Social Media as Big Business

Social media is the part of the economy where overnight sensations are business as usual.Recent social media company stock offerings have attracted huge investment and now the big elephants in the room are trying to move in on their rivals' territory.

Except for names such as Google, Facebook and LinkedIn, you would think this is a story about big business flexing its muscle. In fact, social media has become big business, with spectacular successes and stupendous failures.

Initial public offerings for LinkedIn and Pandora Media fetched investors in droves, despite sketchy profit profiles. One report indicates LinkedIn generates a paltry $300 million in annual revenue, but its users are increasing by 100 percent per year, which evidently is what catches the attention of investors. There are reports Facebook will issue an IPO in the near future, with a potential valuation of $100 billion. An unofficial report says the social networking giant may have eclipsed 750 million users worldwide.

On the other end of the balance sheet is MySpace, which was purchased six years ago by Rupert Murdoch's News Corps for $580 million, but sold last week to an investor group that includes Justin Timberlake for a meager $35 million. MySpace has become roadkill in Facebook's race to the top of the social media heap, but it has evolved into a specialty online space for musicians and their fans. Leveraging that niche may be what Timberlake, the pop singer-turned actor who played the part of a savvy social media entrepreneur in The Social Network, has in mind for MySpace.  According to reports, Timberlake’s vision may include a talent show component. 

Meanwhile, Google is trying to move in on Facebook's domain with its new Google+, which seems to combine the networking capabilities of Facebook with the group approach to contacts that Yammer features. In Google+, groups are called circles. While initially touted as a social networking site with greater privacy protections, Google+ announced it will force all users to make their accounts public and searchable. 

In a surprising move, Facebook eliminated a Google Chrome extension, which allowed Facebook users to export all of their contacts automatically into Google+. This decision may be a passive-aggressive move toward Google+, or Facebook simply could be protecting user privacy. 

Foursquare, which has seen Facebook and Twitter add location-based tools, is trying to outflank its elephantine competitors by sliding into the game space. This gambit got an improbable bump in June when "good" computer hackers, after a weeklong "hackathon," created the World of FourCraft, which combines elements of Foursquare and Risk in a quest to dominate New York City. (Manhattan is reportedly winning, despite the best efforts of Brooklyn "soldiers.")

Don't fall asleep because you may miss the next big surge in social media where overnight sensations are business as usual.