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Summary:

Consumer sentiment in the U.S. is falling. People are planning to spend less for the holidays this year, pointing to higher energy prices and a bleak economic outlook. What if cranky consumers stop creating content for free even as they open up their wallets for Black […]

Consumer sentiment in the U.S. is falling. People are planning to spend less for the holidays this year, pointing to higher energy prices and a bleak economic outlook. What if cranky consumers stop creating content for free even as they open up their wallets for Black Friday specials?

[qi:101]This version of the web is a follow-on to the first web boom, right down to the money on which it’s based. A bunch of the hottest startups of this generation were launched by people who made bags of cash in the late nineties (for example, Marc Andreessen, Joe Kraus, Sabeer Bhatia). A bunch of the financiers of today were entrepreneurs of yesterday (Peter Thiel, Flip Filipowski). And some of the talkiest talkers of Web 2.0 do so from a platform of wealth built a decade earlier (Guy Kawasaki, Seth Godin).

But those are only the most obvious cases of how this era of affluence builds on the last. The untold story is how real people — what businesses think of as consumers and most of us think of as ourselves, our friends, and our family — have been willing and wealthy enough to spend time producing online goodies with little or no pay.

If consumer wealth crashes — and both Business Week and The Economist offer cover stories this week saying it will — what happens to the content powering Web 2.0? Will people still have time to blog if they need to take a second job (or a first one) to keep making payments on their rapidly adjusting ARM? Will people still videocast their lives if those lives require full-time drudge work to keep the bank account balance positive? Will people still create new web sites like it’s 1999 when the stock market and their paychecks say it’s anything but?

Plenty of people still have plenty of money to do work for free or almost free, and it would be impossible to shut down the human drive to express one’s self and connect with other people doing the same. But if consumer affluence crashes, it may not be long before Internet idealists turn into Internet realists and start saying pay me for my content or else I can’t afford to create it.

  1. Drop the first paragraph and the last two, and you have a decent example of trickle-down economics.

    Your premise is flawed. Data that came out last week not measuring a subjective concept as “consumer confidence” and “planned spending,” but actual holiday spending showed that consumer spending is sharply increased year over year.

    As much as the myth of imminent recession and economic collapse continues to be propagated in articles like this, isn’t it interesting how the tech boom keeps on getting bigger and bigger?

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  2. Web 2.0 is all about empowerment, whether it’s the individual who starts his/her first blog, or the small business shop that suddenly has the ability to mix it up with larger competitors. UGC is here to stay, but I do think consumers will search for the best way to spend their time and creative energy wisely.

    An economic downturn might put a dent in hobby time for some, but for many, creating content, blogging, and submitting ideas to companies via Open Innovation platforms are an integral work/pleasure mix of their lives. UGC can be a great resume builder, a great way to connect with companies seeking talent, and ultimately, the web is one big audition platform. It’s the place where dreams might just come true, and as long as there’s a shot at hitting paydirt, we’ll keep plugging away, even when times are tough.

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  3. THe hype around user generated content – in the form of extensive blogs and user generated videos – may be beyond its peak and fade quickly, once economic crunch forces people to focus on more existential matters.

    However, I see UGC more like Tim O’Reilly describes it. Amazon and Google leverage UGC in the form of the information from millions of user generated hyperlinks, search queries and purchasing decisions. Few people realize that blogs, user generated videos and restaurant reviews are but the tip of the UGC-iceberg.

    When more and more cellphones are equipped with GPS sensors, these will provide information on presence, as well as on traffic flow – another form of user generated content that requires no effort from the user.

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  4. Mark: You have misread my article in search of some ideological fanaticism that exists only in your mind. This is not about trickle-down economics… there are people who also made money during the last boom (either from stock options or in the later housing market boom) who don’t show up in news articles because they’re not fabulously wealthy or aren’t doing snazzy startups. The idea is not that they won’t have money because it won’t “trickle down” from the rich startup-makers, but rather that an economic downturn could hit them too.

    Whether people spend more or not this holiday season doesn’t mean that they won’t have to budget more carefully next year. At any rate, I didn’t say there will definitely be a consumer crunch. I said some business magazines are predicting it and then wondered what might happen to UGC, given it relies on a certain level of consumer affluence.

    Jeff: I agree, Web 2.0 is about empowerment and that won’t go away.

    Martin: it wouldn’t be a bad thing if what disappeared was the hype and what’s left is the practice of UGC (an aside: I hate that phrase, user-generated content! In this article however, the “consumer-generated” angle was key).

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  5. Let me get this straight … you’re suggesting that a weaker economy threatens consumer-generated content? To the extent the current renaissance of personal publishing was based off people’s generous (unpaid) efforts, I just don’t see people all-of-a-sudden requiring to be paid. If anything, they’ll generate more — The Web is endless free entertainment, both for consumers and content creators. For many of them, just having an audience is enough motivation.

    What WILL change in my opinion will be the many many for-profit blogs, currently funded by advertising, sponsorships, etc. If/when the economy tanks, it’ll be the marketing dollars that get pulled first — especially the CPM banner and button ads. A crash will force marketers even moreso to ROI-based initiatives.

    CGC is being done for-profit, and freely. The for-profit folks will feel the biggest pinch, not the ones already doing it for free.

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  6. @anne: sigh Way to take a comment personally and get all defensive. Nothing really wins readers and influences people like calling them fanatics.

    As I said before, your entire article is built on a false premise. Saying “economic depression could be coming, so let’s theorize how that’ll affect UGC” is exactly like saying “Godzilla could swim to America from Japan, so how will that affect the ozone layer?”

    Your premise doesn’t make much sense, and therefore anything that comes after it is irrelevant to those of us who live in the real world. It isn’t that I’m a fanatic when it comes to politics, it is that you’re uninformed when it comes to economics.

    There’s not shame in that. I’m uninformed about a great number of things. Instead of calling me a fanatic, perhaps you should research the area with which caused your faux pas in the first place.

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