The Economics of Social Media

What is the economy of social media like?  Before this question can be answered, it is important to consider all that goes into a social networking site.  There are key topics to think about when creating a social network: What is the purpose of the site? What platform/software/format will be used to provide the intended functionality of the network? Will the network be open or closed – meaning will the created profiles be open to any one or private, or an in between of both? According to an article titled Guide to Social Networking (How to Create One Network and Key Resources)  the amount of privacy a site offers will affect who chooses to join the network ( It is also important to give thought to the content of the site and how and when to attract users.  Basically, the first step to creating a new social networking site is the creativity and the brains of the initiator –> the person wanting to start the new site.  In the article mentioned above, it states how the use of a company called NING provides platforms for social networks and offers a high degree of customization.  Some sites may require programming expertise whereas other sites may be more doable for a more average amount of knowledge.  The article mentions other sites like drupal, joomla, mambo, plone, which are open source contentment management systems to aid in the development of a new social network.  If you go to you will see a statement at the top of the page that says “Come for the software, stay for the community.”  This site is revealing how people end up so satisfied with the software that is offered, that they remain loyal to the site (  With open source contentment management systems, a server is needed as a place to install, run, and host the software.  These softwares are provided on the sites in the form of information of how to create a social network, or by purchasing private access to the information that comes with a server to get you started.  A question I often ask myself is “how do social networks make their money if they are free for users?”  As of July of 2013, Mark Zuckerberg, the CEO of Facebook, has a net worth up $3.7 billion as shares of Facebook rose dramatically following earnings ( When really thinking about the question, social networks make their money through advertisements that are presented on their pages.  If you have a Facebook, the next time you log on notice the column of advertisements on the right hand side of the page.  Those companies that are advertising there paid Facebook a certain amount of money depending on the frequency, size, and number of ads they have on Facebook.  Once Facebook became extraordinarily popular in terms of users and successful in terms of money, it became a successful corporation in which people could purchase shares of stock.  As stated above, Zuckerberg earns money from selling shares in Facebook.  Many people want to have their own share of the success of Facebook.  This is true for many other social networks.  They have advertisements and stocks available as ways to accumulate profit.  The product of social media is an intangible one, meaning it is not a physical thing someone can hold.  Social media sells interconnectivity and personalization to its users.  By having a social media account, people are able to befriend, like, follow, chat, whatever it may be with many people around the world.  They can personalize their own information and share what they wish to share.  It’s astonishing that this is all available for no cost to the consumer.  Facebook, Instagram, Twitter, Google+, FourSquare, and so many other sites do not have a cost for their users.  People are interested in having the ability to connect and stay updated with whom ever they please through the internet.  This product is exceedingly and increasingly popular in today’s world.  The consumers of these intangible products are people looking to connect to others whether it be for personal or business use.  Many people of many ages are using social media more and more, attributing to its economic growth and success.

Best,                                                                                                                                                                                                                                                                                              Leen



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s