Although the economy is currently troubled, TIME magazine points out that there is one area that is thriving: social media. Facebook, Twitter, LinkedIn, Groupon, Yelp, Flickr, are just some examples of companies that barely existed five years ago, but are now together worth billions. For the most part, these companies are private, but have drawn the attention of Wall Street and other investors. There is no doubt that these companies enrich their founders (e.g. Mark Zuckerberg is now the youngest billionaire in the world!) and their investors, but do they add anything to overall economic activity?
Jobs in social media are growing fast, but there were only 21,000 listings last spring, which is a tiny fraction of the 150 million-member U.S. workforce. The article poses the following questions: "Do social media tools enhance productivity or help us bridge the wealth divide? Or are they simply social--entertaining and diverting us but a wash when it comes to national economic health?" The answers to these questions are still unclear; for the most part, only time will tell.
Currently, billions of dollars in investment capital are being spent on these ventures. In order for the U.S. to have a fruitful economic future, that capital needs to "grow the economic pie and not just among the elite of Silicon Valley and Wall Street." Furthermore, as the article poignantly points out, "The U.S. retains a competitive advantage because of its ability to innovate, but if that innovation creates services that don't turn into jobs, growth and prosperity, then it does us only marginal good."
Since it's still fairly early in the game and all of these social media tools are relatively new, it is difficult to answer these questions definitively. Many of these same questions were being posed 20 years ago during the first Internet explosion: "Were Netscape and the Web enhancing our economy, or were people just spending more time at work checking out ESPN.com." The article also explains, "Official statistics weren't designed to capture benefits, and didn't--until statistics mavens at the Federal Reserve, urged on by Alan Greenspan, refined the way they measured productivity. As a result of these somewhat controversial innovations, the late 1990s became a period of substantial technology-driven gains."
Therefore, 20 years later, history may be repeating itself. There is a possibility that social media tools are indeed laying down a foundation for new industries and jobs but aren't yet registering on the statistical radar. Many companies do indeed believe that social media tools make them more competitive. "Ford and Zappos, for instance, use Twitter to market their products and address consumer complaints." Many companies have created internal ways for employees to communicate across divisions through social media, for example using Yammer. Even industry groups for engineers, doctors, and human resources professionals are using social media to share new ideas and best practices on a regular basis, instead of periodically at conferences. One senior executive at Manpower said, "we should think of social-media tools as today's version of the telephone. Yes, they are used for frivolity and all sorts of noneconomic activity (chatting with friends, passing the time), but they also help communication happen more efficiently."
One major question that lingers is "what proportion of the social media benefit will be captured economically by consumers vs. by corporations." Social media gives people the platform to share ideas, compare prices, assess which companies are good to work for, enhance education. But the major caveat is that the people using these tools are the ones who can afford to spend money on technology and have a higher education, not the tens of millions of people in the world who can barely find their next meal. A Pew Research Foundation study found that only 45% of adults making less than $30,000 have access to broadband, which is essential for using social media.
Therefore, it seems that social media is just another contributor to "economic bifurcation." There is no doubt that companies are benefiting from these tools, even if it's hard to specify any numerical gains. Individuals are benefiting too--getting good deals on Groupon, finding jobs on LinkedIn, and keeping in touch with old friends on Facebook. But as the article points out, "the irony is that social media widen the social divide, making it even harder for the have-nots to navigate." If all of the news were to transfer to Web news and be posted through social media only, what about all the people who can't afford to buy a computer or pay a monthly Internet fee, but who can afford to pay a couple dollars for a newspaper or watch free television? Are they to be left uninformed?
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