Has Social Media Gone Too Far? What Is “Social Media” Really? Who Owns The Digital Content Representing “You”? Are You Using A Product or Is The Product Using You?
Social Media is a very interesting phenomena to say the least. Even old guys like me know what it is (if you can believe it). Truth be told it has had a tremendous impact, especially for the very small business in terms of becoming “known” using a communication medium that is almost free. Almost, as recent items in the news bait the questions: What really is the “cost” of social media? Who really owns and controls the digital “you”? Well, maybe not you personally or directly, but your on-line data. In other words, who you are, what you post & write, what you upload. Is it really yours? And if it is not yours, why would someone else want it? How do social media platforms actually make money off your “free” user account?
2015 statistics indicate there are roughly 280 Million users of Linked In, about 316 Million we are told for Twitter (according 2018 statistics, although this would seem to pertain to “active” accounts as it has been estimated overall there were over 1 Billion Twitter accounts that have been deleted or gone dormant over time), about 540 Million are using Google Plus and the largest of all is reportedly Facebook with 1.2 Billion users. But while some sites do offer some kind of “premium” account services that users would paid for via monthly fees, the vast majority of those accounts are of the “free” variety. So, How Do Social Networking Sites Make Money? Mr. Jonathan Strickland answers that question with an article posing the very same question:
In the article Mr. Strickland alludes to the point that just about all of these social media platforms had failed to make money initially and were relying on venture capital financing to keep the doors open, conceivably until a time they could become profitable. Indeed, understanding that users are on-line for free, for the most part, where does the revenue come from? As already pointed out by others covering this very question and topic, 250 + Million users paying nothing to have an account equal ZERO revenue or income for the social media site. In addition, 2018 statistics for Twitter indicate that only 25% of accounts are “active”. 50 Million businesses reportedly have a Facebook account yet only 4 Million companies actually pay for on-line advertising on Facebook. You-Tube is reported to have 1.5 Billion user accounts and the claim is has a market reach for persons aged 18 to 49, greater than the reach of cable television companies combined. But, how do they make any money if these accounts are all free?
According to Statista, In the fourth quarter of 2017, Face-book's total advertising revenue amounted to 12.8 billion US. dollars. Payments and other fees generated 193 million US. dollars in revenues. Twelve Billion Dollars is a lot of money but is that enough to pay the bills and recoup all of the investment (read venture capital) money poured in over the years? On the surface, the answer to that question would appear to be NO. Or, is it the case that social media companies are “greedy” in that they want revenue above and beyond what they already get from those “pop up” advertisements on your user page? Regardless, the recent news about Cambridge Analytica and resultant personal “data mining” of social media accounts has thrust this issue into the limelight.
But getting back to the advertising revenue issue, Hearst Magazines president David Carey opines that “digital media cannot survive on advertising alone” & “advertising-dependent digital businesses will have a lot of problems in the future”. He informs that they “need at least 25% of revenue to come from other channels, such as conferences or e-commerce”. While you might say that Carey is coming from a traditional “media” outlet putting out content of one kind or another (magazine articles) social media is intertwined and faces many of the same issues. One can say the only difference is that the “content” of social media are the users and what they post or write on-line as opposed to a journalist preparing an article. https://www.sailthru.com/marketing-blog/digital-media-companies-evolving/ How do we know this is true? Because Facebook said so. In an article written by Mr. Neil Lustig (5 Predictions for Publishers After the Facebook Break-Up, https://www.sailthru.com/marketing-blog/5-predictions-publishers-facebook-break/) he highlights the January 11, 2018 announcement by Facebook claiming that “stories from publishers will seldom show up in feeds” and that “Facebook says it will prioritize posts from friends and family.” In other words, once again, the account user is the content. So, that begs the question: How do they make money with user generated content?
The answer to that question is some kind of effective data mining. And make no mistake about it, while social media does of course provide a conduit for interaction, news, dialogue, comments & information to be disseminated by individual users, it is also has become a vital marketing tool for business. How so, apart from obvious promotions & advertisements posted on social media pages?
Well, think about the “old school” way that companies, businesses and marketers tried to capture “consumer sentiment” and individual customer habits so they could better “sell” to them. And one example that comes to my mind is the supermarket. I remember when this was started more than 25 years ago whereby supermarkets first rolled out targeted product coupons printed directly at the cashiers terminal for use at your next visit. Based upon what was rung up in your purchase that day, special product coupons were printed accordingly. So, if you bought say a bag of dog treats you probably got a supermarket printed coupon for some brand of dog food you can use next time. But, the problem with that was it was still anonymous. Which is to explain, they knew what you bought that day but they didn’t know “who” was doing the buying. Enter the new supermarket customer “identity” cards to supposedly offer discounts, special promotions or whatever else.
Now, with a “customer” card, not only did they know what you bought, they can develop an entire profile about you personally, individually. They could create a database to determine with some degree of accuracy if you were married or single, if you had pets, if you had children (and what ages more or less) and whatever other cross referenced information could be gleaned (such as do you pay with credit card, debit card, cash and which bank those cards were issued from) all based upon your buying habits. And enter a new revenue stream for the supermarket as well, selling or renting these databases to telemarketers. While it would be foolish to rent such a list to a competing supermarket chain, the data about how many supermarket customers paid with a credit & debit card, and more specifically from what bank, would be gold for any bank trying to get more new credit card / debit card customers. So, not only could a telemarketer have your name & telephone number, they had some fairly detailed information about you, making the cold call less chilly (why bother calling someone to sell them life insurance products when you know they are single, as opposed to married people with children who might be a better target).
Getting back to this social media phenomena, the knowledge about you goes up exponentially when you go “on-line”. Store issued “preferred customer” cards certainly offer a small treasure trove of data but knowing who your friends & contacts are and even more so what you post or write an even larger data score, especially when politics comes into play. Which is to say, harvesting social media gives up information about your political views and who or who not to send a political message to. It also offers a “pulse” about what people (read potential voters) are talking about in real time so a potential political message can be crafted accordingly. That is very powerful stuff if one wants to “shape the narrative” and manipulate public opinion. A heavenly dream for any political operative attempting propaganda promotion.
But how do we know or deduce this is what social media data is being used for? Let’s find out directly from what social media marketers are discussing themselves when advising about using social media for business promotion. Mr. Paul Roberts, writing for OurSocialTime, penned an article titled: Can we really measure social media ROI? https://oursocialtimes.com/how-to-measure-social-media-roi/ Now of course he is talking about business social media participation and if it is worth the time, effort and or expense as a ROI (return on investment) for businesses. But, while that was not so much of interest to me as is what he had to say about the data. He writes: “Each social media channel has its own data analytics layer and constructs, along with its own metrics”. And he goes on to say that “Social media data is precious but it’s mostly unstructured”. “The only companies that managed to harness social data into a product proved to be our biggest corporations. Because all this data is being created by the world, it takes a big data approach to mine it. CEOs have begun to figure out how to deal with that; algorithms are coming of age, programmatic advertising and targeting are now usable and extensible”. “In my view the real value of social media isn’t in the data but in its transformation into structure. That is where the gold lies today”.
So, what is he suggesting? Social media data is difficult to use because it basically is collected as “meta data” and that many companies do not have the time and expense to filter, sort & collate that on their own. In addition, supposedly there is no industry standard so Facebook, Google and all the rest have their own proprietary algorithms and data collection methods. BUT, WHAT IF the social media companies themselves did have this capability? What if they, and ONLY they, had the ability to sort, collate and data mine their own users and them sell this information for targeted marketing purposes elsewhere? This recent issue in the news surrounding Cambridge Analytica involves a “rogue application” they invented for data mining purposes that Facebook claimed to be unaware of. But is that really true? Some information has been recently brought to light that Google had been manipulating news & feeds for “political purposes”. How would they know how to do that? How could they “target” news for certain & specific users and not others?
Mr. Matt Agorist wrote an article about Google recently titled: The Personal Data Google Has on You Is Shocking and Dwarfs that of Facebook, Here’s How to Stop It:
In the article he writes: “it was revealed that both the Obama campaign and the Trump campaign used third-party integrations to collect private information on millions of unsuspecting Facebook users. The resultant scandal has sent Face-book's stock tumbling as well as created a firestorm for Mark Zuckerberg and his fellow data miners. Remaining conveniently out of the scrutiny, however, is Google, whose data mining of private information, according to a recent report, dwarfs that of Facebook.”
Another point of view and in defense of social media companies, is that you agreed to it. I mean, every time you signed up and clicked the “I accept” button without reading all of the fine print in the “customer agreement” the result is you agreed, regardless if you were aware to exactly what you were agreeing to or not. So, from a legal standpoint, there is not much to do about the data collection aspect IF it was mentioned in the customer service agreement. Possibly such media companies may have broken some laws as it pertains to what they did themselves directly with that data, how it was used and whether or not what they did was disclosed in the “agreements” you affirmed when you signed up. But, that’s up the court system to flesh out and decide (such as political campaign intervention or election influencing if done in such a way that violates campaign related laws) and considering the number of class action lawsuits allegedly planned, all this may come out in discovery. However and in addition, it is also true that people sometimes post intimate details about their own personal life on-line, having that information exposed potentially to millions of strangers. And so, the argument goes that account users do this and then have the audacity to want to complain about privacy. A valid point I think.
In any event, the issue for social media account users is that they feel “violated”. The heart of the matter is ethics and how social media companies perhaps use account owner “data” to manipulate them in some way. I suppose in this day & age of less and less direct human contact, digital contact has replaced it, with users feeling they are being equally intimate with their on-line “experience” as they would face to face. However, once you go on-line you can kiss all vestiges of privacy goodbye. One can argue it should not be this way, but my view is to compare social media account usage to that of the typical mall store parking lot. Which is to explain, how many times have you driven into a well lit private store parking lot (for the purposes of shopping, read patronizing, the store you want to shop in), complete with security personnel making patrols, only to find a well place sign indicating “We Are Not Responsible For Any Damage or Theft Regarding Your Vehicle Parked In Our Parking Lot”? Legally the store or business told you up front they are not responsible for your safety or security despite the “window dressing” of security staff and so on. An exoneration of any liability, “Park Here At Your Own Risk”. Likewise, social media venues seem to want to take the same attitude, telling you they are doing everything to “make you safe” while freeing themselves of any liability for “rogue applications”, data mining of your information and possible hacking. Of course, the matter again is not “outside” forces but the social media company itself doing the data mining for whatever purposes or reasons, be it for financial gain or some other end goal.
Considering Mark Zuckerberg of Facebook very recently “testified” to the US Congress regarding his own company practices, these sort of issues are all coming into the limelight of public debate and awareness. And the devil is in the details. Did some of these social media companies indeed violate the terms and agreements they made you affirm as a new account user? If they didn’t, did they possibly break any laws or were the agreements themselves unlawful in any way? What should social media firms really be responsible for if not legally then at least ethically when it comes to your “data”, on-line postings and personal information details you voluntarily submit?
Some are suggesting there will be major changes to social media going forward and how it operates. There are calls that it should be regulated as a public utility, with some sort of government oversight. Others suggest the public might back away from participating “on line” going forward. But I don’t think social media is going away and especially now that it has been proven to be a communications and news dissemination medium for so-called “alternative news” and “citizen journalists” (the censoring or banning of certain users, content & political views aside). What all this attention will do is heighten the public debate about what it means to live in a digital, electronic age whereby once you enter the ether known as the Internet you never know where you, or your “data” might end up (nor how it will be used). In other words, “Blog, Post, Upload At Your Own Risk”.
About The Author: This article was written by John Schroder of Ascot Advisory Services. John's firm has been helping clients in the Dominican Republic for the last 18 years to date with residency application services, naturalized citizenship filing, banking assistance, incorporation services and legal services pertaining to real estate (title transfers, legal representation at closing, sales contract review). In addition he writes articles like this one and produces a newsletter for his clients & subscribers. You can contact him by telephone at 809-756-1917 or click the about the author link above to reach a contact page to send an email directly.
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