The history of social media is a fascinating journey that spans several decades and has significantly impacted how people communicate and interact not only online but in the broader real world community.

Early Internet Bulletin Board Systems (BBS) – The concept of online communities dates back to the late 1970s and early 1980s when BBSs emerged. These were text-based forums that allowed users to dial in using old fashion dial-up modems and share messages, files and discussions.

CompuServe and Prodigy – In the late 1980s and early 1990s, services like CompuServe and Prodigy provided limited social features, such as email and discussion forums. These were among the first instances of online communication and networking.

SixDegrees.com – Launched in 1997, SixDegrees.com is often considered one of the first true social networking sites. It allowed users to create profiles and connect with friends, making it possible to see the connections between users. However, it shut down in 2001, too far ahead of the curve?

Friendster – Friendster, founded in 2002, popularized the concept of online social networking. It allowed users to create profiles, connect with friends and share content. It gained significant popularity in Asia but eventually lost ground to other platforms.

MySpace – MySpace, launched in 2003, became the most popular social networking platform in the mid-2000s. It allowed users to customize their profiles, share music and connect with others. It was acquired by News Corporation in 2005 for US$580M and spectacular growth followed. However, its popularity declined from 2008 with the rise of Facebook and was sold in mid 2011 for a reported US$35M.

Facebook – Founded by Mark Zuckerberg and his college roommates in 2004, Facebook revolutionized social networking. It initially targeted college students but quickly expanded to include users of all ages and backgrounds. Facebook introduced features like the News Feed, photo sharing and the Like button, becoming the globally dominant social platform.

on the phone

YouTube – Launched in early 2005, YouTube focused on video-sharing, allowing users to upload and view videos. It played a significant role in the growth of user-generated content and online video culture. In Late 2006 it was acquired by Google for US$1.65 billion, and the rest, as they say, is history.

Twitter (X) – Launched in 2006, Twitter introduced the concept of microblogging, where users could share short updates (tweets) in real time. It became the platform for sharing news, opinions and trends globally. It was controversially acquired in 2022 by Elon Musk for US$44 billion and renamed X, and the controversy is continuing in real time.

Instagram and Snapchat – Instagram (2010) and Snapchat (2011) introduced photo and video sharing with a focus on visual storytelling. They quickly gained popularity, especially among younger users. In early 2012 Instagram was acquired by Facebook for approximately US$1 billion and Snapchat listed on the New York Stock Exchange in March 2017

Other Platforms – Over the years, numerous other social media platforms emerged, catering to specific interests and demographics, including LinkedIn (2002), Pinterest (2010) and TikTok (2016).

Mobile Revolution – The advent of smartphones and mobile apps accelerated the growth of social media, making it more accessible and convenient for users to stay connected. Coupled with this has been the emergence of more focussed or specialised Apps.

One such example is Wable, (www.hellowable.com)  an innovative connection App bringing neurodivergent people together. Inspired by the successful Netflix series, Love on the Spectrum, Wable is a groundbreaking safe space to find dates, friends and connect.

Privacy and Regulation – Concerns about a range of issues including data privacy, fake news, online harassment and a range of well-being issues for younger users have led to increased scrutiny and growing calls for greater regulatory measures for social media platforms in recent years.

The history of social media is a dynamic story of technological advancements, changing user preferences and the evolution of online communication, shaping the way we connect and share information in the digital age.

likes

How The Algorithms Work

Social media algorithms are complex sets of rules and calculations used by social media platforms to determine what content users see in their feeds, search results and recommendations. These algorithms are designed to curate and personalize content based on individual user preferences, engagement history and the platform’s objectives. While the specific algorithms vary between platforms, they typically share some common elements and principles. Here’s a general overview of how social media algorithms work:

Social media platforms collect a vast amount of data from users, including their interactions, preferences and behaviour. This data may include likes, shares, comments, clicks, search queries and more.

Each user’s profile is built using the collected data. This profile includes information about the user’s interests, demographics, location and past engagement with content.

When a user logs into a social media platform or performs a search, the algorithm evaluates a vast pool of available content to determine what to show to that user.

people

The algorithm ranks content based on various factors, including:

  • Relevance: How closely the content matches the user’s interests and previous interactions.
  • Engagement: The number of likes, shares, comments and clicks a post has received.
  • Recency: The freshness of the content, with newer posts often receiving higher priority.
  • Content Type: The algorithm may prioritize certain types of content, such as videos, images, or text posts, based on user preferences.

Source Authority: The credibility and history of the account that posted the content.

social blocks

The algorithm aims to provide a personalized user experience by showing content that is most likely to engage and interest the individual user.

It uses the user’s profile data and past interactions to make content recommendations. For example, if a user frequently interacts with posts related to a specific topic (e.g., cooking), the algorithm will prioritize cooking, showing them more content related to that topic.

Social media platforms continuously update users’ feeds, search results and recommendations as new content becomes available and user preferences change.

The algorithm evaluates and re-evaluates content in real-time, ensuring that users see the most relevant and engaging posts.

Algorithms also aim to introduce users to new content and diverse perspectives by occasionally showing them posts or topics they haven’t interacted with before. This helps prevent echo chambers and filter bubbles.

In addition to organic content, algorithms determine the placement of sponsored posts and advertisements in users’ feeds. These placements are often based on user data and ad targeting criteria.

User interactions, such as likes, shares and comments, provide feedback to the algorithm. It learns from these interactions to refine content recommendations over time.

It’s important to note that social media algorithms are proprietary and closely guarded by the platforms. They are continually refined and updated to achieve specific goals, such as increasing user engagement, time spent on the platform and advertising revenue. While these algorithms strive to enhance the user experience, they have also raised a number of serious concerns about filter bubbles, echo chambers and the potential for misinformation to spread. Social media companies regularly face public scrutiny and debate about how their algorithms impact society and the information ecosystem. This is a hot topic, especially set against the rise of AI.

The financial model for social media platforms can be quite complex and multifaceted, as these platforms employ various revenue-generating strategies to sustain themselves and generate profits. Here are some of the primary financial models used by social media companies:

telephone

Financial Models

Advertising is the most common and significant source of revenue for social media platforms. These companies offer advertisers the opportunity to target specific demographics and user interests, making it an attractive advertising channel.

Revenue is generated through various advertising formats, such as display ads, sponsored posts, video ads and promoted content.

Social media platforms often use user data and engagement metrics to enhance ad targeting, making ads more relevant to users and more effective for advertisers.

Some social media platforms offer a freemium model, where basic services are provided for free, but users can pay for premium features or an ad-free experience.

For example, the professional networking site LinkedIn offers premium subscriptions with additional features like InMail messages, advanced search and enhanced networking capabilities.

Subscribers pay a monthly fee to access these premium services, generating a recurring revenue stream for the platform.

Social media platforms collect vast amounts of user data, which can be valuable for market research, analytics and targeted advertising. Some platforms sell anonymized user data or insights to third-party companies or advertisers.

finger push

Social media platforms like Facebook, Instagram and Pinterest have integrated e-commerce features, allowing users to discover and purchase products directly through the platform.

These platforms can earn a commission or transaction fee from sales made through their platforms. Some platforms enable content creators, such as YouTubers and TikTok influencers, to monetize their content through ads, brand partnerships, or direct fan support.

The platform may take a percentage of the revenue generated by content creators. Social media platforms facilitate partnerships between brands and influencers for sponsored content campaigns.

Brands pay influencers to create and share content that promotes their products or services and the platform may take a commission or fee for facilitating these partnerships.

In some gaming and virtual worlds users can purchase virtual goods, accessories, or currency within the platform’s ecosystem. The platform takes a percentage of the revenue generated from these in-app purchases.

Social media platforms may license or syndicate their content or data to media outlets or other platforms, generating licensing fees.

Some platforms incorporate affiliate marketing links, allowing users to earn commissions by promoting products or services through their profiles or content.

Social media companies often employ a combination of these revenue streams to diversify their income and adapt to changing market conditions. Their financial success depends on their ability to attract and retain users, deliver value to advertisers and innovate with new revenue-generating strategies.

The social media market size as of the end of 2020 stood at approximately US$95B. This number is expected to grow significantly.

PM Corp logo

PrimaryMarkets provides investors with access to companies that are at the forefront of marketing via social media platforms. We provide access to opportunities previously only accessible to institutional investors.

PrimaryMarkets exemplifies how innovation can transform the way we invest, trade and raise capital by breaking down traditional barriers, providing liquidity solutions and promoting transparency. As the Platform continues to grow and evolve it promises to unlock even more opportunities for investors and the companies shaping the future of economies.