Thursday, February 16, 2012

The Physics of Social Media finances

Following my recent post on The Physics of Social Media, it has been pointed out to me that there's the distinct possibility that the finances of Social Media and social platforms are also subject to Newton's Third Law. This is the one that states "To every action there is always an equal and opposite reaction"

What does this mean?

Well, how many people these days use social networks and expect them to be free? Everyone, right?
But there's a problem with this.... The cost of developing, improving and running these sites isn't free. There's no such thing as a free lunch where website hosting is concerned. The cost of just hosting a social website like Facebook, with its approximate 700,000 - 800,000 users and billions of page views per day, is huge! (Annually estimated at $50 million in September 2010)
But someone has to pay for all this infrastructure.

Sites such as Facebook make a lot of their money by selling advertising space, in much the same way as Google or another search engine does. In the attention economy companies want to be where the eyeballs are and the more targetted they can make their advertising... the more they are prepared to pay.

So by giving more details about yourself, you are therefore allowing social networks to sell more specific advertising inventory to companies. They in-turn can pin=point your needs more.... or in other words, you're paying for their lunch (AKA the incredibly high valuations of these companies) by sharing your personal information with them. And somewhere within me that stirs a physical reaction.....
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