• by Wendy Davis , Staff Writer @wendyndavis, January 8, 2007

Time magazine named digital content creators "Person of the Year" for 2006, but a new report suggests that 2007 will mark an even more significant milestone for consumers who create media.

"Consumer-generated content already accounts for [the] vast majority of content available on the Internet. And that is only likely to increase--as tools are becoming ever more powerful and easy to use-- enabling more and more people to contribute to the overall Internet experience," states the Oppenheimer & Co. Inc. report, "The Digital Consumer: Examining Trends in Digital Media."

What's more, the surge will occur even without an improvement in technology, predicts the 92-page report. "Customers are willing to accept lower quality on the Internet--just to capture the immediacy of content."

The report authors add that consumers' willingness to accept even mediocre quality streams bodes well for online video, as "end users are likely to increase their consumption of it even before the infrastructure is ready to provide a TV-quality-like experience."

In addition to creating content, consumers also will increasingly control its distribution, Oppenheimer forecasts. "In our opinion, distribution of digital content to a consumer is not likely to be 'owned' by any of the players that are currently, seemingly, vying for that position--but rather by consumers themselves," Oppenheimer writes. "Consumers are likely to decide whom they will 'let into their living room,' whom into their 'music library,' how they will want the two to interconnect, etc."

But the report is bearish on the prospects for ad-supported online video. Rather, for the most part it will be monetized based on purchases and subscriptions, predicts Oppenheimer. "Supplanting revenue derived from content purchases and subscription would amount to incremental $60 billion spend on advertising," states the report. "It is unlikely, we believe, for such a shift to occur over the next several years."