SplashCast Throws In The Towel On User-Generated Content; Looking For A Buyer

The allure of building a business around user-generated content is fading fast. SplashCast, a company which launched two years ago around the notion of helping consumers put together videos, text, graphics, and music in embeddable broadcast “channels,” is discontinuing its original product. “Most of us would rather consume than create. This is one of the big ticket findings of the Web 2.0 technology wave,” concludes CEO Michael Berkley.

And after failing to raise a B round of funding, he is now trying to sell the company. Instead of trying to make money off of user-generated broadcast channels, he is focusing on his newer Social TV product, which adds social features such as chat, commenting, and polling to professionally-produced videos.

The SplashCast product being discontinued was simply too complicated for most consumers. It was a full content-management system which allowed consumers to bring together videos with images, text, and sound. In a candid assessment of why it fell flat, Berkley says: “We were hoping to launch a publishing revolution. What we found, however, is that very few users are willing and able to make an ongoing commitment to publishing and distributing content. Lots of users test; few stick with it.”

While more than 100,000 SplashCast accounts have been created, “only a few thousand” use the product regularly, he tells me. Partly, this is the curse of building a business which relies on the creativity of users. “Like so many other Web 2.0 companies,” admits Berkley, “we simply haven’t found a way to meaningfully monetize user generated content. Users are loathe to pay meaningful subscription fees. Furthermore, advertising on user-generated video content hasn’t played out—just ask YouTube.” If only a tiny fraction of users create anything worthwhile, you either need a whole lot of users to make that work or you need to be able to attract the most creative people to your product.

But partly, SplashCast also suffered from the curse of not keeping things simple. Berkley is taking that to heart by shifting the company’s remaining resources to making Hulu-quality videos more social on Facebook and MySpace. Berkley says SplashCast videos reach 5.8 million unique viewers per month and it streams 7.2 million videos. A full 90 percent of those streams come from only 25 SplashCast channels, mostly centered around network TV shows like 24 and the Simpsons or major label music artists.