The social networks have steadily increased their audience and changed how people socially interact and share opinions and information with friends and content creators. The sharing of content that is created by users was also supported by mobile adoption.

The reason why social networks surpassed classic media outlets in revenue and became a profitable business model was because of targeted online advertising. This type of advertising allowed companies a less costly, more widespread and more customizable advertising solution than the traditional TV and offline medias. The platforms have thus started to gain significant followers through social interactions between users on Facebook or through quality content that was made by creators on YouTube.

The old advertising model is confronted with issues

The targeted advertising model is lately encountering some issues such as inequal revenue sharing, limits on automated moderation and collection of personal data that users are concerned with. This resulted in a decrease of creator revenues, increasing distrust from the public and brand association risks for companies that want to advertise.

The platforms need to cover their rising infrastructure costs and thus increase revenue. This is usually done by increasing the ad catalogue, by using algorithmic content distribution and by selling personal data to companies for advertising purposes. The other stakeholders have opposite interests:

  • Creators want more revenue sharing and more interaction with fans.

  • The users prioritize less intrusion in their private life and this is translated as no personal data collection and a transparent content distribution algorithm.

  • The advertisers require a safer environment for their promotional content.

Figure 10: Conflicting interests of others

The opposing interests mean that the stakeholders do not feel that their voices are heard and their interest are truly represented. This leads to a number of limitations of social media platforms.

Limitation 1: The content creator revenues and fan interaction are reduced.

It is suspected that there is a decrease in the portion of revenue shared by platforms with the creators. This can’t be confirmed because of a lack of transparency. The platforms have also increased the use of automated moderation algorithms and this resulted in a lot of content demonetization and censorship.

A new set of rules from the European Union have introduced new punitive regulation for copyright infringement and this resulted in less revenues for creators. The creators also no longer have a direct relation with fans as platforms increase content distribution control for advertisers. This means that creators are trying alternatives for social media platforms.

Limitation 2: The users lose trust quickly in social media platforms

The social media users have become aware of the scandals of personal data leaks and have realized that the collection and monetization of personal data is hidden and uncontrolled. The regulation is increased in this industry sector, but users continue to adjust privacy settings and use ad blockers. The content distribution algorithms are hidden, have a commercial purpose and do a poor job of promoting what is relevant. They are unsuitable for kids, create information silos and limit freedom of speech.

Limitation 3: The brand association risks for advertisers

The social media platforms need content moderation to create a safe framework for advertisers. If inappropriate content is not banned from the platform, advertisers will be concerned for their brand image and risk unwanted association. The automated moderation has proved on a number of occasions to be inefficient for this purpose.

The response of major social platforms

The social media platforms chose to deal with such issues by favoring advertisers and revenues and the expense of users and content creators. They relied more on automated content moderation and increased the monetization threshold for creators. This resulted in reduced creator revenues, unwanted content demonetization and less fan interaction while promoting what was recommended by the algorithms and advertisers. The social medias also launched premium content features to increase revenues from viewers.

The platforms have increased their revenue with additional ad pressure and with reducing the proportion of income that is allocated to creators. The advertisers have convened to protect their brands with automated moderation and human moderation also. They planned to increase content quality with higher monetization thresholds.

Such actions to protect the revenue model have only supported the interests of platforms and advertisers. The users and content creators found that their interests were not a priority. To ignore the interests of users of social platforms is a considerable risk for market players. This creates an opportunity to create a platform where all the participants are given the same consideration, all the contributions are fairly rewarded and the rules are transparent and introduced, adjusted and accepted by the whole community.

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