An examination of the social media economy. Lecture from Tufts University EXP-50, Social Media: Participatory Culture and Content Creation

1. SOCIAL MEDIA
IS
BIG BUSINESS
Ben Rubenstein
Tufts University EXP-50

2. BIG QUESTIONS
How does social media make money?
What drives the value of social media for users? For
advertisers? For investors?
What risks and challenges should we be aware of?
What’s the outlook for the social media economy (and
related economies)?

3. HOW MUCH IS SOCIAL MEDIA
WORTH? (JUNE 2015 EDITION)

4. HYPE OR HOPE?

5. HYPE OR HOPE?
2009:
$250
million
valuation
April 2010:
$1.35
billion
valuation
Nov 2010: Rejects $6
billion Google offer
Nov 2011: $12.8
billion valuation
2012:
$5.8 billion
valuation 2015: $5
billion
valuation

6. HYPE OR HOPE?
Nov 2013: Rejects $3
billion Facebook offer
May 2015: $16
billion valuation
Apr 2012: $4.25 million
valuation
Apr 2013: $800 million
valuation

7. HYPE OR HOPE?
2015: $21 billion
valuation?
2013: $1.5 billion
valuation
2014: Acquired by
Facebook for $19 billion

9. Would you invest
in social media?

10. BUSINESS MODELS
Advertising
Virtual Goods
Freemium
Subscription

11. ADVERTISING

12. VIRTUAL GOODS

13. FREEMIUM

14. SUBSCRIPTION (PREMIUM)

15. Would you pay for
Facebook? (or
Instagram)

16. ““If you’re not paying for the
product, you are the product.”
Anonymous internet pundit

17. “

19. USER VALUE: DATA

20. DATA MINING + SOCIAL LISTENING

21. USER VALUE: CONTENT
Instagram: “A non-exclusive, fully paid and royalty-free,
transferable, sub-licensable,worldwide license “
LinkedIn: “copy, prepare derivative works of, improve,
distribute, publish, remove, retain, add, process, analyze,
use and commercialise, in any way known or in the
future discovered…”
Facebook: “...does not end upon the deactivation or
deletion of a user’s account, content is only released
from this license once all other users that have
interacted with the content have also broken their ties
with it”

22. Nope.

23. ADVERTISING +
THE INTERNET

24. TENSIONS
Business
Objectives
User
Experience

25. ORIGIN STORY
Advertising became dominant because:
- Easy to implement
- Easy to sell to investors (‘investor storytime’)
- Attention is everything (vs. print ads)
“The primary benefit of online advertising is
the ability to see who’s looking at an ad.”

29. THE AD-SUPPORTED WEB
PROS:
‘Free’ content
Personalization
Openness
CONS:
Tracking
Centralization
Clickbait
Filter bubbles

31. ESCAPE HATCHES

33. ESCAPE HATCHES

34. ESCAPE HATCHES

36. WHY AM I SEEING THESE ADS?

37. WHY AM I SEEING THESE ADS?

38. WHY AM I SEEING THESE ADS?

39. WHY AM I SEEING THESE ADS?

40. WHY AM I SEEING THESE ADS?

41. RETARGETING

42. ““Facebook has collected the most
extensive data set ever assembled
on human social behavior.”

43. Targeting

44. Targeting

45. Targeting

46. Targeting

47. Targeting