A new and autonomous media generation is coming of age in a culture where every individual can be a publisher, photographer, or performer. These empowered individuals no longer have to wait for companies to sell them the content they want. They can take the tools available to them and make what they want for themselves. But how can sites turn this massive, unstructured, and constantly changing flow of user-generated content to cash?

The rise of user-generated content (UGC) represents a seismic shift to a participatory culture in which each individual can co-create the content they consume. Everyone can be a publisher and, more importantly, everyone's opinion matters. The internet is no longer about browsing, researching, and being addressed from a comfortable distance. This new internet—often coined "Web 2.0"—is much more proactive, engaging, and democratic. Individuals syndicate, blog, tag, and share—and they gravitate to destinations that encourage and enable participation.

But involving the users, and integrating their content, requires deeper engagement and the right tools. Building and improving social networks to meet the needs of diverse communities is no small task. And, according to Ken Doctor, an analyst at Outsell Inc., most publishers have neither the talent nor the DNA within their organizations to do it with home-grown solutions. Fortunately, the maturing of web technology and business models has spawned a new generation of tools and tactics to help tackle the complexity of integrating user-gen tools.

"Outsell believes that it is a 2007 planning imperative for publishers to move beyond grudging acceptance to a full-fledged embrace of user-generated content," says Doctor. While early efforts to extract value from UGC may have fizzled, new models are taking off thanks to a sharp focus on three factors: deploying easy-to-use publishing platforms and associated social media tools; a business model designed to create related revenue, gain new users, and increase the time spent on the site; and a critical mass of people participating in the UGC phenomenon.

Indeed, user-centric social networking sites are the web's fastest growing category. One in 20 internet visitors went to social networking sites during the month of October 2006, nearly double the proportion of traffic a year ago, according to the research company Hitwise.

In the United States, the Pew Internet & American Life Project reports that 55% of all online Americans between the ages of 12 and 17 have created a profile on MySpace, Facebook, Xanga, or another social networking site. The U.S. is not alone, however. In South Korea, for example, the Daum Video site attracted 6.65 million visitors as of October 2006, and posted a whopping 82.8 million page views.

Learning to Listen
Despite the variety of UGC flourishing on the internet, the range of business models and strategies is limited by a lack of imagination and vision (most are based on aggregating eyeballs for advertisers). Not that the approach won't drive its share of revenues. The market research firm eMarketer reckons ad spending on social network sites will reach $865 million this year, with MySpace capturing 60% of the spending.

However, advertising is not the only game in town. Just as search has become the de facto interface to content on the web, so have social networks become the entry-point to a much greater and richer internet experience. The Hitwise study revealed the impact that social sites have had in driving traffic to other destinations on the web. Shopping and classified sites, for instance, received 2.4% of their visits directly from MySpace in September 2006—an 83% increase since March.

Against this backdrop, social networking has become a significant force on the web and a part of users' daily lives, observes Outsell's Doctor. "The sites are replacing search as the interface to content." He imagines dozens of hybrid business models that could spring up around this new level of interaction, ranging from sponsorship of the community's activities and interests to premium sites that monetize the niche content long tail.

The advance of these models and mindsets make UGC (and the tools that enable it) a must-have feature for a wide range of sites, not just social networking destinations, notes Cynthia Francis, CEO of Reality Digital, a software development company providing products and a hosted platform for sharing, storing, and managing UGC. "Every site will need these tools, just as they all feature a search box today. It's going to be table stakes."

More importantly, not providing a forum for UGC could cost a company customer loyalty. "People want to stand up and be counted for their contribution. They are saying: ‘Yes, I am interested in what you have to say to me but I want you to be equally interested in what I have to say to you,'" Francis explains. Companies will have to demonstrate they're doing more than just providing a contact email address for people to send feedback; they'll have to show they're genuinely interested in a dialogue. "Failing to encourage and enable this content exchange sends a message that the site couldn't care less about what its visitors say, think, and feel…and that will speak volumes."

To help site owners deal with the avalanche of UGC headed their way, and fulfill their obligation to manage this new content environment, Reality Digital has developed the Opus platform, which allows companies to add UGC elements to their sites. The new patent-pending advertising overlay module, Opus Dashboard, provides administrative, screening, and reporting tools for monitoring and monetizing content.