YouTube to pay for User Generated Content

Speaking at the World Economic Forum, YouTube CEO Chad Hurley has revealed that the company plans to financially compensate users who produce and upload their content. Other sites such as Revver and Brightcove have long offered a revenue-share to content creators, where YouTube has sought to only do deals with old media, in an attempt to avoid litigation over copyright infringement.

With Google's purchase of YouTube last year, followed by more aggressive attempts to monetize the site (such as the deal struck with Verizon Wireless), I think it was inevitable that YouTube would come under pressure to share some of those fruits with ordinary users.

When Revver announced a similar deal with Verizon but one in which content creators would receive a royalty, I wrote:

The Verizon Wireless deals with YouTube and Revver make it evermore transparent that so called user-generated content is actually worth money - vCast subscribers are being asked to pay $15 per month. When access to YouTube videos were free and not living behind a walled garden, many video producers were happy to swap financial compensation for wider exposure. The arrangement with Verizon Wireless changes everything, and when compared to Revver's offering, YouTube looks like a far less good deal for content producers today than it did just a few days earlier.

When (and not if) YouTube introduces revenue-sharing for its users, it will further squeeze out the other players in the market, many of whom were trying to differentiate themselves by offering to pay for User Generated Content.

So why didn't YouTube pay its users from the start? Hurley (in what Scott Karp suggests could be "the best spin of 2007") says:

We didn’t want to build a system that was motivated by monetary reward. We wanted to really build a true community around video. When you start out with giving money to people from day one, the people you do attract will just switch to the next provider who’s paying more. We’re at a scale now that we feel we can do that and still have a true community around video.

(Watch the video clip of Hurley talking at the World Economic Forum via Jeff Jarvis)