The product's value to one user comes mainly from content or data other users write and keep current (profiles, reviews, listings, posts, answers), which the company hosts and makes findable rather than producing itself.
How User-Generated Content works
Each user's contribution is a free input that raises the product's value for everyone who reads or searches it, and the stock of contributions is costly for a rival to reassemble. It grows fastest when contributing also serves the contributor (a profile that gets you found, a review that earns trust).
How companies won with User-Generated Content
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
vs. HomeAway · 2008-16
Airbnb
Payment, two-way reviews and a guarantee inside the booking
What it did
Guests paid through the site (2008); $50,000 Host Guarantee (Aug 2011)
HomeAway
Travelers booked and paid owners directly; online payment optional at 2.5% (2011-12)
What do users create, who uses it, and why do contributors keep it current?
Who names it
Author
What they call it / where it appears
O'Reilly +
Harnessing collective intelligence: users add value
Note. Data produced as a by-product of delivery and reused by the company is Data Exhaust; usage data that improves the service for others is Data network effects. This tag is for content users author on purpose and other users consume. When the stock of contributions becomes a barrier, tag the defense separately (Accumulated assets & catch-up barriers, a network effect).