One of the most exciting and stimulating aspects of capitalism is also one of its most alienating – innovation and the creation of new ways to use land, labor, capital and machines. Some win, but others lose. The system is a churning whirlpool of dynamic interactions.
Social media was created for us by capitalism through innovation, invention of technologies and satisfaction of consumer needs and wants. Are we better or worse off for capitalism having invented and sold social media? Both, perhaps. As some Vietnamese Buddhists say, “No gain without a loss.”
The Economist recently opined that TikTok has “changed social media for good,” in the sense of “forever.” TikTok invented an information collection system which used algorithms to decide which short videos should be shown to its consumers. Consumers love the dependency on AI for entertaining them. But the business model generates less revenue for the social media platform.
In five years, in the American social media market, TikTok has attracted some 100 million plus users.
To compete, Facebook and Instagram have turned their main feeds into algorithmically sorted “discovery engines.” Similar, look-alike products have been put in the social media marketplace by Pinterest, Snapchat, YouTube, Netflix and now, Spotify. As a result, short-term video has taken over social media.
Of the 64 minutes that the average American spends viewing such services a day, 40 minutes are spent on short videos. The new format is less profitable than the old news feed.
TikTok monetizes its customers (suppliers?) at $0.31 for every hour of use, much lower than Facebook and Instagram.
The ad load attached to a short video is less than other content.
Secondly, video ads are more expensive to produce, limiting the number of advertisers willing to pay for their placement on the short video platforms.
Thirdly, video games attract customers. Last year, globally, some 3.2 billion people played video games. Usage has grown with the spread of smartphones, a technological innovation of capitalism. The game market will be worth U.S. $185 billion this year.
Fourth, Elon Musk talks as if he has a new business model for Twitter. He wants to promote “citizen journalism” (and profit therefrom) to take market share from the legacy media in print and television. He plans to give users who tweet and have their posts checked for reliability and accuracy the role of journalists – finding news and bringing it before the public. This is power to the people on a scale never imagined by the founders of Students for a Democratic Society in 1962 with their Port Huron Statement.