News Corp's Peter Chernin: No Money in UGC

Peter Chernin sees a big story for online advertising in 2007 but sees little potential to monitize user generated content.

The Hollywood Reporter:

"News Corp. president and chief operating officer Peter Chernin said Tuesday that he expects his company to exceed its goal of $500 million in digital revenue for the current fiscal year and that online video advertising has the potential to be "the single best (business) story" for media companies in 2007.

Speaking at the 17th annual Citigroup Entertainment, Media and Telecommunications Conference in Las Vegas, Chernin said online ad rates have started to become significant at CPMs of $25-$30.

But he warned that industry watchers might overestimate the business opportunity behind user-generated content. "There is very little opportunity to monetize user-generated videos because advertisers are not always comfortable with their content, and "there is no scarcity value," Chernin argued. "If you put an ad on a minutelong clip of someone falling off a skateboard, people can find that (video) everywhere."

Business Week:

"That made me sit up and think. I have heard this from advertisers about YouTube, which explains why they're scurrying to clean up their content. But here's a lot more validation from someone who actually runs one of these sites and has a lot in this game. Chernin said that MySpace has about 2/3rds to 3/4rds as many video downloads as YouTube, the Hollywood Reporter writes.

It sounds like he's making a distinction between user generated content and social networking. But you have to wonder how willing advertisers are to climb into the wild and woolly world of social networking, beyond the places like the home page which Ad Age recently reported sell for $1 million per day. "