The description of many online companies’ business model from The Big Switch: Rewiring the World, from Edison to Google
Look more closely at YouTube. It doesn’t pay a cent for the hundreds of thousands of videos it broadcasts. All the production costs are shouldered by the users of the service. They’re the directors, producers, writes, and actors, and by uploading their work to the YouTube site they’re in effect donating their labor to the company. Such contributions of “user-generated content,” as it’s called, have become commonplace on the Internet, and they’re providing the raw material for many Web businesses. Millions of people freely share their words and ideas through blogs and blog comments, which are often collected and syndicated by corporations. The contributors to open-source software projects, too, donate their labor, even though the products of their work are often commericalized by for-profit companies like IBM, Red Hat, and Oracle. The popular online encyclopedia Wikipedia is written and edited by volunteers. Yelp, a group of city sites, relies on reviews of restaurants, shops, and other local attractions contributed by members. The news agency Reuters syndicates photos and videos submitted by amateurs, some of whom are paid a small fee but most of whom get nothing. Social networking sites like MySpace and Facebook, and dating sites like PlentyOfFish, are essentially agglomerations of the creative, unpaid contributions of their members. In a twist on the old agricultural practice of sharecropping, the site owners provide the digital real estate and tools, let the members do all the work, and then harvest the economic rewards.
