While it's amazing to feel the rush of likes and excitement of having thousands of followers. Would you stop and look around to understand that we are nothing but unpaid employees of the Social Media Apps.
Let's understand this in simple ways. Any traditional media has people on hire to do the job of creating the content for the channel, it could be in form of on field or off field.
These hired people then go around searching for the content or have a team of people to script the things for them in order to produce it.
So this content basically pays the company in different ways. Let's understand.
The On-Air Content Anything that is aired on the television has a cost of sponsorship involved or there are ad revenues coming from the commercials that one sees during the break time from the shows (content).
Sponsored Content. When a company or person pays specific amount of incentive for a given type of content to be published or created on these traditional channels.
Brand Placements (Advertisements) Advertising is most commonly used in media outlets that 1) can't cover their entire costs just by selling their content (like newspapers and magazines), and 2) would have little to no audience if they charged (or charged more) for their product. For example, a newspaper would never sell at $5 per copy, and you wouldn't pay $30 for a movie ticket, so advertising is there to subsidize the cost.
Subscription Subscriptions are great for media types that are continually being updated - think a newspaper, a magazine, or cable TV - or have some kind of ongoing value - think websites like LinkedIn or informational databases. Subscriptions are popular with media companies because they provide steady revenues over time.
Pay - Per Item The pay-per-item model works for media types that come in an individual package, offer no ongoing value, and are sustained through sales alone. An example of this is a pay per view movie on cable, a movie ticket at your local theater, or a CD or DVD.
Merchandising Media companies use merchandising as a secondary, or ancillary, income. This is popular with recognizable media franchises whose fan base would want to purchase related items. An example might be the merchandising efforts of a company like Disney, which produces and sells merchandise for all of it's big-budget movies and TV shows. Many times, merchandising efforts earn more income than the media product it references. For example, the original Star Wars movies earned more income through merchandising than through ticket sales.
So as you can see the companies earn their revenue from different models, these are not all the modes that they earn from. All the revenue they make is then converted into getting more employees to generate more content and the cycle continues.
Let's talk about social media now, As the world progress and small businesses grow on these platforms and benefit from it. There is also a dark side to all the apps that are in the social media world.
These app do not only make you addicted but also make you follow the trends and slowly consume you if you are not careful enough.
You may be wondering that how are you employee to a social media app? Employment implies work for which one has been engaged.
Social media is all about engagement of one's life over a digital platform. The whole point of having a social media is freedom of expression. While you are expressing yourself on these apps. Let's see how the app manufacturers are benefiting from it.
5 Ways that the Social Media Apps Earn Money
Venture Capital Venture capital is a form of private financing and it's how a lot of social media companies got their start. A wealthy individual or a group of people invest their money in these startups or ideas in order to boost the application or the idea.
Advertising The biggest way that social networks make money is through advertising. There's a reason why the sites are designed to be addicting. The more you look, the more advertising you're exposed to. Other companies pay the application developers to put these advertisements in place for you to
User Data Another big source of income for social media platforms, and a controversial one, is through collecting and selling user data. It's important to understand what this means. Facebook, Twitter, Instagram, and the like aren't selling identifiable information like your phone number, email address, or other private details to companies. However, what many of them do sell is aggregated and anonymized usage patterns.
Memberships All the popular social media sites let you make your account for free. However, some of them lock additional features behind a paywall in the hopes that you will pay for these premium memberships.
Transaction Fees and Virtual Products Some social networks offer services for other people to sell or raise money through them. The social network will collect a transaction fee on this. Another way of making money is through virtual products. This can be seen in something like Tumblr, which charges for some blog themes.
Diversifying Once a social network grows large enough, they look to diversify. For those with enough capital, buying other companies is a quick way to do this. It's why Facebook own WhatsApp, Instagram, and Oculus. It's also why Twitter has acquired companies like Gnip, MoPub, and Periscope. Not only do they get the technologies and user data that these companies possess, but they can also use them as an additional revenue source to fund their social media platform.
So how do you become the unpaid employees of these social media channels. It's simple to understand, You the user basically generate the free content for these applications and allow them to have larger audience to en-cash upon your data and engagement on their platforms. The more you're active on these platforms the more the marketers and companies pay the platforms to advertise the products and service to you or your loved ones.
How your loved ones are being marketed because of you? Stay tuned for the upcoming blog to know more about it.