It’s not easy to make a living off Internet comedy. If you serve up a hilarious video, your bandwidth costs go through the roof. If you don’t mark your content NSFW (“not safe for work”), one of your fans could get fired. And if you post something to hosting sites with lots of traffic, they take home the ad money, not you.

That’s life for Wes Borg, a 38-year-old who co-runs a comedy troupe called “Three Dead Trolls in a Baggie” and deadtroll.com out of Edmonton, Canada. He makes videos about technology and politics with titles like “Every OS Sucks” and “Canada is Boring.” Mr. Borg’s girlfriend, a yoga instructor, makes more money than he does.

But recently, in the course of his “constant and obsessive scouring of the net, looking for partners that won’t rip us off,” Mr. Borg chanced upon two companies called Revver and Peer Impact that offered to serve up his videos and give him a cut. The fine print? Revver gives contributors 50 percent of advertising revenues. Peer Impact is a legal peer-to-peer network that credits DeadTroll buyers the price of the group’s videos if they sign up with a promotion code. Both firms pay out to fans whose recommendations convinced their friends to watch or buy videos; Revver pays 20 percent of revenue per click, and Peer Impact splits 10 percent of a file’s purchase price between peers who share it and members who recommend it.

Beverly Hills, California-based Revver and Peer Impact, a unit of Saratoga Springs, New York-based Wurld Media, are part of a new breed of company that encourages web users to contribute content in exchange for a stake in its success. Among a burgeoning field of so-called “web 2.0” companies hoping to profit from user-generated content, these firms stand a better chance of competing for loyal users than larger companies like Yahoo that solicit and boast of user-generated content, but keep most of the revenues for themselves.

Web 2.0 Colonialism?

In a session at the crowded Web 2.0 conference in San Francisco last October, Yahoo CEO Terry Semel said user-generated content “is of utmost importance” to his company—“a gigantic piece of what we do and our ability to monetize.” In the last year, Yahoo launched a blog service, a “publishers’ network” that places ads on users’ sites, and bought the popular photo-sharing service Flickr. The portal profits from these services by selling ads to run alongside them or by charging subscription fees. Its revenue rose 47 percent last year to $5.26 billion.

That’s great for Yahoo, but what about the users who create the content? That question is raised by Anil Dash, a well-read blogger (dashes.com) and vice president of professional products at the largest independent blogging company, SixApart. In a post last October, Mr. Dash discussed Flickr’s process of classifying users’ pictures by their “interestingness”—a combination of the comments, tags, clickthroughs, and favorites associated with a photo.

“Is interestingness its own reward?” asked Mr. Dash, suggesting users might be compensated with money or some other kind of value. A vigorous discussion ensued in the blogosphere, with entrepreneur Paul Mooney (dotnetjunkies.com/weblog/paul/) summing up many people’s thoughts in his comment: “Profiting from user-generated content is Web 2.0 colonialism.”

Flickr founder Caterina Fake responded by saying that social software systems have many kinds of value aside from monetary, such as “connecting with other people, creating an online identity, expressing oneself—and not least, garnering other people’s attention.” Flickr does tightly incorporate “Creative Commons” licenses where users can indicate how they would like their pictures to be used and attributed. And Yahoo has discussed plans to allow contributors to its social shopping service and its community question-and-answer board to earn ad revenue generated from their pages.

Sharing the Wealth

A photo equivalent to Revver has not yet emerged, but Scoopt, a tiny company based in the United Kingdom, has led a group of photo sites that sell “citizen journalism” to the mainstream media. This year, Scoopt hopes to set up deals with carriers so that camera phone owners can immediately distribute their money shots should they happen to be at a crime scene or natural disaster.

Multiple startups are trying to one-up blogging and online news sites by rewarding users for contributing well-read content. Seattle’s Newsvine, which raised an amount somewhere “in the low seven figures” from Second Avenue Partners, combines syndicated news with user recommendations, comments, and columns. In January, Newsvine generated over 100,000 page views on the day it opened up to select people who had requested an early trial. The company says it will give contributors 90 percent of any advertising earnings.

Another site called Gather wants to be the blogging host for the NPR set. Gather CEO Tom Gerace often compares his company to eBay, saying it will host a marketplace for user-driven content similar to the e-commerce giant’s platform for user-driven retail. Gather, based in Boston, has about $10 million in investment and high-profile board members such as former U.S. Senator Bill Bradley and Lotus vet Jim Manzi. Mr. Gerace says the company plans to sell its own ads and pay readers for spending time on the site, voting on other members’ content, and writing posts that draw traffic.

And the sites do seem to be adding to the conversation. Newsvine, for instance, had reactions to a story about a fire in Colorado from a man who had driven through it, while a Gather writer’s family member was involved in one of the recent West Virginia mining tragedies.

Gather has drawn criticism from some prominent bloggers for its “old-media” approach. But then again, existing bloggers are really not its intended audience; both Gather and Newsvine are trying to reach beyond the early adopters to the mainstream. And as Mr. Dash points out, the users motivated by advertising payouts are a particular bunch. “Most people aren’t looking to make a dime off of people looking at pictures of their puppy,” he says. “At the very high end you have people who are acting as media outlets themselves.” Somewhere in between are the public pon-tificators and video bloggers.

Deliver the Masses

But cuts of ad revenue—whether they’re chunks or slivers—don’t add up to much without a lot of volume, both in content and page viewers. Drawing in a loyal and high-quality user by dangling cash in front of her isn’t profitable for the startup or the contributor without critical mass. It also threatens to encourage users to game algorithms to pad their earnings.

Some cooperative content ventures require a bigger critical mass than others; Newsvine will do just fine if it can get a few dedicated users to contribute on a regular basis. “I frankly think we couldn’t handle a million people submitting thousands of stories a day,” says CEO Mike Davidson. On the other hand, a new startup called Gravee wants to repair the problem of search engines that “extract too much value out of the web without sharing that value with the content owners who are creating it.” Its solution: get web site owners to sign up to receive a cut of search advertising that appears with “natural” search results. But until it can gain some serious traction, Gravee’s goodwill payments won’t be much more than a gimmick.

These young companies do hark back to the heady days of the late 1990s, when savvy web surfers could supplement their incomes and their home entertainment centers through myriad dot-com deals. But it’s different now, according to Mr. Dash. “The last time they tried these types of models during the bubble—the pay-per-page-view—there weren’t enough people online,” he says.

Will there be any kings of user-generated content? “No millionaires yet,” says Revver CEO Steven Starr, “but check with me next month.” He says the venture-funded company, which embeds code in videos to track them when they are spread through emails and other web sites, is serving up terabytes of data, with 5,000 public videos and many private. After its launch last fall, the company made good on its first round of payments in January.

Mr. Borg’s “Dead Troll” videos, which won about 50,000 views on Revver, brought him $60. “They’re doing a few things really, really right,” the comedian says of Revver. “I spend all my time making the crap; I don’t have time to go out and find all the advertisers for it.” It’s no yoga teacher’s salary, but it’s just the thing to make him want to post another funny video.