Economic Implications on Social Media Essay

The developments in the information technology sector have led to facilitation in information sharing across the globe in what has been referred to as social media. The internet has brought many changes in the way individuals across the world interact. Through the use of social media, individuals are able to exchange photographs, videos, post their thoughts on blogs and take part in discussions that takes lace online. Social media allows the people, organizations, companies and governments to be able to reach large numbers of people with a lot of ease. This paper shall give an overview of how the social media has impacted on the economic domain of development in the society by analyzing both the positive and the negative impacts. Social Media: Social media refers to the various internet based and mobile services which allows the user to take part in online exchanges, contributing user-created content and being able to join the online community. It also refers to the tools and technologies that enable an online interaction, networking, sharing and collaboration. There are various services internet services that are usually associated with social media which includes blogs, wikis, social bookmarking, social network sites, status updates services, virtual word content and media sharing site (Dewing, 2010). Blogs is a short form of ‘web log’ which can be described as an online journal in which pages are put on view in an overturned chronological order. The blogs can be hosted for free on various websites including WordPress and Blogger among others. Wikis on the other hand refers to collective websites in which anyone participating can modify the pages or create their new pages using a Web browser. A good example of a wiki is the Wikipedia which is a free online encyclopedia that utilizes the wiki technology. Social bookmarking sites are those sites which allow the users to share and organize links to websites for instance the Delicious, Digg, and Reddit. Social network sites are the web-based services which enables the individuals to build a public or semi-public profile in a delimited system. The individuals are also able to articulate a list of other users whom they share connection thus being able to navigate through and view their list of connections and those of others in the system. Such sites include Facebook, MySpace, and Windows Live Spaces amongst others (Dewing, 2010). Status-update services are also referred to as micro-blogging services are more like social network sites but they allow individuals to share short updates and also be able to view updates from others. A good example is the twitter services. Virtual world content on the other hand offers a game-like virtual environment for the users to interact. A good example of this would be the imaginary world that is created in Second Life whereby users can create avatars to interact with each other. Avatars are the virtual representations of the users. Media–sharing sites are those which enable the users to post videos or photographs for instance the You Tube and Flickr. It must be noted that some of these categories do overlap for instance twitter can be regarded as both a social network site as well as a stats update service (Dewing, 2010). Social media is capable of affecting the manner in which individuals interact online. Social media is known to open up new ways for cooperation and dialogue in today’s world. Most of the content posted in social media may remain there permanently at least by default. The content may also be accessible, replicable, and searchable. Social media can therefore be used anywhere, and at any moment provided that there is internet connectivity in the area. Such factors are responsible for shaping of the dynamics of the social media. The fact that the players in the social media are usually invisible raises various questions regarding the framework, correctness and unambiguousness regarding the communication. The identity and motives of those who post contents in the social media are not always clear (Dewing, 2010). Evolution of Social Media: The internet became popular in the last two decades and web sites which allowed individuals to create and upload content started appearing with the first network site said to have appeared in 1997 for the first time. The first social network site to be launched was called ‘SixDegrees. com’ and it was followed soon by many others at the turn of the millennium. In 2002, there was an upsurge in the number of social network sites with some surging to popularity only to fade in a little while such as the Friendstar. However, others were able to develop niche communities for instance MySpace appealed to adolescent music enthusiasts (Dewing, 2010). Towards the end of the first decade of the second millennium, social media was widely accepted, for instance; by the year 2009, Facebook made the announcement that its users were well over 350 million worldwide (Dewing, 2010). There are a number of factors that have led to a surge in the social media participation which include technological factors, social factors and economic factors. Technological factors include things such as readily available broadband, improvement in software tools, and the development of more powerful computer and mobile services. Social factors on the other hand include the rapid uptake of social media by the young generation while the economic factors include the growth in commercial interests in the social media sites and affordability of computers and related software (Dewing, 2010). Impacts of Social Media: Since the widespread usage of social media is a recent phenomenon, social and economic implications can only be barely understood. Some quarters hold the belief that social media is causing isolation amongst the people whereas others believe that social media has broaden democratic participation. According to a research conducted by statistics Canada; We should expect neither a dysfunctional society of loners nor a blissful society of happy net-workers. Rather, we are facing a society that is differently cohesive from the one we have known. There do not appear to be any significant differences in the number of social ties or in the amount of social interaction between Internet users and non-users. Instead, the Internet is providing ways of fostering participation with community members and enhancing relationships, including through social media (Dewing, 2010, para 10). Social media has also had economic impacts in regard to the manner in which what is contained in the social media is created and consumed. This can be summed up to the growth in the information and communication sector of the economy. In most economies, growth in this sector of the economy has been tremendous even surpassing the overall economic growth. Many business firms and organizations have also incorporated social media in their marketing strategies (Dewing, 2010). Socio-economic Impacts: The socioeconomic theory appears to be spearheading the deflationary cycle more than the financial or the political economics. Previously, the Keynesian and libertarian theories were believed to be the key players in the deflationary cycle. According to the socio-economic theories, it is claimed that in order for us to get out of the deflationary cycle, there is need to view it as both a sociological and fiscal problem. The solution is therefore to be found in the ground-breaking technology which promises huge profits to be used in investment so as to commence the next boom cycle, and snap the society out of the predicament created by the economic downturn. Social media could play a role in mitigating the damages that arise from the deflationary cycle. It could also be instrumental in the construction of the next opportunities for technological innovations (Fischer, 2009). Understanding the objective economic potential is very crucial and dependant on the revolution of the social media. Social media is known to utilize technology in enhancing the people’s ability to interact with others. Social media is to be found in interaction, connection, trust and relations that are driven by technology. In regard to business, this implies establishment of trust and channels of communication which supports and enables collaboration and building of engaged teams through the removal of barriers and frustrations that were created by conventional structures. Social media particularly in regard to collaboration has the potential to unlock the hidden knowledge in organizations when required. It also lowers the cost of software via open source cooperation, easing the finding of appropriate information, and making organizations to be more responsive. These are however cultural changes that occurs gradually. Nevertheless, the promise for change is there even though it might take much longer time. However, the technological investment that is required to bring about these changes is quite cheaply available (Fischer, 2009). With social media, change is bound to happen. Social media has the prospects of creating more effective organizations via the collaboration, â€Å"providing a greater variety of information services at low cost through mashups and open source, and a lower cost to product and service messaging, when the product and service has great appeal†(Fischer, 2009, para 7). Similarly, social media has detrimental impacts on the established industries. The conventional advertising media has become decreasingly effective due to the increasing numbers of the individuals who are networked and therefore attentive to one another. It is imperative to observe that; Friend of a friend referrals, rating sites or consumer oriented websites will become the norm and rely on their objectivity to maintain trust with their followers, therefore are not as subject to trying to manipulate their audience based on the promise of big advertising revenue (Fischer, 2009, para 8). There is no doubt that manipulation is part of the social media practice though the ability for any individual to broadcast and gain audience to the large network in the social media indicates that it is not an easy task and it is destined to be the exception and not the norm in the long run (Fischer, 2009). The distribution of retail products may also come to the forefront due to the social media influence. Due to the fact that e-commerce has been enhanced in the recent past owing to a revolution in the social media, some social observations have been made in regard to marketing trends for instance, there has been a relation drawn between the trends on how particular products are moved in the market. Such observations may be observed as ‘individuals who bought product X also bought product Y’. Large business organizations may also offer lower prices and utilize the social media to achieve the personal touch, a domain previously associated with small business organizations. This has been geared towards the ‘commodization’ of products that are produced on a large scale and the futuristic markets with the chances of realizing massive profits. The markets of the future are said to be niche markets that would require subject matter expertise and customization (Fischer, 2009). The gains of the social media in economic venture may be offset by the unsettling role associated with it in the conventional industries. In the past, any technological changes would result in obvious and simple routes to massive increases in the production and demand. However, with the social media, increase in productivity and demand over a short time is not palpable due to the fact that it requires cultural changes together with the technological transformations. Eventually, as the cultural changes are realized over time, massive increases in the production may be realized; however, in the short term social media can not be used to provide an obvious path for investment capable of leading to gains in effectiveness and productivity (Fischer, 2009). There is this argument that tightly knit society has the capability to survive economic stress better compared to a loosely knit society. Social media ensures that the world is woven in complex interactions and also offers individuals with something to do when they are not involved in an economic activity. This is motivated by what can be referred to as ‘reputation economics’ which is designed to motivate individuals to engage in activities such as creating open source software, report on events, and many more information services that would have required individuals to pay for before the advent of the internet. This allows for rich content and growth of valuable products to be carried out devoid of investment and yet with returns for instance a â€Å"business entity that hosts their websites on Linux servers or uses open office to create and manage documents† (Fischer, 2009, para 9). To add on the long term effectiveness of the social media which include the creation of complex systems like an operating system at relatively low cost; it could also enable the development of new innovations presenting a clear path that shall increase production and demand. The deflationary cycle that is predicted by the socio-economic theories could only be shortened if only we are able to find out the kind of innovation required and be able to bring it more quickly (Fischer, 2009). Social media is said to provide revenue to both the users and platforms. It has to be noted that social media better known as social computing is a driver for competitiveness. The effects of social computing may be seen on the industry itself for instance, the development in the social media or the information and communication technology sector. It can also be observed in other industries that uses the social computing. There is evidence that â€Å"more targeted marketing and user research which are reliant on user profiles and content interest are opening new channels to markets† (Pascu, 2008, para 11). There are emergent employment possibilities vial social networks and new opportunities to utilize user innovations in developing the products or as an intermediate between organizations and consumers (Pascu, 2008). The impact of social media can not be wished away as insignificant. This is because, faced with the modern reality where social media provides a platform for the consumers, competitors and the market place to discuss products, services and employees. All this is carried out online â€Å"whether it’s a protest group on Facebook (â€Å"United Airlines Sucks! â€Å"), a persistent hashtag on Twitter (#attfail) or just a meme that travels from blogger to Blogger† (Taylor, 2009, para 5). At this juncture, it does not matter as to whether it is of importance to probe into the social networks. What is of importance is whether one is paying attention to the social media where the message has gone to. This means that the customer to the company products is the one to define the brand in the market. This is quite challenging as it means that those organizations with acceptable products are bound to be reap benefits even with minimum branding and marketing strategies whereas those companies that are considered bad by the customers are destined to suffer from a bad reputation even when they spent more money to advertise themselves and try to position themselves as market leaders (Taylor, 2009). It is therefore important for organizations to take time and monitor what is going on in the social media. There are various services at the disposal of whoever would like to monitor the social media which include the individual services such as ‘Search. twitter. com’ and more complicated ones such as ‘Filtrbox’ and ‘Radian 6’. For successful business undertaking, there is need for organizations to embrace the social media which provides an avenue to engage with the customers. Interaction on the social media with the customers is crucial and thus joining these sites for creating new bully pulpits for the organization’s marketing and sales messages without proper interaction with the customers is not commendable (Taylor, 2009). The organizations can not be isolated from the social media as they create a powerful impression with the capability of having a lasting impact that may prove to be hard to change. Accompany with a bad reputation might score poorly even with spirited advertisement due to evaluations that are obtained from the social media. It is therefore important to address the problems that are affecting the organizations one by one rather than spending huge sums of money in advertising the products (Chong, 2010). Conclusion: Social media has been a new discovery in the information and communication sector and that its impacts on the economic development are worthy noting. The economic impacts of social media are two fold and may bring positive results or negative results to a business organization. With social media, the consumers of the company products are able to talk about the products, services and competitors and definitely such discussions are to impact on the business entity either for better or for worse. Social media can therefore have far reaching repercussions on the business organizations in terms of profitability. Reference: Chong, S. , (2010). 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Retrieved on 26th July 2010 from; http://docs. google. com/viewer? a=v&q=cache:dHneLXVRkYgJ:www. foresight-network. eu/index. php%3Foption%3Dcom_docman%26task%3Ddoc_view%26gid%3D352+Economic+Implications+on+Social+Media&hl=en&gl=ke&pid=bl&srcid=ADGEEShixNJSG5ddAxmDsp3_H0NmsZ-LetSdSeKnGykkb0y_4ruRrW-EstMaeGHfs16v1u66MJlBbpW-WIgVRxtCabedvJWeojTeW4mfj7Z70xD-y31hAWGz7VhQwakzAylysKUUV0NN&sig=AHIEtbRbStc-eBG_GjfGNgsEL-OmZ0oP8g Taylor, D. , (2009). What’s the impact of social media on business growth? Retrieved on 26th July 2010 from; http://www. intuitive. com/blog/impact_of_social_media_twitter_facebook_business_growth. html