Newscorp.'s Chernin: Little Opportunity to Make Money in User Generated Content

Posted by: Heather Green on January 10

In an Hollywood Reporter story from a Citigroup conference yesterday, News Corp. president and chief operating officer Peter Chernin is quoted saying that his company expects to beat its $500 million in digital revenue estimates for this year, but “warned that industry watchers might overestimate the business opportunity behind user-generated content.”

“‘There is very little opportunity to monetize” user-generated videos because advertisers are not always comfortable with their content, and “there is no scarcity value,” Chernin argued. “If you put an ad on a minutelong clip of someone falling off a skateboard, people can find that (video) everywhere.’”

That made me sit up and think. I have heard this from advertisers about YouTube, which explains why they’re scurrying to clean up their content. But here’s a lot more validation from someone who actually runs one of these sites and has a lot in this game. Chernin said that MySpace has about 2/3rds to 3/4rds as many video downloads as YouTube, the Hollywood Reporter writes.

It sounds like he’s making a distinction between user generated content and social networking. But you have to wonder how willing advertisers are to climb into the wild and woolly world of social networking, beyond the places like the home page which Ad Age recently reported sell for $1 million per day.

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