Thursday, May 03, 2007

Mark Jung, Former COO of Fox Interactive, On the Perils of Web 1.0 Approaches & User Generated Content

As promised in my post yesterday, today I feature the key points of an interesting keynote address at yesterday's Red Herring Spring Conference in Monterey by Mark Jung, former COO of Fox Interactive and former CEO of IGN (which was acquired by Fox) -- his central points are below in bullet form:

-- web 1.0 assumptions – “content is king” and “content exclusivity” is critical;

-- these assumptions are poised to lose, as are traditional offline media companies who do not effectively get into the online game;

-- no web 1.0 sites gained traction – including advertising traction – in any significant way;

-- MySpace, on the other hand and as an example of an effective web 2.0 company, adds 250,000 new user profiles per day;

-- today's online world is categorized by fragmented media consumption – visitors visit millions of websites;

-- is today’s user generated content world “ready for a crash” a la web1.0 because, among other things, advertisers don’t want user generated content now (just as they didn’t before)?;

-- it depends on how you define "user generated content" -- “user published content” (e.g., sourced by a widget from high quality branded sources – higher quality content) is worlds apart from what most people think of as being “user generated content” (e.g., a kid doing a stupid prank);

-- but, one must ask the question about what the incentives really are for those publishing “user published content” -- it is not always about the money; it may be about the fame or notoriety instead (e.g., a 17 year old may not care about the money – although he or she should care perhaps);

-- a true definition of a "portal" today is an aggregator of distributed public communities;

-- in the long run, are these portals truly in control of the monetization of their own inventory and their advertising model? Interestingly, the answer may be "no" because the publisher is not in control of what is actually in the frame of the real estate it owns – the users who publish content within that frame may be the ones in control;

-- and, this user published content creates real costs (such as bandwidth), as well as issues surrounding objectionable content (and is manually screening of all content a realistic strategy? -- and, if not, how can potential liability be reasonable contained?);

-- these are the questions that should concern all those involved in Internet media;

-- in answering these difficult questions, the extreme reactions will not work -- i.e., too heavy of a hand won’t work (walled garden won’t work); but, the laissez faire strategy also doesn’t work;

-- rather, all parties must “win” (should be an effective revenue share for all involved or a cross subsidy of some kind -- but, remember, money is not necessarily a primary driver for those publishing user published content);

-- a good example of a successful web 2.0 business model is eBay –- the entire experience is driven by viral marketing and viral distribution and eBay takes a “tariff” on every transaction (leverages the power of the community and takes a tariff and shares the bulk back with the community); in a sense, eBay doesn’t really share revenues, it’s the other way around – the consumer shares revenue with eBay.

Interesting stuff ...