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The hype surrounding Google and YouTube obscures the fact that few parties are making money from user generated content.  Professionally produced content clearly isn't going away – the Internet just gives us more feedback about what to program and how to make money from it.  

While some companies have made a business out of repackaging existing shows and commercials for the Web, we believe the bigger play is in new forms of advertising that boost interactivity, targeting and overall user control.   

Consumers expect options in the form of personalization, Amazon-style recommendations, search, and the ability to self-select the ads they want to see.  Rights holders and distributors stand to make immense competitive gains using such features if they act now.

In the short term, online video will be monetized by advertising, but in the medium to long term, this model will be complemented by a growing percentage of higher-quality, paid content.   

In the meantime, there will be immense complexity as content providers, retailers, and aggregators experiment and differentiate with new types of online video businesses.  The service providers that cut through the morass with a simple value proposition stand to benefit – as do the firms that enable their success.