Treat Your Customers Well
No one at Google decides how to rank the sites, they rely on how other sites throughout the net link to them. The administrators of MySpace and facebook don't produce any of its content. Wikipedia doesn't employ experts to write its articles. The owners of YouTube don't film videos themselves. Craigslist itself doesn't buy or sell anything. Digg doesn't write articles, select them or even comment on them. These (and many others) rely on user generated content.
It's pretty clear that there are huge profits to be made off of content that other people produce for you. But there is a trick to doing it properly, and some of these sites "get it" while others don't. The secret is nothing new: businessmen have said for years that "The Customer Is Always Right". With user generated content, it is more important than ever to treat your customers well—even if you don't "have to". Here are some examples of companies that understand this and some that don't.
Google says they make 40% of their revenue from AdSense, and I'm surprised it's not higher. Everywhere you go on the web, you see small Google ads. To the owners of the small websites they run on it's great: a way to make money with very little effort. To the advertisers, it's great because they don't have to pay unless people click on the ads. Even the viewers (not normally someone that advertisers cater to) are mostly pleased to have small inobtrusive text ads rather than huge flash animations that cover up the page they're trying to view. Everyone is so happy that they don't mind Google making off with a huge chunk of the revenue.
Wikipedia seeks to resolve conflicts by consensus and by maintaining a neutral point of view. Yet the people who run the site often silence any criticism of themselves or the way they run it.
YouTube doesn't plaster the screen with ads. But they recently introduced the practice of putting ads next to a video—but only if the poster permits it. And they share part of the revenue with the poster. Somehow, the YouTube community does not seem to be up in arms about this new advertising: it's almost as if they think it is fair.
Facebook recently decided to partner with numerous businesses including Blockbuster, and tell all of one's "friends" every time a user rented a video (or whatever the business was selling. Although it was probably illegal, this was a great business deal for the companies involved: Blockbuster gets more "shelfspace" in their customer's minds, Facebook gets a useful business partnership. The only ones hurt are the customers who just might not want everyone knowing what video they rented last night (at least Blockbuster doesn't rent porn).
Amazon recently started highlighting one good and one poor review for each product. This may hurt the sales of certain products, but it won't hurt Amazon.
The message is clear. If all you have is your customer's content, you'd better make certain that you treat them well.