The other night I was sitting in my house and my Foursquare iPhone app pinged me and told me that a friend of mine had been laid off and was drowning her sorrows in a beer at a bar just down the street from my house. So, being a good, supportive friend, I popped on over to the bar.

Here was the crowd: my friend, laid off from a relatively well-known online video content company. A friend of hers, who is the host of an online video series about video games, whose day job involves video production - I believe he was a cinematographer. The other three people there worked in the video games industry and, for all intents and purposes, could be viewed as savvy consumers of online video, but not practitioners. The audience.

We got to talking about online video. We were a little drunk. In an attempt to cheer up my friend, we started disparaging the online video industry. It’s not going anywhere! Those companies have the wrong approach! We got into the usual debate that we all get into about YouTube, Hulu, the up-and-comers like Revision 3 or the new unknowns like Comcast’s TV Everywhere. You know the conversation. The one we all have all the time.

This whole talk was, of course, pretty damn boring to our non-Internet-video industry friends. We were being a bit rude, but they let it slide since we were on lay-off patrol. But then one of them said something really interesting:

“I can’t stand YouTube anymore because I can’t deal with how cheap everything looks,” he said. Now, if this had come from me, or the cinematographer, or our newly laid-off friend, it would have made total sense. We work in the field, and people that work in a field respect the craft of film. But this guy was, essentially, the consumer.

And then it hit me.

I’m starting to think that for the last five years we’ve been sold up the river. We’ve all been led to believe that the zeitgeist of the public accepts user-generated content. That bloated production costs, expensive actors and elaborate sets are a thing of the past. That user-generated content was a revolution, and that UGC = eyeballs. This was not a hard assumption to make, given the ginormous amount of traffic that YouTube garnered and continues to garner.

But now I think that the confluence of two trends lead us to this mistaken assumption, and each one of them is now receding. First, I think we mistook supply for demand. People wanted to watch video on the Internet. So they watched the videos that were available on the Internet. There wasn’t a whole lot of professionally produced content on the Internet, thanks to the reticence of professional content producers in getting their material online. But there was a ton of amateur, mildly entertaining, sometimes hilarious content. So we watched that instead.

We see evidence of this now, of course. On any given day, the most-viewed list on YouTube may well be filled with a number of UGC clips, and low budget videos. But look at the month’s top videos, or the year-to-date, and the professionally produced content dominates. This observation is not a critique of YouTube. I believe they have always been aware that better production values yields more views. They were just working with what they had.

Secondly, I think we saw a temporary resetting of aesthetic values. A cleansing of the palette, if you will. Not to get too academic, but we see this in art and culture all the time. Henry Miller. The Sex Pistols. Pulp Fiction. Lars Von Trier. Dada. Martin Luther. Things get too bloated, extreme, ridiculous, and a people or things come along and tear them down and start over. “Rip it up and start again,” to quote the chronicler of post punk Simon Reynolds (who stole it from Edwyn Collins, in a move typical of the movement). These cleanses are culturally cathartic, and often partially in reaction to a political angle - in this case the fact that the mainstream studios were not just ignoring the demand described above, but actively antagonizing many of the practitioners in this new manifestation of the art.

But for every The Clash there’s a Big Audio Dynamite. For every Lutheran revolution there is an excess of 18th century Anglicanism. For every Nirvana there’s a Nickelback, and for every Blair Witch Project there is a Book of Shadows. The resetting to minimalism allows a new generation to learn the craft, as it becomes more accessible, and thus begins the cycle of appreciating the well-crafted.

So, now, I believe both of these cycles are coming to an end. Hulu and Comcast’s TV Everywhere are bringing the high-production-value television we’ve always loved online. Netflix is bringing the films. Revision 3 and NextNewNetworks and the like are filling in the middle. A new supply is there to satisfy the demand. And in the same way that when we were kids we willingly shelled out our hard-earned money to go see the latest summer blockbuster just for the visual effects, the online audience is beginning to appreciate and even insist upon well-produced content. UGC will always have its place, of course. I’m talking here specifically about entertainment content, not news. And even within entertainment, sometimes the production values are irrelevant. Comedic videos come immediately to mind.

And, of course, there’s the whole economic situation. No one’s paying to make great online-only content yet. The sponsors aren’t paying near what they pay for broadcast. This isn’t a problem that’s going to go away.

But demand drives the dollars, and I think the demand for high-quality content online is definitely strong. And growing.

Rick Webb is COO and co-founder of The Barbarian Group.

www.barbariangroup.com