The Economy of Social Media

Social media platforms -- Facebook, Twitter, you name it -- are businesses just like any other. Although we sometimes we don't think of these sites like businesses -- perhaps because they're free to use -- the fact of the matter is they require significant resources to create, launch and operate, and they're ultimately out to make money. Thus, the emergence of social media has had a significant impact on our economy.

Creating a social media site requires a significant investment of time and money. First and foremost, programmers and developers need to develop the apps/sites. This isn't an overnight process, and can be expensive to fund. Launching and operating the sites also requires monetary investment, like other businesses. After all, employees need to be paid, there are web hosting fees, and marketing/advertising isn't free either. As a result, many web entrepreneurs turn to venture capitalists for the extra cash, or find other avenues to the money like crowdfunding. 

Making that money back can be a challenge for some sites, as the bulk of revenue for most social media companies comes strictly from advertising (Miller). But since social media is engaging, personalized and shareable in nature, many advertisers see more value in these mediums than they might in television or print. The result is stiffer competition for ad space, which drives up prices and makes social media profitable. This is a win-win for consumers, advertisers, and the sites themselves. After all, consumers use the sites for free and get ads targeted to them based on their interests, advertisers get directly in front of their target audience, and social media sites make the money they need to stay up and running.

So how do social media sites as a whole impact our economy? It depends on who you ask. McKinsey Global Institute published a study that estimated social media adds from $900 billion to $1.3 trillion in value to our economy (Hardy). This value comes mainly from "added productivity" that social media sites provide, like increased communication and improved consumer focus. However, an infographic from LearnStuff.com disputes this, claiming that social media sites actually cost the economy $650 billion due to "decreased productivity," namely workers slacking off on the job (Shore). It's a pretty shocking contrast. Though there's probably truth to both of the productivity claims, it's extremely difficult to pinpoint a number for how social media affects our economy. 

There's no doubt that having a social media page is beneficial for business. It's free, easy to use, and allows companies to connect with their loyal consumers while exposing themselves to new markets. The real question is this: is the benefit of a social media business page enough to offset the loss in productivity causes by employees using personal pages on the job? It's undoubtedly a difficult question to answer, but if it could be figured out it'd likely shed a clearer light on the real impact of social media on the economy as a whole. 

The relationship between social media and the economy is a tricky one, but it's important we get better at understanding it. When sites like WhatsApp sell for multi-billion dollar price tags, we have to pay attention. We may not know what, but something important is happening to our economy.

References:

Hardy, Quentin. "McKinsey Says Social Media Could Add $1.3 Trillion to the Economy." Bits. New York Times, 25 July 2012. Web. 26 Feb. 2014. 

Miller, Miranda. "Social Media Revenue Forecast to Hit $16.9 Billion in 2012.” Search Engine Watch. N.p., 26 July 2012. Web. 26 Feb. 2014.

Shore, Jennifer. "Social Media Distractions Cost U.S. Economy $650 Billion.” Mashable. N.p., 2 Nov. 2012. Web. 26 Feb. 2014.

What Are "Social Graphs"?

As social media has risen to prominence, the term "social graph" has received more and more attention from web developers, advertisers, and the general public. In short, a social graph is a data structure that serves as a representation of online relationships. It is essentially a huge web that connects users with "the people, places and things they interact with online" (Dickinson). 

Social media and social graphs are intimately connected to one another. The widespread use of social media makes it an ideal tool to track online connections between users. People use social media to connect with others and share content, which are precisely the things social graphs are concerned with. It has been reported in 2010 that Facebook owns the largest social graph dataset in the world (Wilson). Sites like Twitter, LinkedIn, and Myspace all have social graphs of their own, but the size and quality of these graphs are dependent on what the users do on their sites. Facebook is the largest social network in the world and they're slowly increasing the scope of the website, which has led to their domination in the social graph category. But still, their data overlaps with what a lot of other sites have. A TechCrunch article sums it up succinctly:

"Facebook knows who you are, what you’re interested in, where you go on the web, what apps you use, and more. However, other companies have bits and pieces of these data sets. LinkedIn knows your resume, Google knows your web searches, Twitter knows who you follow, Apple and Amazon have your credit card number, and your phone’s OS maker knows what apps you’ve downloaded. Who your real-life friends are, though, is Facebook’s domain" (Constine)"

The existence of these social graphs has implications on many different things. For one, it affects our online experience. Sites with detailed social graphs can tailor content toward users more efficiently. That can mean faster searches and improved "suggestions." But it can also mean targeted advertisements. For example, if Facebook can see that you like the New York Knicks, and you recently attended a pick-up basketball event, it's much more likely you'll be fed basketball-related advertisements. If you have 30 friends that like the Knicks, the likelihood of this is further increased. Advertisers will pay more to reach their exact target audience, so social graphs actually have a tangible effect on our economy.

The "open graph", an idea introduced by Facebook, furthers the social graph concept by allowing other sites to access and share their publicly available data (Axon). It essentially opens up the social graph from being site exclusive, allowing public data to be freely shared. This means that a site like Yelp! could use someone's Facebook data to optimize listings, without that user explicitly giving Yelp! that information. Though the open graph has raised serious concerns about online privacy, it's supporters believe it will lead to a more personalized, efficient, and enjoyable web experience. 

Social graphs will continue to become more and more important as the world becomes increasingly internet and social media savvy. In the future, social graphs will likely become some of the most valuable marketing data in the world (if they aren't already). Although privacy is a huge concern for many, and rightfully so, social graphs have the potential to completely change the way individuals experience the internet. 

References:

Axon, Samuel. "Facebook's Open Graph Personalizes the Web." Mashable. N.p., 21 Apr. 2010. Web. 17 Feb. 2014. <http://mashable.com/2010/04/21/facebook-open-graph/>.

Constine, Josh. "Facebook Is Done Giving Its Precious Social Graph To Competitors."TechCrunch. N.p., 24 Jan. 2013. Web. 17 Feb. 2014. <http://techcrunch.com/2013/01/24/my-precious-social-graph/>.

Dickinson, Boonsri. "So What The Heck Is The 'Social Graph' Facebook Keeps Talking About?" Business Insider. Business Insider, Inc, 02 Mar. 2012. Web. 17 Feb. 2014. <http://www.businessinsider.com/explainer-what-exactly-is-the-social-graph-2012-3>.

Wilson, Fred. "One Graph To Rule Them All?" A VC: Musings of a VC in NYC. N.p., 11 July 2010. Web. 17 Feb. 2014. <http://www.avc.com/a_vc/2010/04/one-graph-to-rule-them-all.html>.

Who Uses Social Media? And How Many?

Nowadays, social media users come from all walks of life.

According to a study from Pew Research published in September 2013, 73% of online adults use some form of social media. (An eMarketer report puts the number at around two billion.) When broken down by factors like gender, race, age, education, income and urbanity, a few trends begin to emerge.

1. Women are more likely to use social media.

The Pew study estimates 78% of women use social networking sites, opposed to 69% of men. When broken down by site, we see that women use every prominent social media site more than men, with the exception of LinkedIn.

Social Media Site Usage by Gender

Gender	Facebook	Twitter	Instagram	Pinterest	LinkedIn
Male	66%	17%	15%	8%	24%
Female	76%	18%	20%	33%	19%

Additionally, a social media study published on First Monday found that men and women tend to use social media at the same frequency, but women spend more total time on the sites.

2. The younger you are, the more likely you are to use social media.

Ninety percent of people age 18-29 use social media. But as you climb up the age bracket, use gets more and more sparse. In the 30-49 range, 78% use social media. Those 50-64 are at 65%, and of those 65 and up, 46% use social networking sites.

Social Media Site Usage by Age

Age	Facebook	Twitter	Instagram	Pinterest	Linkedin
18-29	84%	31%	37%	27%	15%
30-49	79%	19%	18%	24%	27%
50-64	60%	9%	6%	14%	24%
65+	45%	5%	1%	9%	13%

The trend holds true across every site, save for LinkedIn again. It's clear that Facebook is still dominant in the usage category, but Twitter, Instagram and Pinterest are also prominent amongst younger people. For the older crowd, not so much.

3. Population density is a mild predicator of social media usage.

The Pew study also notes that 76% of people living urban settings use social media, compared to 72% in suburbia and 70% in rural areas. The difference, while not significant, is noticeable. 

Facebook use is pretty even across the board, but Twitter, Instagram, and LinkedIn use is substantially lower amongst people living in rural areas. Suburban users lead slightly in Twitter, LinkedIn and Pinterest usage, while urban users are most adept with Instagram.

4. Blacks lead in usage of most sites.

Among the five major social media sites discussed, all but Pinterest are led in usage by blacks. Whites lead in Pinterest usage, but are last in Facebook, Twitter, and Instagram. While Hispanics lead the overall numbers, they don't stand out particularly when looking at specific sites.

Social Media Site Usage by Race

Race	Facebook	Twitter	Instagram	Pinterest	LinkedIn
White, Non-Hispanic	71%	16%	12%	21%	22%
Black, Non-Hispanic	76%	29%	34%	20%	30%
Hispanic	73%	16%	23%	18%	13%

5. Income positively correlates with LinkedIn and Pinterest use, 

The overall usage numbers for the four different income brackets are relatively equal. The biggest difference in usage between income groups? Four percent. 

However, when looking at the site breakdown, usage becomes a little less even. Facebook has slightly more users in the two lower income brackets than in the upper two, but the numbers in each subset are about equal. Twitter and Instagram use is spread out a bit more evenly, with no groups dominating. However when we get to Pinterest, and especially LinkedIn, we start to see some differences. 

Pinterest and LinkedIn Usage by Income

Income	Pinterest	LinkedIn
Less than $30,000/yr	15%	12%
$30,000-49,999/yr	21%	13%
$50,000-74,999/yr	21%	22%
$75,000+/yr	27%	38%

Those in the $75,000+ bracket are almost twice as likely to use Pinterest and three times as likely to use Linkedin as those making less than $30,000 a year. Even those in the bracket below are significantly more likely to use these sites than those earning less.

 References:

 Duggan, Maeve, and Aaron Smith. "Social Media Update 2013." Pew Research Center's Internet & American Life Project. Pew Research Center, Sept. 2013. Web. 10 Feb. 2014. <http://pewinternet.org/Reports/2013/Social-Media-Update.aspx>.

 "Social Networking Reaches Nearly One in Four Around the World." EMarketer. EMarketer, 2013. Web. 10 Feb. 2014. <http://www.emarketer.com/Article/Social-Networking-Reaches-Nearly-One-Four-Around-World/1009976>.

What Is Social Media?

• What makes something "social media?"
• How is "social media" different from other forms of media?
• What are some online examples of "clearly social" media?
• What are some online examples of "clearly not" social media?
• Why?

In order to fully answer these questions, it's helpful to first look at what the dictionary has to say. Merriam-Webster defines social media as:

"forms of electronic communication (as Web sites for social networking and microblogging) through which users create online communities to share information, ideas, personal messages, and other content"

In contrast, the definition of media is simply:

"a medium of cultivation, conveyance, or expression"

From looking at these two definitions, we get a better idea of how fuzzy the lines are between social and non-social media. What the two have in common is that they both deal with the sharing or presenting of ideas. But while traditional media is a one-way communication form, social media is a two-way communication form that gets its power from the communities it envelops. Sites like Facebook and Twitter are generally regarded as the epitome of social media, but there are a number of platforms, like YouTube and Pinterest, that contain social traits without serving the exact same functions. Regardless of the subtle differences in form and function, these sites are social because they tap into communities and give each user the ability to express themselves freely. Traditional media forms fail to do these things, allowing information to flow from only one source. Though they may be speaking to a community of people, traditional non-social media doesn't accept or consider the responses to it's content.

"Clearly social" sites, in my opinion, are those that are free to join, allow the creation of a profile, and let users share their own content while consuming the content of others. All of the sites in the above paragraph do this, albeit in different ways. "Clearly not social" sites, on the other hand, do not have all of these features. Something that isn't social is not free to join by anyone and does not allow for any two-way communication. Rather, it is only to be consumed. It is in that way that television, radio, and print would be considered predominantly non-social.