GoPro (NASDAQ:GPRO) wants to pay users to create great content. Under the new GoPro Awards program, the company will pay $500 for photos, $1,000 for uncut videos, and $5,000 for a fully edited video that showcase interesting content. GoPro has allocated $5 million to fund these awards over the next year.

In exchange, GoPro gets to promote the content through its video channels and social media sites. Offering cash awards for interesting content might initially seem like an odd strategy, but it actually serves GoPro's marketing and media ambitions fairly well.

Source: Pixabay.

Viral videos as a marketing tool
GoPro relies heavily on videos uploaded to its YouTube and social media channels to promote its cameras. Last quarter, its YouTube subscriber base grew 40% to 3.1 million and its Instagram subscribers surged 140% to 5.8 million. The GoPro Channel can also be viewed on Xbox consoles, Roku devices, Virgin America flights, and other networks.

Zander Lurie, GoPro's Senior VP of Media, recently told Fortune that GoPro Awards let the company "reward community members who are doing cool things with our cameras." The more videos that go viral, the more cameras GoPro sells, and the less it needs to spend on traditional advertising.

For $5 million, GoPro could buy the rights to 10,000 photos, 5,000 uncut videos, or 1,000 edited videos. Each of those photos or videos could be seen millions of times. The most popular video on GoPro's YouTube channel, this promotional video for the HERO3, has been watched nearly 40 million times.

That's definitely a more economical choice than advertising on TV. According to Variety's estimates, $5 million would only be enough to buy 10 30-second spots on the latest season of The Walking Dead, which drew in 14.6 million viewers during its season premiere. Viewers also generally pay more attention to viral GoPro videos, which they choose to watch, than TV commercials, which are passively broadcast.

Streamlining sharing efforts
In the past, sharing GoPro videos was a cumbersome task that required transferring a video file to a computer, editing it, and then uploading it. Earlier this year, CEO Nick Woodman said a GoPro camera was like "an iPod without iTunes," but stated that the new mobile apps and an upcoming cloud platform would streamline the process.

That's why GoPro has been emphasizing Wi-Fi connectivity and smartphone- or smartwatch-based controls over on-camera features. That's also the reason it launched the tiny HERO4 Session as a no-frills extension of the smartphone. New "trim and share" features in its mobile app also make it easier to directly share videos to Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube and other social networks.

In addition to making it easier to record, trim, and share content, GoPro is also encouraging users to sell professional quality content to advertisers through its content licensing portal. In exchange for connecting advertisers to creators, GoPro takes an undisclosed cut of the ad revenues. Winning photos and videos chosen through GoPro Awards will also be featured in this portal, and any earnings will be split with the creator.

This content platform will also likely complement GoPro's partnership with Alphabet's Google. Earlier this year, Google launched Jump, a virtual reality "ecosystem" for capturing 360-degree videos with the 16-camera Odyssey rig it built with GoPro. Content creators can use Jump to stitch those videos together and share the finished VR video on YouTube. If GoPro launches a GoPro Awards category for VR content, it could sell more VR rigs and YouTube would gain more 360-degree content.

But can GoPro evolve into a media company?
Encouraging users to create more high-quality GoPro videos builds brand awareness, but it's unclear if the company can turn these videos into a pillar of growth. Nonetheless, the company has hired plenty of high-profile media veterans over the past year to beef up its media business.

Lurie told Fortune that GoPro was "uniquely positioned" because unlike Instagram, Vine, and YouTube, the company has "millions of people who have our capture devices and pursue their passion." That may be true, but there's no clear way to monetize the GoPro Channel beyond sales of premium content to advertisers. Any revenue generated there could easily be offset by expenses for hiring professionals to produce original content or doling out awards.

Therefore, it's unlikely GoPro will ever use revenues from the GoPro Channel to offset potential declines in camera sales. Instead, it should be considered a way to reduce marketing expenses and reach more people than traditional ads. The media platform can also be used to promote GoPro's new VR and drone efforts, and it could act as a promotional reel to attract more partnerships with companies and Hollywood studios.

The key takeaway
Investors should see GoPro's media expansion as an ecosystem and marketing strategy rather than a revenue-generating one. GoPro Awards and the content licensing portal could spur the production of high-quality GoPro videos, which have a higher probability of going viral. That, in turn, might convince more customers to buy more GoPro cameras to produce and share their own content.

Leo Sun owns shares of GoPro. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.