Yes, folks, it’s happening. The mad rush to capitalize on user generated content by major news networks is starting to bite them in their respective behinds. Earlier this week, AdAge reported people are uploading footage of random sex acts on its user-generated news site, CBSeyemobile.com. Perhaps sophomoric stunts are to be expected from the network that also brings you David Letterman’s Stupid Human Tricks. But things got a great deal more serious today, when a malicious and unsubstantiated “breaking story” was posted on CNN’s highly promoted iReport claiming Apple’s Steve Jobs was rushed to the hospital with a heart attack. Apple’s stock took a major hit soon after, according to Silicon Alley Insider. The SEC is expected to investigate the now-retracted posting, in the hopes the offending iReporter gets caught before profiting on the stock fluctuation.

Is this the start of a new trend? Web users toying with a volatile financial market by posting fraudulent company “news” and profiting from the reaction? I’m sure we’ll see some copycat stunts in the near future. Especially when so many news and entertainment outlets like CNN & CBS are tripping over themselves to solicit free user-generated content they can monetize through ad-supported distribution.

But as today’s events prove, even cheap things can come at a great price. In the end, CNN “America’s Most Trusted News Source” posted a fraudulent business story that adversely impacted the stock price on a major Fortune 500 company. I’m all for empowering the people with mobile data capturing tools, but media gatekeepers need to do a better job of policing their own user-generated products if they expect to maintain serious brand credibility while they strive to expand their brand.

Don’t get me wrong. User generation can be an effective and constructive online tool (see how Amazon user comments drive sales and enhance the customer experience). But UG initiatives require significant investment in strategic, human and financial capital in order to work effectively.

Scroll down for more on the unreliability of some user-generated content in “Unreliable Sources” posting below…

Javier San Miguel, Associate Creative Director, Senior Web Copywriter

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