posted: 2014-12-24 by Steven Grinberg

The utilization of the social media industry has been driven by three primary components: a continuous need for social connectivity by individuals for personal and professional purposes; the business services and solutions that cater to customer needs and streamline processes; and the technological advancements upon which these platforms are developed, delivered, and accessed. These three categories (people, businesses, and technology) are what currently drives growth and will shape the industry's future.

What is the Future?

What Does The User Want and Need

The social media end-users must be kept in mind at all times when thinking about social media. Their needs must be met with minimal discomfort to them. We can consider five high-level needs the social media user has.

Social Interactivity

This gives the user a sense of belonging within a community. The community can be as small as a few individuals or as broad as hundreds of individuals and organizations. The user wants to connect with others; to share thoughts and media; to build and maintain relationships. This is more than social media users need -this is a requirement for all human beings. We are social creatures, unable to survive without the company and support of others. The social media industry taps into a deep human need: togetherness.


The social media user needs to believe that s/he is safe. The ability to instantly have an audience of potentially several thousand people is a fairly new option along the timeline of human existence. Many experience trouble dealing with this level of visibility and require various levels of safety and security in order to proceed. The user needs to know that his or her information is available only to the intended audience, that the information will not be altered or removed, and that the information won't be used against him or her.


Since the social media industry provides virtual connections, the user needs additional reasons to use the services. Otherwise, we would never move past email. Entertainment means different things to different people. Some are entertained by jokes or funny animations while others prefer conversations or reading material. Entertainment is more than content -it is also delivery, usability, and communication.

Rewards or Benefits

This is related to entertainment, as being entertained is rewarding and beneficial, but so is being informed or empowered. The user is understandably selfish and is using social media for his or her benefits. The rewards and benefits that social media offer, which are unique to each user, are the user's return on their investment of time.


The user needs to be able to create and consume data from multiple locations and with minimal complications. This requires a thorough understanding of all aspects of the technology related to social media. The hardware used to engage with the interface that connects the user to the other individuals and organizations participating within this space. These are all complex solutions that need to be presented to the user in an easy and transparent format in order to provide the experience that will keep the user coming back.

Bottlenecks That Interferre

It would be erroneous to only discuss the factors that will promote growth without considering those that might slow it down or even prevent it altogether. Sure, we can talk about major life changing events that would result in tremendous paradigm shifts, such as wars that take out our ability to communicate electronically for extended periods or technological breakthroughs that obviate our current solutions, but we'll stick to more likely issues.

As the number of SNS grows, with each one becoming yet another data silo, the level of complexity grows. The end-users are forced to have a presence in multiple arenas and the marketers are forced to follow. In a time where consumers expect instant gratification and paths of least resistance, this results in largely unnecessary amounts of repetition and inefficiency. Furthermore, there is a risk that so many social media companies enter the market that the industry itself becomes spread too thin and is no longer profitable.

Current SNS business models require that advertisements are displayed to many end-users. The truth is that end-users usually aren't on the SNS for the advertisements. The advertisements, in addition to spam and other obtrusive data, create a signal to noise ratio for end-users. If the ratio is low due to a high amount of unwanted data, the end-users will not continue to utilize the services as their needs aren't being met. The dilemma is that SNS depend on funding from marketers that want their ads displayed as often as possible to as many end-users as possible.

Privacy concerns, censorship, and government policy has the potential for colossal negative impacts across the entire industry. We've discussed these three issues in the Politics section, but it needs to be restated as the severity of these issues can be detrimental to the industry. So far, we've only been informed of our data being tracked by the government for the purposes of national security. This same data is available for sale by the SNS owners to the highest bidder. There are already business solutions that utilize this data for customer relations management. What might happen if, for example, health insurance companies begin to monitor user accounts for behavior, such as smoking or drinking, which might grant them the option to charge more? We've also seen how social media can be used during times of social unrest (think: Arab Spring) and how governments attempt to mitigate unrest via censorship (think: China). If using SNS hurts or hinders the end-users, their reasons and motivation for using SNS taper.

SNS saturation; signal to noise ratio diminishment due to advertisements and spam and the issues related to privacy, censorship, and government policy will continue to limit exposure to and usage of social media for all stakeholders. These factors, applied, negatively impact the growth of social media utilization.

The Business Models of Tomorrow

Services offered to all users will continue to evolve as well. They will cater to collaborative intelligence and context-awareness; there will be more aggregation of existing and, sometimes, unrelated services. Advertising and free will remain important, revenue sharing will grow, and just-in-time services based on dynamic resource management will provide further granularization.

This is where you can start thinking about some of the long term challenges that were discussed in the Bottlenecks section and, in combination with the User Needs that were defined, develop solutions. The user will need better control of how they create and consume data. This can be provided through multi-purpose data creation and customization tools, as well as through filter options that allows users to specify what they see. These types of tools and options provide control and contextualization. Moreover, if done properly, it offers not only convenience, but also security, ownership, and presence of data to the user. Solutions that provide the user this level of control will meet user needs for immediate challenges and challenges to come as new technologies arise and the environment continues to evolve.

The solutions requirements outlined here will likely be introduced individually and then bundled into existing packaged solutions. A June 24, 2014 interview by Executive HBR Editor Justin Fox with Marc Andreessen and Jim Barksdale discusses Barksdale's adage that "there are only two ways to make money: bundling and unbundling."

Concluding External Influences and Trends

In understanding upcoming social media industry business models, we need to consider the services offered. With today's SNS services, the advertising model allows for the growth of a massive user-base by offering that user-base to paying customers. A subset of that user-base might be willing to pay for additional services offered, which is the motivation for the "freemium" model. These models work for services that are highly in demand and will continue to do so as novel solutions are introduced.

Novel solutions might not be original though; they may be combinations or bundles of existing solutions. These bundles can consist of services that are constantly in use, such as communication or security solutions, or services on an as-needed basis, such as transportation or entertainment solutions. This creates many potential permutations for achieving revenue streams, including innovative options for revenue sharing.