Blog Post

Are Sites And Services Making Money Off User-Generated Material Practicing Cash-sploitation?

News Corp. execs didn’t spend hundreds of millions of dollars on an idea when Fox Interactive acquired They bought a community based on user interaction and a great deal of user-generated material. But it was the ideas and the work of the people who created and nurtured it that gave the community a home. What did MySpace users get for their contribution when the site was sold? Nothing in the way of financial compensation but they got assurances that the community would continue to be supported. Is that enough? Is it fair? As long as FIM keeps its end of the bargain, yes. The users get something free and cool in exchange for their contributions — and they get it whether or not they contribute a little or a lot. In the future, active participants may get compensated in other ways for building community, making recommendations, etc., possibly with award points towards merchandise or downloads.

Those questions are cropping up with increasing frequency as users contribute to the creation of so many Web 2.0 services and sites — and as the entreprenuers and VCs cash in. The latest round comes with the sale of to Yahoo. Henry Blodget says the answers were mixed at a think tank on social media when the subject came up — and that it had never occured to him anyone would see it as exploitation. Other are looking for ways to pay (OhMyNews already pays, for instance) or to allow users to make money from their own content. But I suspect most users are more than content just to get the service. Change that “compensation,” though, and wait for the waters to roil.