User Created Content, supporting a participative information society

1. User-Created Content:
Supporting a participative Information
Society
Support document for the workshop
Brussels, 7th November 2008
With partners

2. Table of contents
Objectives and scope of the study........................................ 3
Methodology ......................................................................... 5
Access issues - Will broadband networks sustain UCC
growth?...................................................…............................ 9
Business models - Is the value of UCC platforms in the
content?.................................................................................. 12
User as a producer, or the end of professional content?...... 25
Legal and Policy issues - Is self-regulation the solution?..... 37
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3. Objectives and scope of the study
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3

4. Objectives and scope of the study
The objective of the study was threefold:
To analyse the developments taking place in the field of user-created
content,
To assess their economic, social, technical and legal implications, and
To consider how these affect EU policies in the field of ICT and media.
In this context, User-Created Content refers to :
Content made publicly available through telecommunication networks,
which reflects a certain amount of creative efforts, and is created
outside of the professional routines and practices.
It does not deal only with content made publicly available on the
Internet but with content made available through any
telecommunication network and platform.
The analysis should cover:
Europe and the most advanced countries in the world, in particular the
USA, Japan and South Korea
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4

5. Methodology
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6. Methodology
Some literature already exists in the field of user-created content
and has been collected by the consortium and used as a basis
throughout the mission.
50 case studies have been elaborated on the basis of information
collected from the web sites of the companies as well as from the
press and some dedicated web sites.
55 interviews (face to face and phone interviews) have also been
conducted during the mission.
A workshop with a representative set of stakeholders is organised in
Brussels in order to present and validate the major findings of the
study.
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6

7. List of the 50 case studies
North America Japan& South Western Europe Southern Europe Nordic countries Eastern Europe
Korea
Video sharing Pandora.TV DailyMotion Tuclip Neogen.tv
Photo sharing Flickr Fotosik
Photobucket
Social network Islandoo Cyworld Serious Talent Dada LunarStorm
MySpace
Knowledge sharing/ Wikipedia Wer.weiss.was Wikilengua
Collaborative work RocWiki
Citizen journalism OhmyNews AgoraVox
Skoeps
Virtual World VirtualMe VirtualMe Habbo Hotel
SecondLife
Video Games Machinima
WeGame
Kongregate
Recommendation LibraryThing Last.fm Biblioteket.se
Deezer
Talent Search Ziddio Manuscrit
Blurb Sellaband
Lulu Backstage
KijkmijTV/SeeMeTV
MTV Flux
Zizone
Social bookmarking Mister Wong
Mobile specific services Qik Perso TV Mobango
Mobango
ShoZu
Betavine
UCC service on the TV Fame TV
set TV Perso
Audiobooks LibriVox
Content ranking Threadless
Government 2.0 FixMyStreet
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8. List of interviews
AFP Frank Alsema Myvideo (SBS)
AgoraVox Frankwatching Neogen
Akamai Freshnetworks (Freshminds) Netlog
Alain Bensoussan Avocats Garage TV News corporation
andUNITE Geenstijl OECD
BBC Google (Youtube) Orange
Brainsonic Habbo Hotel (Sulake) Red Chocolate (GoSupermodel)
British Telecom Havas Digital RIA Novosti
Buma/Stemra IJsfontijn RTL Netherlands
Charlie Becket Khaeon Games ScreenTonic
Cory Doctorow Lagardère Active Skyrock
Dailymotion Lego Swinxs
Endemol Livejournal Telecom Italia
e-TF1 / WAT Marketingfacts Telekom Austria
European Federation of Magazine Publishers Mediaedge:cia Twingly
European Newspaper Publishers' Association Mobibase William Dutton
Eyeka Moshi Monsters (Mind Candy) WoZZon
Federation of European Publishers MySport
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9. Access Issues
Will broadband networks sustain UCC growth?
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10. The technical environment: broadband everywhere?
Penetration of broadband Internet access
among European households in 2007
The development of UCC services is 90
80
currently sustained by the quick 70
broadband adoption… 60
50
40
…But cable is also widespread and 30
the digitization of the networks is on 20
10
the right path 0
Hungary
Czech Republic
Italy
Slovenia
Malta
Latvia
Slovakia
Portugal
UK
Germany
Cyprus
Sweden
Finland
Luxembourg
Austria
France
Spain
Lithuania
Ireland
Poland
Bulgaria
Greece
Netherlands
Denmark
EU Countries (27)
Belgium
Estonia
Romania
IPTV also experiences a strong
development in some market and % of HH with Internet acces s % of HH with broadband Internet acces s
could complement the access to Source: IDATE based on Eurostat
UCC services 90%
Evolution of 3G subscribers in Europe from 2007 to 2011
80%
Last but not least, 3G penetration is 70%
60%
still low but is expected to 50%
40%
experience a tremendous growth in 30%
20%
the coming years 10%
0% Italy
Czech Republic
Hungary
Slovakia
Slovenia
Malta
Latvia
Germany
Cyprus
Portugal
Sweden
Austria
Spain
Ireland
Luxembourg
France
Finland
Greece
Lithuania
Bulgaria
Poland
United Kingdom
Belgium
Total EU countries (27)
Denmark
Netherlands
Estonia
Romania
Mobile is seen as the future
Eldorado for UCC services
2007 2011
Source: IDATE
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11. Drivers and obstacles
The most important technological driver is access to broadband
internet, determined by the availability and affordability. Important
for the further development of UCC is the access to mobile
broadband internet, also as this might become an alternative for
fixed networks.
Broadband enables people to upload content produced with the
widely available digital equipment and edit / share it by means of
easy-to-use (online) tools.
However, when these conditions are not right in regions the drivers
become obstacles. When there is a lack of access to broadband in
terms of availability and affordability the development of UCC is
hindered. Moreover, even if there is sufficient access to broadband,
insufficient upload capacity is a barrier.
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12. Business models
Is the value of UCC platforms in the content?
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13. UCC services and advertising revenue: an impossible
equation?
UCC sites with global audience + increasing Internet advertising
spending = no advertising revenue for UCC sites
A spectacular growth in the audience of UCC sites:
the number of users of video sites nearly doubled from the end of 2006
to the end of 2007
+ A tremendous increase in Internet advertising expenditures :
69% of additional advertising spending around the globe from 2007 to
2010 will go to the web (~61 billion USD in 2010)
= A modest take-off of advertising spending on UCC services:
Estimates of UCC advertising expenditures for Western Europe and the USA
(in billion USD)
2007 2008 2009 2010
Internet advertising expenditures (Western Europe) 9 997 12 752 15 857 19 516
Of which UCC spending 77 136 206 289
Internet advertising expenditures (USA) 16 112 19 173 20 611 22 611
Of which UCC spending 162 278 391 519
Source: IDATE for UCC spending estimates in Western Europe, eMarketer for estimates in the USA
and ZenithOptimedia for the Internet advertising expenditures
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13

14. No future for donation revenue?
Most wikis websites totally or partially rely on revenues derived from
donation, as non-profit organizations.
Wikipedia = The most emblematic wikis:
Nearly a quarter of a billion people visiting Wikipedia every month
Generating nearly 4 billion page views (Comscore worldwide, February 2008),
Total income (mainly donations) = USD 1.5 million in 2006 and USD 2.7
million in 2007.
Total expenses of about USD 2.1 million.
Wikipedia would be seriously considering proposals to become
financially independent via advertising on the site.
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15. Could paying models be a credible alternative to
advertising?
The Internet is traditionally seen as the temple of free, but…
… several UCC services have developed various paying models –
not necessarily directly linked to UCC – contributing to generate
complementary revenue:
Monthly, quarterly or yearly subscription fees to access to premium
services (for example extra storage capacity for photo-sharing sites),
Subscription fees to access content (like for a TV premium channel, like PersoTV),
Revenues generated by the sale of user created content (like Lulu) or the
sale of goods/items derived from UCC (for example the sale of tee-shirts or mugs
created with photos uploaded by users).
UCC platforms also derive revenues from the licensing of content and
technology to third parties, from the sale of personal data and/or of
aggregated data for statistical analyses.
Isn’t the value of UCC services in the technical expertise or the
quality of services rather than on content itself?
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16. Successful UCC services’ business models: still a work in
progress…
The UCC phenomenon is still too recent to ensure that business
models should be definitively set.
UCC platforms are still struggling to find out viable business
models. These latter will probably evolve in a near future:
Advertising will hold a major place in the financing of UCC services:
since users seem reluctant to pay for accessing the content proposed on
UCC platforms, the latter will have to find other sources of income and will
develop in particular free models based on advertising revenue. This implies
that advertising adapts first to a 2.0 environment;
Subscription and paying models will only be possible for premium
services: it seems that users are willing to pay only for services such as
extra storage capacities, or music downloading or dating services. But that
will concern only a minority of users and specific services;
Donation models should remain quite limited to very specific services,
such as non profit organizations with a confidential audience (so as to limit
the operational costs);
Licensing and e-commerce should also play a growing role in the future
economy of UCC services
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17. Could the authors benefit from their creations?
Examples of revenue sharing between UCC services and content creators
Category Service Description
Video sharing YouTube YouTube paid out more than USD 1 million in total revenue to user partners as part of the Partner Program between December 2007 and April
2008.
The amount of the revenue sharing depends on the notoriety of the content.
TuClip Authors of the videos selected on Antena 3 receive 100 EUR
Author of the video selected as being the best of the week receives 600 EUR
Social Netw orks MySpace Developers will be given the right to monetize themselves, through advertising, the applications they created on the MySpace Developer Platform
and to keep all revenue.
Citizen Journalism AgoraVox In the long run, the authors of the best stories w ill be remunerated depending on the traffic and interest they generate.
OhMyNews The author of a story published on the website’s main page receives KRW 20 000 (about 13 EUR).
Before September 2007, an artic le published anywhere else on the site was also remunerated with a KRW 2 000 payment.
Skoeps 50% of the revenue (~€50) from content sales was shared with users that generated the content.
Part of the advertising revenues was shared with the skoeps reporters
Video Games Kongregate Kongregate shares between 25% and 50% of ad revenue generated by games with their respective developers
Kongregate pays skilled developers between USD 20,000-80,000 to create premium games to provide their community w ith quality games.
80% of the revenue from in-game micro transactions goes to the game creator
WeGame The top 5 placers can w in prizes. First place gets a USD 250 Amazon.com gift certif icate, 2nd gets a USD 100 gift certif icate, 3rd gets a USD 50
gift certif icate, and 4th and 5th both get a USD 25 gift certif icate
Talent search SeeMeTV Each video download normally costs 25 Eurocents. From this amount, 10% is shared with the video owner
Manuscrit Le Manuscrit Publisher pays commissions to its authors:
•For electronic files: betw een 25% and40% of DF price according to the number of copies sold
•For print on demand books: between 8% and 15% of DF price according to the number of copies sold
MTV Flux Users keep 100% of the advertis ing revenue generated on the web pages that they are hosting. On the additional pages hosted by Flux - such as
profile pages, community pages, etc. – Flux splits with the users (50/50) the Flux advertising revenue generated each month.
Sellaband The advertising revenue generated on the website w ill be credited to the Artists corresponding with the number of free downloads related to their
music titles in relation to the total number of downloads.
The profit of the standard album w ill also be split equally between The Artist, The Believers and SellaBand.
Ziddio Ziddio regularly holds contests where w inners are awarded w ith quot;exoticquot; prizes such as a TV production deal, a gaming system, a stack of cash,
etc.
UCC on the TV set Fame TV To urge users to submit content, Fame TV grants a GBP 0.10 reward to an author each time its content generates a premium SMS vote, charged
GBP 1 to users
Content ranking Threadless Threadless shares its revenues with tee-shirt designers and slogan authors, and also pay members who contribute to sales.
Source: IDATE according to companies
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18. Generating revenue: not the main driver for people sharing
their content on UCC services
Main motivating factors for authors:
Expressing oneself,
Being famous (even if fleeting)
Or stay tuned to one's community turn
Probably two different attitudes depending on the main intention of
people:
When it deals with quot;real amateurquot; content, people do not expect
revenue and accept to share their content for free
When it deals with potentially talented people, who could expect to
derive income from their content, the fact is that they could accept to
share their content for free since their primary goal is not to make
money directly through the Web but to have the opportunity to become
famous and then to make money in a more quot;old-fashionquot; way (by selling
CDs or working for a TV channel for example).
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19. Business models vary depending on the nature of UCC
services (1/2)
Principles of UCC classification
A classification has been developed Type of
content
Economic Social Examples Category
name
during the mission so as to provide an Revenue No
revenue
Happy
Few
Large/Open
access
analysis framework for UCC services. Personal X X Souvenir
photos
Private
Content
This classification is based on a content Personal X X Funny videos Personal
Content
and user approach as opposed to a Story telling X X Wedding book Stories for my
friends
platform or service approach. It is based Story telling X X Collaborative Enlightened
work amateur
on the three following criteria: Story telling X X Book in Limited series
commemoration
Type of content; of a specific
event
Social aspect; Story telling X X Mini series Semi-pro
Economic aspect.
Main characteristics of the UCC categories
Open/Large
Criteria used for the UCC classification access
Criterion Definitions
refers to content developed without editorial views (example: Enlightened Amateur
Type of content Personal
souvenir photos)
Semi-Pro
Story telling refers to content developed with editorial views (example: online
photo album integrating comments, music, etc.) Personal Content
Social aspect Happy Few refers to a restricted access to content. The creator appoints the
people who will be authorized to access his/her content No revenue Revenue
refers to a large or totally open access to content, that is to say
Large/Open access that every people having access to the service (either through a
registration process or not) will be able to access content Private Content
Economic aspect Revenue when it is possible for the creator to earn money (even if it is not Limited series
systematic)
Stories for my friends
when it is not possible for the creator to derive revenue from
No Revenue his/her creation (even if the UCC service could earn money
thanks to this content)
Happy Few
Personal Story telling
Source: IDATE
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20. Business models vary depending on the nature of UCC
services (2/2)
Almost all types of UCC services
integrate advertising revenues in their
business models. Main sources of revenues for services
of each category of the UCC classification
Donations and public funding mainly Open/Large
access
fuelled the quot;enlightened amateurquot;
Enlightened Amateur
category. Advertising +donations
+public funding
Semi-Pro
Personal Content Advertising + e-commerce
The subscription models are essentially Advertising + subscription fees
+e-commerce
to be found in the four quot;no revenuequot; No revenue Revenue
categories (cf. on the left-hand-side of the
Private Content
classification). Advertising + subscription fees
Limited series
E-commerce
Stories for my friends
Advertising + subscription fees
Revenues derived from e-commerce are
common in the two “revenue” categories Happy Few
(cf. on the right-hand-side of the classification), Personal Story telling
but not limited to them. Source: IDATE
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21. The value chain also varies depending on the possibility for
UCC to generate revenues (1/3)
The value chain for the quot;Semi-Proquot; and quot;Limited seriesquot; categories:
This model is the only one in which users/consumers pay for UCC and the only
one in which the users/creators derive revenue from their works.
Creation Distribution Consumption
Other websites /
Content providers
content publishers
Consumer Consumer
electronics electronics
manufacturers manufacturers
Users/creators Software providers UCC platforms Software providers Users/consumers
ISPs and telcos ISPs and telcos
Advertisers Investors
UCC flows Content/service flows Revenue flows Revenue flows
(different from UCC) (revenue generated by UCC) (revenue not generated by UCC)
Source: IDATE
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21

22. The value chain also varies depending on the possibility for
UCC to generate revenues (2/3)
The value chain for the quot;Enlightened Amateurquot; and quot;Personal contentquot;
categories:
In this model, UCC platforms can only hope to monetize UCC thanks to
partnerships with other Internet players or content publishers. Otherwise, neither
the platforms, nor the creators derive direct revenue from UCC.
Creation Distribution Consumption
Other websites /
Content providers
content publishers
Consumer Consumer
electronics electronics
manufacturers manufacturers
Users/creators Software providers UCC platforms Software providers Users/consumers
ISPs and telcos ISPs and telcos
Advertisers Investors
UCC flows Content/service flows Revenue flows Revenue flows
(different from UCC) (revenue generated by UCC) (revenue not generated by UCC)
Source: IDATE
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22

23. The value chain also varies depending on the possibility for
UCC to generate revenues (3/3)
The value chain for the quot;Stories for my friendsquot; and quot;Private contentquot;
categories:
In this model, where the access to UCC is restricted to a quot;happy fewquot; base, no
direct monetization of UCC is possible.
Creation Distribution Consumption
Other websites /
Content providers
content publishers
Consumer Consumer
electronics electronics
manufacturers manufacturers
Users/creators Software providers UCC platforms Software providers Users/consumers
ISPs and telcos ISPs and telcos
Advertisers Investors
UCC flows Content/service flows Revenue flows Revenue flows
(different from UCC) (revenue generated by UCC) (revenue not generated by UCC)
Source: IDATE
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23

24. Drivers and obstacles
Due to the need for self-expression and social interaction UCC platforms
can potentially achieve a large target audience / market. Companies can use
UCC to get involvement / engagement of users with their products or
services.
Although still limited in relation to the availability of UCC, use of UCC by
traditional (media) companies provides an additional driver for UCC.
However, in spite of the large quantities of UCC produced there is a lack of
original and high quality content which is due to technical quality (video
made with mobile phones) but also artistic and professional quality.
Moreover fragmentation of UCC makes it difficult for platforms to achieve
critical mass to be able to monetise UCC. Investments in the platform are
necessary, such as storage capacity and bandwidth, while revenues are
very uncertain.
Also the large amount of UCC that is available to large platforms makes it
difficult to monitor content to prevent any unwanted content (offensive
content, illegal content). This makes the threat of legal action an obstacle.
Getting the users involved by means of UCC also means there is loss of
control over image and brand.
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25. User as a producer
Or the end of professional content?
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25

26. Individual Internet skills: tomorrow, all literates?
% of individuals using Internet regularly
(at least once a week during the last three months)
90
80
A growing use of the Internet closely 70
60
linked to the home penetration of the 50
Internet, and in particular of broadband… 40
30
20
…but strong disparities between the 10
North and North-West of Europe on the 0
Hungary
Czech Republic
Italy
Latvia
Slovakia
Slovenia
Malta
Germany
Cyprus
Portugal
UK
Finland
Sweden
Luxembourg
Austria
France
Ireland
Lithuania
Spain
Poland
Bulgaria
Greece
EU Countries (27)
Netherlands
Denmark
Belgium
Estonia
Romania
one hand and the East and South of
Europe on the other hand
2005 2006 2007
Source: IDATE based on Eurostat
Breakdown of the Internet heavy users by country and by age, in 2007
Men and young people are more heavy
users but women and elderly are closing
the gap
Source: EIAA, Mediascope Europe 2007
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26

27. Online activities: directly from the producers to the
consumers!
Top ten online activities
Monthly usage of Social Computing applications in 2007
Content is definitely the main driver of
the Internet’s growth
A quick adoption of the UCC services but +150% since
2006 +42% since
even heavy Internet users are more 87%
81% 2006
“spectators” than “actors” 42%
37%
31% 31% 30% 27% 26%
~ 83% have already watched videos 20%
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The main activities related to social media platforms
Source: EIAA Mediascope Europe 2006 and 2007
[Base: All Europe Internet users (n=4017)]
UCC services = a new way
of discovering talents,
but each single Internet user
IS NOT a new talent
Source: Universal McCann, Power to the people – Social Media Tracker Wave 3 (March 2008)
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28. Participation to the Information society: enthusiasm comes
from Eastern Europe…
Comparison of the actual reach of social media platforms' activities by country (March 2008) in percentage of Internet users
Romania
South Korea
100%
90% Hungary
South Korea
80%
Romania
Czech Republic
70%
60% Romania Poland
50%
40%
30%
20%
10%
0%
Watching Reading blogs Belonging to a Uploading Uploading Podcasting Writing blogs Subscribing to
videos social network photos videos a RSS feed
South Korea Poland Romania Spain UK Greece
Austria Netherlands Czech Republic Japan Italy Germany
Denmark USA France Hungary
Source: According to Universal McCann, Power to the people – Social Media Tracker Wave 3 (March 2008)
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28

29. Participation to the Information society: … but the habits are
in the Netherlands and in South Korea
Comparison of the actual reach of social media platforms' activities by country (March 2008) in percentage of total population
Netherlands
50%
45% Netherlands
Netherlands
40%
Netherlands South Korea
35%
30%
Spain
South Korea
25% South Korea
20%
15%
10%
5%
0%
Watching Reading blogs Belonging to a Uploading Uploading Podcasting Writing blogs Subscribing to
videos social network photos videos a RSS feed
South Korea Poland Romania Spain UK Greece
Austria Netherlands Czech Republic Japan Italy Germany
Denmark USA France Hungary
Source: According to Universal McCann, Power to the people – Social Media Tracker Wave 3 (March 2008)
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29

30. The heyday of amateur photographers and videographers
% of active Internet users who have uploaded
photos to a photo sharing site, by country
Photos = the most popular online
content created by users
Wide spreading of digital cameras, increase
in bandwidth, development of photo sharing
sites and of storage capacities.
% of active Internet users who have uploaded
videos to a video sharing site, by country Source: According to Universal McCann, Power to the people
Social Media Tracker Wave 3 (March 2008)
Video sharers = less numerous, but
generally more active
21% upload videos on a daily basis
33% on a weekly basis
Italians are particularly active since 31% of
them upload videos daily. At the opposite,
less active users can be found in the UK and
in Germany
Source: According to Universal McCann, Power to the people
Social Media Tracker Wave 3 (March 2008)
30
30