Is there more to social-media commerce than advertising revenue?

I noticed in an article in CNN.com listing The 10 most innovative Web companies that the only reference to a specific revenue generating activity is Twitter’s selling “Promoted Tweets and Trends”. Other than that all the rest merely boast their millions of users, millions of searches, millions of “check ins”, millions of subscribers and followrs, etc., implying — what else? — that’s right: advertising opportunities.

Is advertising money all there is to make on the Web for social-media companies?

Zachary Karabell explored the question in his essay on the 11th April 2011 edition of TIME Magazine:

Social-media sites are all the rage, but what is the added value to our economy?

Indeed, like television, these sites suck up the labour force’s productive time and earn their big bucks (or at least hope to) by converting those millions of eyeballs tuning into their gloss and chatter into an audience for their advertisers.

So do social-media tools enhance productivity or help us bridge the wealth divide? Or are they simply social — entertaining and diverting us but a wash when it comes to national economic health?

Karabell admits that it is still too early to tell what the overall and long-term contribution (or for that matter, any effect) of social-media commerce will have on economies, since these businesses (at least some of them are businesses in the real sense of making operating incomes) have been around only for the last decade at most. Talk of a new bubble economy is already making the rounds. If there indeed is a bubble and if it pops, will there be something tangible to salvage?

In the case of the tech wreck of 2000, what was left behind when the dust cleared was “among other things, a ton of fiber optic cables that we still rely on for broadband today”. Consider then:

It’s not entirely clear what, say, Zynga [of Farmville fame] leaves behind if this bubble — again, if there’s a bubble — pops. All that farmland can’t be repurposed.

Zynga is one of the “10 most innovative” companies cited in the CNN.com list referred to earlier.

Consider that old media (television, cinema, and print) and mature digital media (e-zines, repository Web sites, blogs, etc.) accumulate intellectual capital that can be re-used, re-distributed, re-referenced and re-sold. Compare that to a Facebook “status update” or a Twitter “tweet” both of which remain relevant for all of the five minutes it remains visible on one’s “feed” or “stream” without having to scroll the screen up. What persists after a tweet? What tangible and durable asset does one have to show for in the long run after an hour spent on Facebook?

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One Comment on “Is there more to social-media commerce than advertising revenue?”

  1. We have a bubble economy…a bubble Government Press Release Information Agency…they release bubble news of Philippine prosperity…news that are somewhat of a mirage…along with a bubble-head President…
    How unique, we are as a country…

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