Bear Stearns recently released a report on user-generated content (UGC) titled "A Longer Look at the Long Tail." It was a follow-up to a report issued last November, which I blogged about at the time. UGC is "not likely a fad" and that the increase in video content supply "could lead to lower user satisfaction." The report has 39 pages, if you have the time to read it. In short, Bear Stearns believes the long tail can indeed be monetized and that the value is shifting to the middle of the supply chain. Creators and users will get far less from long tail UGC that the portals will get.

At his Long Tail blog, Chris Anderson goes into the issues the report addresses. He pulled out this quote on the staying power of UGC, which I'll post as well:

"Some investors remain skeptical that UGC is more than a passing fad. If we define UGC as page views only from sites such as Myspace.com, Facebook.com, Youtube.com, Wikipedia.org, Blogger.com, and Digg.com (which is quite conservative), we estimate that UGC now accounts for 13% of total U.S. Internet traffic, up from 0%-1% in 2004. Based on these statistics, we submit that UGC is here to stay."

One point of contention: Bear Sterns and Anderson look at revenue of Hollywood studios' average box office receipts from 2000 through 2006. Their volatility, we're told, is proof that nobody has been able to constantly create quality content. I would argue that looking at year-to-year changes in such an industry is too small a time frame. It's like looking at just any one quarter for any other industry. (Consumer product companies are unlike companies in the entertainment business. The former develops a cash cow and rides it for sometimes decades. Entertainment companies are in the business of constantly launching new products, and their cash cows have a shorter life span.) Another point is that when looking at short head (the big studio movies) vs. long tail, it would be better to group all studio revenues together and not look at variations within the peer group. There may be just as many hits but they're distributed differently from year to year. The point is that big budget movies are getting made, and people are watching them.

The thrust of the paper is dead on, though. Content aggregators stand to benefit the most from UGC as well as the massive flood of music and video one professional notch above UGC.

[music jobs] Director of Content at Dada Entertainment; New York, NY.