Prediction of Possible Business Models in Social Media in the Future.

Introduction

Social media is very clever in implementing business models in such a way that the user does not even notice while being hooked up in engaging content or an interesting application of a social media site that they find themselves paying for a service. Having tried to avoid spending money for social media-based applications has not succeeded since I have been tempted to try out the possibilities of upgraded services just to feel how it is to benefit from something. This experience has led to the conclusion that one should think about all the pros and cons of the service and come to a conclusion if buying upgraded services is necessary. I understood that there is a possibility to avoid paying when you leave the passion for an application aside or think rationally about the application benefits whether they are really necessary or not.
Having read through all possible variants of revenue models in social media, a warm feeling of recognition appeared. Nowadays social media and media economy mostly demands novelty and unique solutions in order to please the customer. When I find a social media-based web page, I have constantly found myself thinking about the websites’ conception how a certain site gains money from its customers while being totally free in the first glance. In further investigation certainly a kind of revenue model becomes apparent since the people behind the website mostly need an income.

Facebook Fan Pages

An emerging way of gathering future customers or hidden revenue is through Facebook’s fan pages. Companies usually create their fan page and tempt people to join these sites in order to “spam” their walls with news and interesting information. The “bite” to get the future customer hooked up with companies may be a lottery (offering a cheaper or free service from the company itself), which in turn hands out joined users’ data and a possibility to send free ads. It most definitely may happen that the future customer starts liking the information and “personal” approach (which in fact is spam on his/her wall), and buy services from the companies. People usually are too comfortable to remove their data from the list after the lottery has ended, so they are an easy target to this kind of advertising.

Peer-to-peer advertising is also an efficient way to gain new customers for the companies. It can happen in real life or through instant messaging chat, e-mail or connecting/forwarding services (like ‘Facebook connect’ or ‘send to friend’). For example a friend or acquaintance suggests the other person to join a fan page of company X, because they are having a lottery for an iPad. Company X then requires you to become a fan of their Facebook profile, provide them with your e-mail address, and choose the kind of newsletter (I call it spam) you want to receive. Peer-to-peer advertising is useful since people tend to believe their friends and acquaintances more than “just another company”, and peers usually know their acquaintances’ preferences, thus leading a possible target group member to the company. Social media also operates with friend or acquaintance ties by providing you with relevant ads of the companies your friends like, which also could lead a person to join these companies.

The larger the fan base of a company is in Facebook the more reliable the company seems to “outsiders”. The last fact has to be pointed out because it is most likely that in participatory economy or in the collaborative environment the users are willing to provide free feedback which is also beneficial for the company and saves from the hassle of survey costs. Reflection coming straight from the customer is even more valuable than surveys from people who perhaps are not connected with the company at all.

Dropbox Revenue Model

Another example is free service provision up to a certain limit and after having crossed the limit you have to pay a small amount of money in order to maintain your rights or upgrade the service. The sum is usually not very big as to reject the option of upgrading if the service is valuable for a user. Since cloud computing gains more popularity, lots of social media pages offer storage space somewhere in the web. I will take Dropbox as an example, since I have tried out the service and am seriously considering whether I should pay for the service or leave my Dropbox size at the current level.

Revenue model for Dropbox is the following – first you create an account and get a certain amount of data storage space which increases by simple steps. You have to complete your profile, download Dropbox application to your computer (the more computers you engage the more extra room you get), and so on. Completing these steps enables you to gain a little bit more space. Then you are offered to advertise the service to your peers who in turn join with Dropbox service as it is a tempting solution to get your data accessible from different locations which are provided with internet connection. In turn the person who
suggested his or her friends who have finished completing the first steps in becoming a “free” customer can have more free disk space somewhere in the servers or “clouds” of the internet. If the initial customer has loyal friends, he or she can upgrade Dropbox space from 2,5 gigabytes up to 8.

The user may think, on the one hand, that it is possible to get rid of extra files from your computer and free disk space, but on the other hand the application creates a new folder where it stores all of your documents. If other computers are engaged, they have the same amount of files. Extra copies and the archive of saved copies are also located in the web, which is positive, because one can make changes within the application without losing necessary data. Considering all the pros and cons of this website I might even consider upgrading the status, but since the cost is relatively high for me, I am skipping the option.

Conclusion

I believe that it is possible to tempt people with hidden revenue models, because still there are a lot of users who do not realize that there is always a catch behind a free service of a social media page. Having educated myself to the level where I can choose whether I want to join a fan page or upgrade a service or I can live without unnecessary spam, I feel secure in social media environment. Spam on the wall tends to annoy more than give me additional information. But new, innovative sites and content certainly draws more users to the ad base.