The User-generated Content Business Model – How Does It Work?

The user-generated content business model is a type of the Customer-to-Customer (C2C) business model. It is a business model for companies that offer online platforms to users who act as customers. Users can generate content on a company’s platform, which others can interact with or use. Through this model, companies don’t need to provide any products or services.

The user-generated content business model is one of the models that existed in the past. Examples of some user-generated content products or services come from a couple of centuries ago. However, the internet has revived the business model. There are several online websites, forums, or platforms that use the user-generated content business model.

Most companies have used the business model to their advantage. They have shifted from creating their own content to letting users create it for them. No official association exists between users and the company. Therefore, any user can join the platform and start generating content. Similarly, these users are not representatives of the company and its platform.

The user-generated content business model is one of the most effective models for online companies. Some tech giants have used these models to their advantage. They have billions of users worldwide who post content to these platforms regularly. The success of these platforms depends on their users and the content they generate.

How does the User-Generated Content business model work?

As mentioned, the user-generated content business model works similar to the Customer-to-Customer business model. In this model, a company or business offers a platform for users where they can interact. Most of these platforms are online, allowing users from around the globe to connect. These users are the primary source of success for this business model.

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The platform’s users then post content to it. The type of content that they can post depends on the platform. There are various types of user-generated content platforms. These include video, audio, podcast, review, social media update, forum, news, etc. The user-generated content needs to be useful, so other users can benefit from or interact with it.

The company that provides the platform plays a passive role throughout the process. However, it still needs to perform regular maintenance to ensure the user-generated content meets a certain standard. Therefore, these companies may have administrators or moderators that regularly check the user-generated content and keep things in check.

There are several sources of revenue for companies that use the user-generated content business model. However, the most prevalent source is advertisements. Most companies use their platforms to show ads to their users, through which they can generate content. Some companies may combine this business model with other models, such as the freemium or subscription business model, to charge users directly.

What are the advantages and disadvantages of the User-Generated Content business model?

The user-generated content business model may come with some benefits and problems. Some of these advantages and disadvantages are as below.

Advantages

The user-generated content business model allows companies to focus on providing a platform to users. These companies don’t need to worry about producing valuable content for users. The users are responsible for content creation.

The business model also allows companies to increase their reach and engagement through user content. Internet users are more likely to trust user-generated content as opposed to other forms. Therefore, a company using this model is more likely to attract more users.

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Depending on the size of the company, the business model can be low-cost. Furthermore, a user-generated content business model company is easily scalable. The more a platform’s users increase, so will its costs. However, the platform also pays for itself as more engagement also increases revenues.

Disadvantages

The primary disadvantage of the user-generated content business model is its reliance on users. The business model places a substantial emphasis on users and their ability to create content. In the absence of users or their engagement, this business model fails.

Similarly, the business model still needs the company to provide the platform to intervene. It is because users may share illegal content, which can impact the company’s reputation negatively. The interaction between users on the platform can be a source of several problems, such as scamming, hacking, piracy, etc.

Examples

YouTube is the world’s largest user-generated content platform. It allows users to create their own content and upload it to the website. Almost all other social media platforms, such as Facebook, Instagram, Twitter, etc., follow the same business model. Other platforms may include Reddit, Quora, Stack Overflow, Twitch, Imgur, GitHub, etc.

Conclusion

The user-generated content business model is for companies that allow users to post their content on their platforms. This business model is prevalent in most online platforms and forums. It is a variation of the Consumer-to-Consumer business model.

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