Ariel Szczesiak

Media Economics

2011-02-02

THE FUTURE OF SOCIAL MEDIA

2

Introduction

Over the last seven years, we have witnessed an extraordinary development of new branch

of media – the social media. It used to be just a couple of communities gathered around

some websites. Right now it is a multi-billion dollar industry that unlike any other has a lot of

influence on our habits, relationships and pastime activities.

The future of social media will be driven by some soft factors presented below in the table 1.

The very abundance of services and connections will create erosion of trust in opinions

expressed by friends and peers (Edelman report 2010 and 20111). People will seek experts

and gurus in specified fields of knowledge and value their opinions as trusted. This creates

opportunities for new services, like Klout2, which will try to assess the influence on internet

community of a user. Also privacy will no longer be assumed or taken for granted. Eric

Schmidt, Google’s CEO, warns about a future without privacy3. You will have to actively

protect your privacy or resign from internet activity (the latter does not seem probable).

The future of social media

Abundance of… Scarcity of….

Many new products and services Trusted opinions

Content ConTEXT & Trusted Filters

Connectivity Private Spaces

Machines Intelligence Human Ingenuity & Creativity

Numbers of ‘connections’ Actual relationships

Table 1 Key aspects of the future of social media according to Gerd Leonhard4

Emergence of some key technologies prompted the development of social media. This

technologies will improve in the future which will even further increase the spread of the

industry. One of the main factors contributing to the expansion of sites like facebook or

youtube was broadband access. A simple access to the Internet is not enough to take full

1 Edelman report, Trust barometer 2010 and 2011, http://www.edelman.com/trust/2011/

2 http://klout.com/

3 TechEye, Google CEO warns of data explosion and future without privacy,

http://www.techeye.net/internet/google-ceo-warns-of-data-explosion-and-future-without-privacy 4 Gerd Leonhard, presentation at PICNIC 09 Amsterdam, http://www.mediafuturist.com/2009/09/the-next-5-

years-in-social-media-picnic-09.html

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advantage from social media. One needs a quick and reliable connection. In the future the

internet connection will be even faster and cheaper and widely available in mobile phones

which will make smartphones the major platform of access (according to eMarketer 600m

people will use their phone to tap into social networks in 2013). Smartphones will enable

their users to log in to social media sites almost everywhere. Obviously, new internet

software and standards will help social media developers (HTML 5, currently still under

development will add new syntactical features like <video>, <audio> typical for social media)

and might open new opportunities (e.g. without Flash 7 there would be no youtube).

This special report tries to show what’s new in social media and cover the most probable

paths that will lead the industry into the future. We will also focus on the likely

implementation of social media in the coming years connected with development of new

technologies. Finally we present major threats that the industry has to face.

Picture 1 Typology of social media

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5 Fred Cavazza, Social Media Landscape, http://www.fredcavazza.net/2008/06/09/social-media-landscape/

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Blogs and wikis

Blogs and wikis will move towards expertise opinion pools rather than simply personal

diaries. The sheer number of blogs is still rising (154 million as track by BlogPulse, 20116),

however recent trends indicate that young people leave the blogosphere. The two Pew

Internet Project surveys showed a decline in blogging among teens7: in 2006, 28% of teens

ages 12-17 and young adults ages 18-29 were bloggers, but by 2009 the numbers had

dropped to 14% of teens and 15% of young adults. At the same time the percentage of 30+

bloggers rose from 7% to 11%. It is very possible that youngsters moved from maintaining

personal blogs to spending more time on social networks sites. The older internet users tend

to be more knowledgeable and would like to share their views and information and tools like

Wordpress made creating and keeping a blog much easier.

It is very hard to predict how Wikipedia will look like after a couple of years. Definitely, there

will be more articles, especially in other than English languages (Wikipedia’s founder, Jimmy

Wales, forecasts that in the coming 5-10 years English Wikipedia pages will fall from 1/3 to

less than 10% of all entries). Wikipedia also established some standard for publicizing

information and guides. A lot of learning materials especially in computing and self-study are

nowadays published as wikis.

Microblogging

Microblogging is probably the fastest way to spread opinions and get feedback from its

users. Harnessing it can help to predict future trends, e.g. one study from HP Social

Computing Lab shows that using chatter from Twitter one can forecast box-office revenues

for movies8. Services like Twitter or Tumblr are very easy to use from a mobile phone and

most content will be written from smartphones. What’s more, microblogging is becoming

increasingly popular in China9 (a little surprising because Twitter was banned in China in

6 http://www.blogpulse.com/

7 Pew Internet, Social Media and Young Adults, http://www.pewinternet.org/Reports/2010/Social-Media-and-

Young-Adults.aspx 8 Sitaram Asur, Bernardo A. Huberman, Predicting the Future With Social Media,

http://www.hpl.hp.com/research/scl/papers/socialmedia/socialmedia.pdf 9 Xue Ying, Microblogging: Its Future In China & In Flattening The World, http://cnreviews.com/business/research-

insights/microblogging-china-future_20091202.html

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News3%

Spam4%

Self-promoti

on6%

Pointless babble

40%

Conversational

38%

Pass-along

9%

Content of Tweets

2009, they are using mostly Chinese equivalent – sina microblogging t.sina.com.cn) and its

citizens might be the largest group of users in the future.

The main problem of microblogging is the

amount of unimportant content where users,

for some reasons, tweet about what they are

doing at the moment. Pear analytics

estimated that 40% of content on Twitter is

pointless babble. Probably it is going to

change because people treat microblogging as

novelty and trying it out. One might expect

that some advanced software will be created

to get the meaningful content from the chaotic massages.

Sharing services

Youtube has been named the top social media innovation of the decade by Adam Ostrow,

Mashable commentator10. Regardless of its extreme popularity, the video site has struggled

to achieve profitability. It is projected that youtube started bringing money in 2010 for the

first time11. Google is planning to undertake some changes to monetize the popularity of the

acquired video service. Generally, there will be much closer cooperation with the main

media and entertainment companies. Youtube will stream live Indian Premier League cricket

matches12, develop its film rental service13 and right now the majority of the most popular

channels are corporate accounts. Google is also working on technology that will recognize

the subject of a given video or part of it to show advertisements connected with the content

the viewer is watching at the moment.

10

Adam Ostrow, YouTube Is the Top Social Media Innovation of the Decade,

mashable.com/2009/12/22/youtube-2010/ 11

Robert Briel, YouTube: profitable in 2010, http://www.broadbandtvnews.com/2010/03/05/youtube-

profitable-in-2010/ 12

Mark Sweney, Guardian, YouTube confirms worldwide deal for live Indian Premier League cricket,

http://www.guardian.co.uk/media/2010/jan/20/youtube-live-indian-premier-league 13

Miguel Helft, YouTube Takes a Small Step Into the Film Rental Market,

http://www.nytimes.com/2010/01/21/technology/internet/21youtube.html?_r=1

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Youtube missed the emergence of live casting (now they are catching up14). Sites like

Ustream.tv or Justin.tv (the name comes from the founder, Justin Kan, who was one of the

first people who was lifestreaming – broadcasting his entirely life 24/715) are getting popular

and trying to strike deals with entertainment companies. Right now users are streaming

personal activities, their gaming achievements (also StarCraft 2 gaming tournaments, very

popular in South Korea, have been livecasted) etc. I believe that most of the important

events in the future will be broadcasted live on the aforementioned services.

Today listeners to internet radios expect more influence over the content they get. Social

music platforms such as Pandora or Lastfm (automated music recommendation sites) deliver

songs based on users’ tastes. In the future information gathered by social media websites

will be shared with new devises allowing product or content to become more personalized.

Ford’s next generation SYNC will support mobile application wirelessly allowing an user to

control smartphone apps using voice and steering wheel buttons16. One of the main reason

is to stream Pandora in their car. Today a commuter can listen to his favorite radio station in

his or her car, but tomorrow he or she will settle for their own, customized station they

created with their profile at the internet radio.

Social networks

Facebook probably comes to your mind and with a reason. Other services like MySpace or

regional like NaszaKlasa in Poland are losing users who migrate to the biggest network.

Today facebook is a closed environment but pressure from its users will make them open its

service and we will be able to set up new accounts in different networks and simply “upload”

our contacts. Facebook has become a de facto internet ID (mostly because of Facebook

Connect17 launched in 2008) and as such will function in the future making the traditional

registration forms obsolete (basically you will give the registration details from your

14

Jason Kincaid, It’s Real: YouTube Debuts Live Streaming Platform With Two-Day Test,

http://techcrunch.com/2010/09/12/youtube-live-streaming/ 15

Nick Gonzalez, Justin.TV Teams Up With On2 And Opens Network,

http://techcrunch.com/2007/10/02/justintv-teams-up-with-on2-and-opens-network-finally/ 16

Jennifer Van Grove, Ford SYNC will Soon Stream Pandora Radio, http://mashable.com/2010/01/07/ford-sync-

application-ecosystem/ 17

Dave Morin, Announcing Facebook Connect, http://developers.facebook.com/blog/post/108

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facebook account or similar services e.g. OpenID). However, since users complain on too

much content being posted by their friends (most of being not important) and also on that at

Facebook you are connected not only to your friends but also to work colleagues and family

members and you simply do not want to share all information with all of these group at the

same time, new topical social networks like GitHub, Quora or StockTwits might take a share

of the market. LinkedIn has responded to this trend by setting up LinkedIn groups. Now the

company is planning partnerships with professional associations. Privacy is also a major

concern. Diaspora (joindiaspora.com) is trying to address the issue by providing

decentralized network services where all the content belongs to the users.

Social activity aggregators

When a person, especially tech-savvy, have opened accounts in many social media platforms

they need a tool to manage them. Nobody has the time to log in to Twitter, then Facebook

and then elsewhere to check what is going on and one needs a service that would gather all

such information. To fill the gap websites like FriendFeed (acquired by Facebook) or

Aol.Lifestream (previously SocialThing!, then acquired by Aol) have been established. They

are sometimes called social life managers and pose a threat to other social media companies

by limiting the time spent elsewhere. They are a relatively new service and their rapid

development indicates that they will get higher recognition and userbase in the future.

Social media will be ubiquitous

One can argue that social media are already pervasive but they will be adopted almost

everywhere and will interconnect with each other. Today one can see the ‘like it’ buttons on

many sites but in the future new applications will show which articles or music pieces were

liked by user’s friends. If a great part of population engage in online social activity social

media might create a collective wisdom pool, a social brain, if you will. When this happen

the opportunities seem to be limitless e.g.: sites like Digg or its topical equivalents might

take over human editors.

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The revenue problem

Although we all should agree that social media is a great idea, not everybody is certain that it

is also a great business. The industry struggles to bring profit to its owners (on the other

hand most of the companies are in their early stages). The current model is to quickly

develop relaying on venture capital money (PwC predicts that media companies and VC

funds will continue to make investment in social platforms, see the chart below) and expect

bigger corporations to make an acquisition. Sooner or later investors will expect returns and

the question how to monetize social media will shape the industry in the coming years.

Site Date Revenue Valuation Comment

Facebook Jan 2011 $1,5-2 billion $50 billion Investment by Goldman

Sachs fund18

Twitter Dec 2010 $50 million $3,7 billion eMarketer estimates, VC

investmets19

LinkedIn Dec 2010 $200 million $1,6 billion Private investment market20

SocialThing! Aug 2008 $10 million $25-40 million Acquisition by Aol21

Table 2 Valuation of some social media companies

Marketing budgets for social media grew from 1% in 2009 to 9% in 2010 and will rise to 17%

in 201522. Advertisements might not be enough to cover all the costs. It is not possible to

charge for access to social media but some premium features might be optional and incur a

small fee (so called freemium). Other revenue routs might appear e.g. Twitter earns by

selling access to the tweets to search engine companies like Google or Microsoft and

allowing them to display tweets in search results23.

18

Susanne Craig, Andrew Ross, Goldman Offering Clients a Chance to Invest in Facebook,

http://dealbook.nytimes.com/2011/01/02/goldman-invests-in-facebook-at-50-billion-valuation/?src=twt&twt=nytimesdealbook 19

Amir Efrati, Profit Elusive, but Twitter Gets $3.7 Billion Value,

http://online.wsj.com/article/SB10001424052748704828104576021954210929460.html 20

Telis Demos, LinkedIn looks for boost with IPO, http://www.ft.com/cms/s/0/59e47ba4-2a54-11e0-b906-00144feab49a.html 21

Nicholas Carlson, AOL Insider Says TechCrunch Price Only $25 Million – CNBC Says $40 Million, http://www.businessinsider.com/aol-techcrunch-price-25-million-2010-9 22

Bob Hall, Social Networking - The Future is Now,

http://www.quickprinting.com/publication/article.jsp?pubId=1&id=14769&pageNum=3

23 Eliot Buskirk, Twitter Earns First Profit Selling Search to Google, Microsoft,

http://www.wired.com/epicenter/2009/12/twitter-earns-first-profit-selling-search-to-google-microsoft/

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Digital will not be optional

Although the report is focused on individual users the companies will also take advantage of

social media. Forrester Research Inc. claims that we are in the breach of social commerce era

when groups of customers will have huge impact on product development and social

networks will become more important than corporate websites. The characteristics of the

upcoming times are listed in the table below.

Comparison of current era and the next era of social commerce

Description Consumers Brands Social

networks

Other media

Era of social

context

(current)

Web sites deliver personalized content to visitors

Opt in to share their identity to in return for a more relevant Web experience

Provide specialized content for visitors; get rid of registration pages

Become the identity system of the Web

TV offers personalized interactive channels for viewers

Era of social

commerce

(future)

Online groups supplant brands

Work with peers to define the next generation of products, also purchase in groups

Lean on groups to define products

Offer features to help with product design and vendor management

A new PR agency emerges that represent online groups – not brands.

Table 3 Comparison of current era and next era of social commerce, source: Forrester Research Inc.24

The comparison and review sites will become more social as well. Nobody will wait to write a

review of a hotel or restaurant when they come back home. They will to assess the quality of

service on the spot, in their hotel room using laptops or at the table just after they have

eaten and then share it with their friends. Expect better service when you arrive to an eatery

and put your smartphone on the table (honest!).

In such an environment, companies will have to move to places where their customers are –

to the social part of the Internet and spent significant resources on maintaining their

relationships with clients.

24

Forrester Research Inc, Social Media: The Five-Year Forecast, http://www.destinationcrm.com/Articles/CRM-News/Daily-News/Social-Media-The-Five-Year-Forecast-53635.aspx

10

Short disclaimer:

Because social media is such a rapidly changing environment it was very difficult to find

up-to-date data. Generally any kind of prediction before 2009 was not taken into

account. A lot of new information will probably be unveiled during the Social Media Week

that commences the fallowing week (February 7-11, 2011).

Author also spent some time using some services that he has not been acquainted with.

However, because of abundance of websites, he does not feel capable of writing about all

of them.

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Bibliography

1. Sitaram Asur, Bernardo A. Huberman, Predicting the Future With Social Media,

http://www.hpl.hp.com/research/scl/papers/socialmedia/socialmedia.pdf

2. http://www.mediafuturist.com/2009/09/the-next-5-years-in-social-media-picnic-

09.html

3. Jennifer Van Grove, Ford SYNC will Soon Stream Pandora Radio,

http://mashable.com/2010/01/07/ford-sync-application-ecosystem/

4. Fred Cavazza, Social Media Landscape,

http://www.fredcavazza.net/2008/06/09/social-media-landscape/

5. Pew Internet, Social Media and Young Adults,

http://www.pewinternet.org/Reports/2010/Social-Media-and-Young-Adults.aspx

6. Adam Ostrow, YouTube Is the Top Social Media Innovation of the Decade,

mashable.com/2009/12/22/youtube-2010/

7. Robert Briel, YouTube: profitable in 2010,

http://www.broadbandtvnews.com/2010/03/05/youtube-profitable-in-2010/

8. Miguel Helft, YouTube Takes a Small Step Into the Film Rental Market,

9. http://www.nytimes.com/2010/01/21/technology/internet/21youtube.html?_r=1

10. Dave Morin, Announcing Facebook Connect,

http://developers.facebook.com/blog/post/108

11. Forrester Research Inc, Social Media: The Five-Year Forecast,

http://www.destinationcrm.com/Articles/CRM-News/Daily-News/Social-Media-The-

Five-Year-Forecast-53635.aspx

12. Xue Ying, Microblogging: Its Future In China & In Flattening The World,

http://cnreviews.com/business/research-insights/microblogging-china-

future_20091202.html

12

13. Bob Hall, Social Networking - The Future is Now,

http://www.quickprinting.com/publication/article.jsp?pubId=1&id=14769&pageNum

=2

14. Antony Bruno , A Glimpse At Future Livestreaming Services @MIDEM 2011,

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/a-glimpse-at-future-

livestreaming-services-1005009042.story

15. Nick Gonzalez, Justin.TV Teams Up With On2 And Opens Network,

http://techcrunch.com/2007/10/02/justintv-teams-up-with-on2-and-opens-network-

finally/

16. Jason Kincaid, It’s Real: YouTube Debuts Live Streaming Platform With Two-Day Test,

http://techcrunch.com/2010/09/12/youtube-live-streaming/

17. Louis Gray, Charlene Li Predicts Social Networking Will Be Ubiquitous, 'Like Air,

http://socialcomputingjournal.com/viewcolumn.cfm?colid=759

18. 2010 Social Media Matters Study

http://www.blogher.com/files/Social_Media_Matters_2010.pdf

19. Amir Efrati, Profit Elusive, but Twitter Gets $3.7 Billion Value,

http://online.wsj.com/article/SB10001424052748704828104576021954210929460.h

tml

20. Susanne Craig, Andrew Ross, Goldman Offering Clients a Chance to Invest in

Facebook,

21. http://dealbook.nytimes.com/2011/01/02/goldman-invests-in-facebook-at-50-

billion-valuation/?src=twt&twt=nytimesdealbook

22. Telis Demos, LinkedIn looks for boost with IPO,

http://www.ft.com/cms/s/0/59e47ba4-2a54-11e0-b906-00144feab49a.html

23. Nicholas Carlson, AOL Insider Says TechCrunch Price Only $25 Million – CNBC Says

$40 Million, http://www.businessinsider.com/aol-techcrunch-price-25-million-2010-9

13

24. Bob Hall, Social Networking - The Future is Now, http://www.quickprinting.com

/publication/article.jsp?pubId=1&id=14769&pageNum=3

25. Eliot Buskirk, Twitter Earns First Profit Selling Search to Google, Microsoft,

http://www.wired.com/epicenter/2009/12/twitter-earns-first-profit-selling-search-

to-google-microsoft/