the large amounts of content and traffic that the site will need massive amounts of ad revenue to ever turn a profit.  Even the king of on-line advertising, Google, can’t figure out how to turn a profit on the most popular user generated content site on the Web.  What hope does this give to companies like Twitter who are still trying to figure out their revenue model?

Zappos’ real-time sales map

Zappos, the successful on-line shoe retailer, has introduced a new feature that displays real-time sales of their products on a map with location based on shipping destination.  You can watch flip-flop, sandal, and sneaker sales pop-up all over the country.  It’s an interesting feature.  I guess the point is to inspire people to buy products by seeing where they are being purchased.  No information about the customer is displayed, just the product sold and the general location to which it is being shipped.   It also doesn’t seem like you can zoom-in to a location, so customer privacy is not an issue.  It’s kind of fun to watch the arrival process of new orders and their geographic dispersion.  [via FlowingData]

Tweeting the Opening Bell – MarketWatch Video

more about “Tweeting the Opening Bell – MarketWat…“, posted with vodpod

MBA 734 – Wiki Discussion Question

How do Wikipedia’s processes for creating and modifying articles ever lead to high-quality results?

Social Media, the Tipping Point

James Surokiecki, the author or The Wisdom of Crowds, gives a great discussion at Ted on how social media and the blogosphere emerged to be an important aspect of modern media and news.  He discusses how Internet technology allows people to organize and act in scales that were previously impossible.

MBA 734 – Blogging at DrKW Discussion Question & EconTalk

What are the advantages and disadvantages of implementing internal versus external employee blogs in a corporate setting?  Are there certain industries where one of these strategies makes more sense?

A side note.  Since we’re starting our module on the social web and will be talking about Wikipedia in a couple of weeks I highly recommend listening to a couple of interesting and relevant podcasts from EconTalk, a great and well-recognized podcast about important issues and ideas in economics hosted by GMU economics professor Russ Roberts.  You don’t need an iPod or iTunes to listen to these podcasts; you can stream them directly from the EconTalk website.

The first podcast is with Clay Shirky who is the author of Here Comes Everybody and an expert on the economics of social media.

The second podcast is with Jimmy Wales, the founder of Wikipedia, who discusses how Wikipedia started, how some of the social aspects of Wikipedia work, and where Wikipedia is heading.

Tweet away your new job

Great post on “I’m not actually a geek” on how a new hire at Cisco possibly lost their job because of a tweet.  I thought this lesson was learned with all the firings and job loss because of Facebook behavior.  Imagine that, people actually read what you post on Twitter, wait …  isn’t that the point?

MBA 734 – iPod/iPhone Discussion Question

Has the digital music market irreversibly tipped in Apple’s favor?

Daily Show Pokes Fun at Twitter Frenzy

See this Gawker post for the clips from last night’s Daily Show clip about twitter

MBA 734 – Brightcove Discussion Question

What are the strengths and weaknesses of Brightcove’s business model?