Can User-Gen Movies Give Microsoft's Vista a Boost?

Interesting story in today's New York Times about a contest that Microsoft is running, called the Ultimate Video Relay. The goal is to get budding filmmakers to continue a story begun by Kyle Newman, director of the forthcoming feature 'Fanboys.'

From the Times:

[The contest] is intended to promote the higher-end version of Vista — Windows Vista Ultimate — among videophiles, early adopters of technology and filmmakers.

The contest...has its own Web site (ultimatevideorelay.com), a spinoff of the Windows Vista Ultimate Web site (ultimatepc.com). The relay reference comes from the invitation to computer users to complete a story titled “The Cube” in several stages. The tale, a humorous cross between “The Matrix” and “The Office” (or “Office Space”) begins with a six-minute clip that can be watched on the relay Web site. The clip is directed by Kyle Newman, the director of “Fanboys,” a coming movie about “Star Wars” aficionados.

The online clip is labeled Act I of “The Cube” and ends abruptly. Contestants are supposed to finish the story by providing first a middle (Act II) and later an end (Act III). The entries will be judged by visitors to ultimatevideorelay.com.

YouTube expands advertising program; still sketchy on revenue-sharing

YouTube is expanding its "partner program" today, allowing a wider range of content creators to include ads in their videos and earn some coin. The program is now open to anybody in the US or Canada.

But you still have to apply to become a partner, and YouTube hasn't been very up-front about how the revenue split will work.

A Wired News piece reports that

Partners who regularly produce videos with more than 1 million page views earn "several thousand dollars per month," according to YouTube.

And NewTeeVee has a bit more shading on the announcement.

What's the Economic Value of User-Gen Content?

The investment firm Bear Stearns issued a report last month looking at the economic potential of user-generated content (including things like video and blogs) -- and the impact that UGC content could have on established media companies as it competes with their big-budget movies and TV shows for viewers' time.

From the report:

We see the emergence of UGC as an alternative and viable form of entertainment. If we are correct, this may augur, over time, for a significant increase in the supply of content available to consumers. Given constraints on leisure time and disposable income, both of which are finite, we think UGC will compete over the long run with content produced by the incumbent Hollywood studios and independent producers (although UGC is unlikely to be a perfect substitute given lower production values).

The authors of the report see more potential in ad-supported content models than paid downloads:

...[M]any users prefer free online video with no advertisements, [but] contrary to popular perception, consumers are not completely adverse to short pre-roll ads. Among all respondents and M18-34, 48% and 67%, respectively, prefer a free, ad-supported service with ten- to 15-second commercials. À la carte fees, such as paying $1.99 per video or a $14.99 monthly subscription fee, do not appear compelling to users with only 7%-9% of respondents indicating a preference for these types of offerings.

Drilling deeper into user attitudes toward video ads, our research finds that over one-third of respondents have no major complaints about pre-roll ads. Only 10% of respondents stated that a ten- to 15-second commercial was too long to watch before the video. Our survey finds that online video providers can monetize and improve consumer attitudes toward advertisements by focusing on targeted, relevant ads, reducing frequency (i.e., a user seeing the same ad too many times), and creating less-intrusive ads.

The authors see more opportunity in what I think of as "content curation and navigation" than in simply creating content. Content curation involves creating a thoughtful, targeted collection of content for the audience; navigation is helping users get to the content they want, either through search, subscription feeds, or personalized recommendations. From the report:

...[I]n an era of theoretically infinite video choice, the greatest value can be created not by producing content but by solving the “paradox of choice” and connecting users’ individual interests with the vast supply of content. The need for this type of aggregation/navigation is highlighted by findings from our online video survey — e.g., among users not fully satisfied with online video, one-quarter of the target demo (M18-34) cited difficulty in finding what they want to watch.

(The "paradox of choice" refers to the phenomenon that as the amount of content grows, it can become more difficult and time-consuming to find what you want to watch.)

In their wrap-up, they sound a wake-up call to established media companies:

Net-net, our work finds that technology changes pose a threat to the incumbent entertainment companies. To be clear, we are not calling for the demise of traditional media any time soon. However, we can certainly envision these changes leading to slowing growth and the rise of a new class of media companies just as the text-based Web spawned powerful new competitors such as Yahoo! and Google. As broadband Internet continues to evolve, it seems fairly probable that other, as-yet-to-be-determined companies will emerge from out of nowhere to play a role, as YouTube
did.

To me, this report reads like a memo to media executives that should've been titled, "Buy Internet Start-Ups Before They Get Too Expensive." The next couple years are going to be a race between traditional media companies (Time Warner, Viacom, NBC Universal) and Internet companies (Google, mostly) to buy companies they see as the next MySpace or the next YouTube. Of course, lots of money will be misspent in that race...