Social Media and the Profit Incentive
It has been a little over two months since Elon Musk took over Twitter and subsequently drove the platform into the ground. The staff has been reduced by more than 70%, the owner is only just discovering the terms and limits of what targeted ads are, and the company has recently been sued for failing to make its rent payment. This disastrous run of business leadership would be comical if not for the fact that many people around the world depend on Twitter for their news (it is, still, peak comedy to see a narcissistic billionaire publicly reap the consequences of their incompetence). For better or worse, keeping up with current events was accessible on Twitter.
Social media: a public good or a public good?
Social media has become a central institution in the information age, where ideas and data have become currency. And like many other institutions — such as healthcare, education, religion — there are alternatives to the for-profit model. For example, Mastodon is a free, open-source software for hosting social media services, and it seems to be picking up ex-Twitter users. Membership has risen to 2.5 million monthly active users, and the company is adamant on maintaining its nonprofit status for its core services. Still, there’s a big engagement issue. Compared to the zenith of Twitter (368 million active monthly users), Mastodon’s user count has yet to touch even one percent of Twitter’s.
Of course, social media is changing as Generation Z opts for more localized models. BeReal — a personal favorite — is one of the latest apps to enter the cultural zeitgeist because of its uniquely local stratosphere. Users receive a continental notification where they must take a picture of what they are currently doing, sharing what could be quirkily fun or perfectly mundane. BeReal is designed for real, intimate moments of connection as opposed to the posed, glamorous selections found on Facebook and Instagram. There’s no profile page to curate nor likes to accumulate. As a result, users are opting for smaller, more intentional networks and shifting away from making impressions on those in the outermost peripheries of our social lives. Perhaps the decline of Twitter is a natural progression for how our generation grows tired of the public forum.
Still, it is too soon to say that social media is changing completely to a localized experience, especially with the explosive rise and dominance of TikTok — a platform where the virality of pedestrian users conquers that of populists and influencers. It is even further from the truth to say social media is dead, as many columnists have written. However, I do believe social media is in for a reckoning — not about use case but economics.
Users are not yet motivated to join a public platform like Mastodon, despite the downfall of Twitter being an exemplary case against for-profit social media. Naturally, this raises a series of questions regarding the role social media plays in our society. Should social media continue to function as this predominately for-profit enterprise — or will there come a time for a publicly-owned alternative to rival the corporate goliaths?
The Case For The Private Model
If there is one thing going for the private model, it is something that Elon Musk had to learn the hard way: moderation. Private companies are able to moderate content that they believe violate their terms of service without having to adhere to the constraints of the First Amendment. And despite many Americans misunderstanding the First Amendment, companies have been privy to the fact that hate speech is usually legal and have made a conscious decision as private actors to censor it.
In a hypothetical world where we used a publicly owned platform (i.e., government owned Twitter), hate speech would most likely run rampant. The First Amendment restricts the government — not private actors — from infringing on our right to freedom of speech, which is more of a wild west setting than you would think since content-based restrictions are usually unconstitutional. According to the U.S. Supreme Court, video posts depicting crushing animals is protected, despite animal cruelty laws.
Private moderation does have its downsides, especially when combined with egotistical billionaires, as we have seen with far-right platforms like Trump’s Truth Social and Kanye West’s Parler. However, the market seems to course correct in favor of moderation. Hate speech is incredibly unattractive to advertisers and unwelcoming to most users, creating an incentive for host sites to moderate harmful language. Advertising, ironically, holds both the carrot and the stick for private companies.
The same statement would be true for the users. Social media companies make a majority of their revenue from advertising, which allows users to create accounts on pretty much any social media platform free of charge. Something we take for granted is that this business model allows social media to be accessible to people of any age or socioeconomic status. We could instead be paying to play, like any premium MMORPG, via a subscription or one-time fee. All we pay is a waiver to track and sell our data to hungry advertisers or in some cases, manipulative consulting firms who over throw governments.
Perhaps the alternative to a breach of our data rights is a non-profit model. Using Mastodon as a case study, a non-profit platform removes advertising completely, leading to a more secure and stress-free experience. And unlike the public model, the non-profit can be a private actor and can thus moderate content.
The downside is, as many non-profits face each year, where the money will come from to sustain their staff and assets. For Mastodon, grants and donations have sustained them thus far, though their capacity is nowhere near as great as private ventures. Funding could come from self-generated revenue streams, such as membership fees, though a paywall can be unequitable which does not vibe with a nonprofit’s branding. Not to mention, subscription fees are as much of a for-profit solution as any other, such as BeReal’s future plans to introduce paid features.
Actually, let’s take a step back. A subscription model is not as much of a for-profit solution as any other because big tech has long avoided a paid tier. That idea is one of Elon Musk’s “groundbreaking” ideas — the first of many failures in Musk’s Twitter. Is a subscription model bound to fail when competing with a free, advertisement-based alternative? Well, this is not the case to use to answer that question. For starters, Elon Musk is $11 billion in debt so there may have been some hasty decision-making and oversight (particularly in the faulty verification system). Second, and more importantly, users’ data is still being used and sold to advertisers, which means that even paid tier members are being exploited. A paid tier could work if it provides real value to users, as opposed to cosmetic upgrades.
The tricky part is that every other competitor is currently free and ad-based. Competition, after all, is the engine of capitalism and the agility needed to adapt to consumer needs before one’s rivals is one of the big arguments for a private model. TikTok has been a creative and effective answer to younger demographics who yearn to create content. Now, anyone can be TikTok famous. Instagram allows users to opt out of visible like counts after a number of reports linked social media to body image and mental health concerns. And Twitter, despite being miserably executed, introduced a new fact-checking system in response to the deluge of misinformation that has plagued us the last few years. The point is that for-profit companies should have the potential to move faster than any publicly owned model because private companies are under less scrutiny, political pressure, and financial burden. Is this true in actuality?
The Case Against The Private Model
What makes the private model particularly troublesome for users is the fact that the platform is not the product — our attention is the product being sold. Your singular email address can be valued around $89 USD, and I reckon a whole dataset of your interests, searches, and viewing history are worth a hell of a lot more than that. We don’t see a cent of that, but advertisers are buying them up like gangbusters. That’s why we are “users” rather than “customers” or “patrons”.
And because the platform is not the product, along with a market that is not truly competitive due to an oligopoly headed by Meta, there is no incentive for these sites to truly innovate. Instagram is notorious for copying features, such as Stories from Snapchat or Reels from TikTok. TikTok has now copied BeReal’s dual-camera snapshot called TikTok Now. These are not features that the users have been asking for, rather they are profitable business moves to maximize users’ screen time for the real customers — advertisers.
One of the biggest tools that addicts users to these platforms is the almighty algorithm. In a North Carolina State University study, Dr. Heather Dretsch found that Gen Z and Millennials spend 1.5 hours on TikTok every day, compared to only 1 hour on Instagram. Another study shows that globally users spend nearly double the amount of time on TikTok as Instagram. These algorithms curate content most engaging to the user profile — something perhaps meant to be as innocent as showing more dog videos to dog owners that almost always turns insidious.
Unlike the mainstream culture cultivated by television or the radio, the algorithmic internet separates people into social enclaves and echo chambers that curate different perceptions of reality. The face of the internet — the search engine — embeds racism in search results, such as immediately oversexualizing Black women. Algorithms of Oppression by Sofiya Noble is a wonderful read on the matter. Video recommendations, such as those found on YouTube and TikTok, have been associated with leading users down rabbit holes and ultimately radicalizing them. One notable pipeline being video game enthusiasts turned far-right, manosphere followers — particularly worrying for young boys.
The clear profit incentive of algorithmic content has destroyed our sense of shared reality, culminating in cults (e.g., QAnon, MAGA insurrectionists) that threaten the very core of democracy. Twitter’s shift from a chronological timeline to one that is algorithmic has favored sensational headlines, resulting in a disproportionate increase in junk news clicks. Misinformation and echo chambers have led to misrepresenting data, facts, and history causing fundamentally different understandings of topical issues like critical race theory and pronouns. There has never been such blatant culpability for the rise in white supremacy than the algorithm.
Of course, justice is not to rid ourselves of social media. For many, if not all, social media has become an irrefutable institution in our lives. They are knowledge and information centers as much as libraries — perhaps more so for younger generations. Social media serves as a form of social control with clear social contracts in our local and extended communities. Advocacy groups have used Instagram and TikTok to lead to a wave of class consciousness and environmentalism. Social media apps are engines for revenue, and stock prices are linked to them (see: Twitter blue-check parodies costing multiple companies, including Twitter, millions of dollars). Governments and corporations use these channels to quickly alert the public of announcements. Such an institution as critical as social media should not hinge on short-sighted profitability.
Instead, this new institution should be met with exacting democracy greater than the systems we currently have. The FTC and SEC have not proven effective in preventing meltdowns in our communication. I mean, no one as dense as Elon Musk should have been able to take over a vital communication platform over a silly, reckless wager. And the fact that the only viable digital channels found in this social institution are for-profit entities — who, let’s not forget, are exploiting its users for money —and are all at potential risk of the Twitter 2.0 treatment? Absolutely terrifying.
What we need is some kind of alternative. A publicly owned model may be slow and overregulated, but it would allow for its users to have voting rights to prevent manic episodes. A nonprofit model may be chaotic and poorly managed, but there would be no mouse trap for algorithmic cheese. There has to be something better than what we have now. Perhaps a cooperatively owned social media, one where people pay a membership fee in exchange for protected data and voting rights, could curtail the shortcomings of our former options. There could be a public-private partnership that balances the agility of a for-profit company and the institutionalization of a public agency. I don’t have the exact answer, and I don’t think I’m equipped to find the answer to such an important pillar of our society.
All I know is billionaires cannot reign supreme.
