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It’s all well and good to say your software is social and enables people to express themselves and add all sorts of spin.

However, it’s getting a bit much. It seems that all Internet companies are doing nowadays is trying to get users to do all the work for them and then sell them to advertisers.

Here’s the common magic formula all social software seems to be built on -

1. Create a piece of software that lets users work for the company for free. 
2. Hype it up as something cool and useful and relevant.
3. Cross your fingers and hope you can create the next product that is sustained by users’ hard work.

It’s the ultimate laziness – let’s just build a quick and easy foundation and hope people do all the work to make it a hit.

Think about it – How is this different from Toyota putting up a factory and then saying -

Let’s create a social experience.

Why don’t all of you come in and assemble all the parts.

The rest of you can paint it and write the software for it.

When everything is done we’ll pocket all the revenue and you get the satisfaction of having worked on something – of having expressed yourself.

It’s just that on the Internet you can use words like ‘shared experience’ and ‘social utility’ and hoodwink people into creating content for free that you then try to make money off of.

Why do companies expect to profit without putting in effort?

Most Internet companies aren’t working themselves to create a product. They aren’t even hiring people to create a product.

They’re simply trying to construct an elaborate premise to get users to work for free.

1. At some level companies are telling people – Look, here’s a cool, useful site for you to play on and create content on – All the cool kids are on it. 
2. Then users do the work (or at least the gullible ones do).
3. Next, companies try to make money off of that content.
4. Finally, when that doesn’t work they put effort into stealing more and more user information and finding newer and newer ways to sell their users to advertisers.

That’s not a viable product or service. That’s just exploiting users.

The whole problem here is that you can only get value by putting in value – If your users are adding the value it’s going to be hard for you to make money off of that.

Why? Read on.

Fundamental Problems with trying to monetize user generated content

Well, let’s see -

1. Almost always – Users aren’t getting paid anything and have no incentive to create good content.  
2. Usually – There is no quality control. It’s not like the App Store where apps are reviewed before submission (by the way, the App Store is a platform and very different).  
3. Users aren’t putting much effort into their work. For every very well done piece of content there are 100 really poor examples.
4. User Generated Content Sites are very susceptible to scammers and spammers. It’s the ultimate irony that spammers are exploiting companies that are trying to exploit users.
5. It’s one shot – There is no editing or reviewing or polishing. People just put up anything.

It’s an obvious problem because even the biggest sites aren’t monetizing -

1. Twitter isn’t even trying to make money.
2. YouTube may or may not be profitable. 
3. Facebook has to use words like ‘cash flow positive’ – when you have to go beyond plain english to justify why you aren’t profitable perhaps you should reconsider your business model.

There is very little value in letting users create unlimited amounts of poor quality content that no one except for them and their ex-girlfriends care about.

Just because it’s easy and fashionable doesn’t make it profitable and valuable.  

Internet Companies have taken the ‘minimum effort maximum reward’ principle too far

There’s a definite trend -

1. With software you could write once and sell multiple times.
2. With blogs and sites you could write once and be read multiple times.
3. Then people built platforms and they could let people write software and just make a cut.
4. At every step there was less and less effort and more and more profit. However, there was still solid value being added.
5. Finally, someone took it too far.

The current model is optimized to the point of being ineffective -

• Instead of writing a cool piece of software or a great platform companies are just piecing together ways for anyone to randomly add content.
• Instead of focusing on people who create great software or great content companies are trying to let every Tom, Dick, and Harry in the door and letting them write and add anything.

It’s Pollution of the Content Ecosystem

Consider the difference -

1. A journalist flies to Haiti and writes a great article.
2. An author spends 2 years and writes a great book.
3. Someone gets drunk over the weekend and puts up 25 photos on Facebook.
4. 50 people think a movie sucks and they ‘tweet’ about it.

The latter two have no place alongside high quality content. Yet it benefits Facebook and Twitter to pretend it does.

We’ve been hearing for 5+ years now that everything is going to be social and people will care more about what a random person writes on a social network than what Walt Mossberg writes. It’s just not true.

What we need are companies that actually create something HUGE

On the Internet we no longer have big things being done -

1. Where’s our Craig Venter racing to decipher the human DNA?
2. Where’s our Elon Musk building an electric car?  
3. Where’s our Hadron Collider?
4. Where are our big new advances?  

What the heck are Internet companies useful for if the only things they are doing are meaningless -

1. Virtual Goods? Is this what the Internet is reduced to - Getting people to spend 5 hours a day on make believe farming.
2. Social Networks? Spend all day wasting each other’s time and playing popularity games. 
3. User Generated Content? Trying to create terrible, terrible content and sell ads against it.

Internet companies have forgotten that they could do big things and have become nothing more than suppliers of human cattle to advertisers.

Take any big Internet company set-up in the 2000s – Everything they are doing is focused on advertising and how to milk customers and try to sell them things they may not necessarily want.

That’s why there are no more Internet billionaires. Google and Yahoo and eBay created the last set of billionaires and it’s been a long time since even they did anything revolutionary.

The Internet has been reduced to one giant ineffective advertisement machine – step in and work for us for free and buy the things we advertise to you. It’s the ultimate testament to how terrible the new generation of Internet companies are that they can’t even do that well.