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March 20, 2008

Professional vs. User-generated content

At a time when user-generated content is threatening the viability of several "professionally" generated/edited media business models, Knowledge@Wharton has an interesting debate on this topic.
Turow points out (that) navigating the morass of Internet content isn't easy. "Some things that look amateur are professional and vice versa. You never really know what's going on. And it's hard to track these things down without cross checking. The digital environment is putting an enormous responsibility on the consumer." Waldfogel acknowledges that consumers have to become better judges of content and accuracy, but says that not everyone will be a discerning reader. "Some consumers can tell what is amateur, but it's not easy. A lot of amateur content is cut and pasted from professional content."

...Ultimately, the tug of war between professional and user-generated content will be resolved by their business models. Traditional media companies -- the ones behind professional content -- face a bevy of challenges, Wharton faculty point out. Newspaper companies must deal with higher production and staffing costs, movie and television studios have to pay talent and royalties, and the recording industry has been upended by digital distribution. The growth of new monetization efforts such as web-based advertising are not yet robust enough to offset the decline in these media companies' legacy businesses.

"Where the distinction between amateur and professional content matters is in business models," says Werbach. "For certain kinds of quality content, no blog can match The New York Times, but producing the Times is far more expensive than a blog. If users aren't willing to pay to support the kind of professional journalism the Times provides, something significant will be lost. And that's increasingly happening, because traditional business models for newspapers and TV rely on unrelated advertising revenues to fund quality content. The Internet is disintermediating those dollars."

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.