• by Lydia Loizides , Op-Ed Contributor, May 1, 2008

I was asked to speak at on a panel today entitled "The New Kings of Media" hosted by Herrick, Feinstein LLP. This all stems from a paper that I wrote for them back in December about everyone's favorite topic d'jour: user-generated content. Below you will find the first part of the paper. As always, proper credit is required, so here it goes: This article appears in "User-Generated Content: New Business Models and Legal Issues," edited by Jeff Liebenson and published by the IAEL (International Association of Entertainment Lawyers).

User-Generated Content and Social Networks: Building For Long -Term Value On A Near -Term Phenomenon THESIS

The World Wide Web has been the foundation upon which a series of fundamental changes to various markets have taken place. As the IP-based data network moved from governmental to academic to business to consumer markets, the effect and changes that have been waged against markets that were, prior to the application of the Internet, driven by a one-to-one relationship or that were structured with a "middleman" have been drastically impacted. In some cases, they have ceased to exist. Consider the following areas of commerce: travel, retail, auctions, and classifieds - to name a few. These markets, once inter-personally driven, today rely on data networks rather than human- driven networks.

This disintermediation of markets by the application of the World Wide Web by the technology industry as well as the consumer in many cases (think about Pierre Omidyar / eBay, Shawn Fanning / Napster and Joshua Schachter / del.icio.us) has forced many traditional business models to adapt to faster rates of commoditization, increased access to competitive products and services, and faster devaluation of products and services simply because the World Wide Web affords any individual the opportunity to consume products and services for free -- something that was hard, if not impossible, prior to the mass adoption of the Internet.

The latest seismic impact has been in the entertainment industry. Beyond the impact of P2P networks and file-sharing technologies on the music industry, the likes of YouTube and MySpace have fundamentally changed the relationship between passive and active consumers of content and traditional content distributors - from cable and broadcast networks, to cable and telecommunications providers, and studios.

The impact? The use of professionally produced and distributed content without the rightsholders' express permission. The race is on to evolve sustainable and profitable business models for the monetization of user -generated content (UGC) as it relates not only to the aforementioned content but also the professional, semi-professional, and nonprofessionally created content.

I will explore the intersection of the network effect, critical mass and distributed networks as a basis for monetizing UGC. The entertainment industry's failure to quantify the impact of building such a network, driving and eliminating the top-down model of content distribution, fails to acknowledge the fundamental changes that have taken place at the very core of the relationship between consumer and content.