Ryan Aghdam

The Commodification of Social Media

An essay written for Computers and Society, a required course for Computer Science majors at Northeastern University. The essay discusses the results of “commodifying” social media.

Despite his indisputable successes, Calvin Coolidge is not often celebrated as one of our most effective presidents. He is, however, ubiquitously remembered for remarking that the “chief business of the American people is business”. The adage was part of a speech delivered on January 17, 1925 to the American Society of News Editors. The speech addressed the wealth that the newspapers were earning. Many Americans were concerned that the prosperity was somehow a detriment to their well-being, or perhaps indicative of a bias towards advertisers. Coolidge, a firm believer power of the free market, dispelled these myths, pointing out that the profitability of the newspapers was indicative of high value to consumers, and that any bias would be regulated by competition in the marketplace.

In the mid-1920s, when Coolidge was in office, sharing information was accomplished primarily through newspapers. Businesses could take out advertisements or convince the editorial staff to write an article; ordinary citizens could submit their own letters in hopes that they would be published. It was extremely difficult for an average man to become a journalist because it was difficult to enter the industry. Overhead costs for printing presses and delivery networks were very high and it was virtually impossible to convince advertisers to invest any capital.

The internet changed the paradigm significantly. Traditional newspapers slowly began to adapt and publish their content electronically. Many individuals who had a desire to share information followed suit and began publishing independent blogs. Like newspapers, some blogs were funded by advertising; others were published as a hobby. Regardless of the business model or motivation, blogs became extremely popular and encouraged entrepreneurs to innovate and explore informal communication.

Eventually social media products such as Facebook, Twitter, YouTube, and Google+ were developed to promote informal communication. Each of these four products are for-profit ventures, and are designed primarily to increase the profits of their respective companies; they are not eleemosynary ventures.

Facebook, the quintessential example of a social media website, began in 2003 as a student directory for Harvard Students. The popularity and potential is obvious; it recently filed to become public, and will raise $5 billion in its IPO. They must be doing something right! Facebook focuses on informal social interaction. Its users share photos, send messages, compete in games, and exchange information. Facebook retains and analyses this information to provide more effective advertisements. This practice has been scrutinized by those with concerns about Facebook exploiting users or selling private data. Many have questioned whether or not it is ethical for Facebook to gather information for financial gain.

The information provided to Facebook–and other social media networks–is surrendered voluntarily by its users. They do not–and cannot–collect information that you do not provide! Intended uses of the data that is entrusted to these companies is outlined in their terms of services, albeit cryptically. The information that you surrender to social media websites is not being used to stalk you or to break into your home when you’re away; it’s used to better target advertisements.

What effect does that have?

If I used Facebook, I’m sure I wouldn’t see an advertisement for Gap maternity clothes. The Gap would not spend any money to advertise their new maternity line to me–a 22-year-old male. I would be more likely to see an advertisement for the latest and greatest Android phone, because it fits my demographic and it would relate to the content I had viewed and shared.

In this example, The Gap would be spending less money on advertisements because fewer impressions would be needed, and those few impressions would result in more clicks. They’re spending less money on advertising while improving sales. Savings are either immediately passed on to consumers, or retained in the company. Consider the result when this is applied to all companies that advertise on Facebook. Who gains? Facebook earns more advertising revenue; advertisers save money and increase the effectiveness of marketing campaigns; consumers will save money buying more relevant products. Who loses? No one.

There are some people that may say that Facebook and its competitors are greedy. As economist Walter Williams and John Stossel explain: “Greed gets people to cooperate. If you want to benefit from other greedy people, you have to make sure they benefit from you”. When using social media, you provide your data to be used for targeting advertisements and receive a useful tool for social interaction. If both parties voluntarily agree to make an exchange, it can only be assumed that they are both better off.

The commodification of social media increases the incentive to continue innovation. Profitability in this area during the past decade has been the saving grace of our crumbling economy; its innovation has greatly enhanced our communicative abilities. As Silent Cal said: “Civilization and profits go hand in hand.”