Bear Stearns has released an interesting new report on the Long Tail effect in media, focusing especially on television. It's a follow-up on an earlier report on Long Tail effects, and as such it's an effort to address "pushback" and other objections from media industry heavyweights who make up a big part of Bear Stearn's client base.
The main objections were these three:
- How much demand is there for user-generated content (UGC)?
- Can UGC actually be monetized?
- Won’t “content always remain king”?
To the first question, Bear Stearns brings some real data to bear and finds that UGC is indeed a big deal:
Some investors remain skeptical that UGC is more than a passing fad. If we define UGC as page views only from sites such as Myspace.com, Facebook.com, Youtube.com, Wikipedia.org, Blogger.com, and Digg.com (which is quite conservative), we estimate that UGC now accounts for 13% of total U.S. Internet traffic, up from 0%-1% in 2004. Based on these statistics, we submit that UGC is here to stay.
On the second, the investment bank's answer, like everyone else's, is a fuzzy "probably", predicting that we'll get video advertising right someday. Of course text advertising on UGC content is already there.
Finally, on the third question, Bear Stearns believes (as do I; indeed a third of my book is focused on this) that in a world of infinite choice, content is only as valuable as your ability to find it. They call that "context and aggregation", and it's what both Google and your favorite blogger do when the filter the web according to a narrow lens, be it your expressed search term or their own sensibility.
And then, in one of the best parts of the report, they illustrate the problem with the notion that "content is king". In practice, only good content is king, and good content is impossible to consistently create.
One of the counterarguments to our “context and aggregation are king” thesis is that,
for as long as most can recall, the entertainment industry has lived by the axiom
“content is king.” However, no one company has proven consistently capable of
producing “great content,” as evidenced by volatility in TV ratings and box office per
film for movie studios, given the inherent fickleness of consumer demand for
This chaotic mess of a chart below says it all. Like the wise man said, in Hollywood, despite the bluster about track records and taste, "nobody knows anything." It's all a crapshoot. Better to play the big-n statistical game of UGC, as YouTube has, than place big bets on a few horses like network TV.