How do social media sites make their money?

Facebook has an Alexa traffic ranking of 2. Not a very big number is it? If you have never heard of Alexa before, you may think that that isn’t very good, but what it actually means is that it is the second most visited site on the net – the first being Google.com.


Twitter has and Alexa rank of 9, LinkedIn has a rank of 16, Flickr 32 – the list goes on.

This means that these sites need some serious server power to handle the millions upon millions of visitors they get each day. The problem is servers are extremely expensive to buy and run, due to them needing to be kept cool and have a super fast internet connection, both download and upload.

So how do social media sites run if it is so costly? Where do they make their money? How does Facebook make it’s money? How does Twitter make money? How do LinkedIn, Foursquare, Twitter, Bebo, Flickr, Myspace etc. all make their owners billions?

It’s complicated…

Unfortunately I cannot provide you with a hard and fast answer which applies to each social media site, as they all use different methods, but what I can do is tell you how individual sites like Facebook and Twitter make their money.

How does Facebook make money?

On Facebook there are adverts, you may have noticed them at the side of some of the pages. Often they are very well designed to blend in with the theme of the site, so that you almost think that they are just more recommended pages.

Facebook's LogoThese adverts will be potentially get hundreds of millions of views each day. This probably means that they cost a fair bit to buy, so ‘the Facebook Team’ will be cashing in big time on them.

So Facebook make their money through advertising, right? Well actually only some of Facebook’s revenue comes from advertising. The exact figures are only known by a select few, but I would estimate that less than half of Facebooks revenue comes from it’s adverts. So where does the rest come from?

Facebook credits.

Since Facebook introduced it’s credit scheme last year, a whole host of new applications and offers have sprung up, all giving you the option of using Facebook credits to provide a service (e.g. watch movies on the site) or improve an experience (e.g. level up faster in a Zynga game).

Facebook currently takes 30% of the money spent on credits for itself, and at just over £2 for a movie or 25 ‘farm cash’ that doesn’t really seem that much.

However, with over half a billion registered users, if each user buys just 50 credits (around the price of one movie – £2 ish) a year, assuming the 30% cut Facebook gets, it could be turning over almost £1 and a half billion each year, on credits alone!

With over 400 games and apps where users can go and spend their money, Facebook are sure to be gaining a lot of cash via their credit scheme!

Facebook has recently been valued at a figure of somewhere around £30 billion ($50 billion) but in the future, who knows how high this figure could climb!

How does Twitter make money?

Twitter has no ads, so how does it make it’s money? Twitter is a microblogging platform which many users use from their mobile phones. Twitter charges users who update their feed via mobile, and it generates an awful lot of money through this.


Twitter's Logo

Despite it costing mere pence per transaction, often users will update their feed mutiple times each day. Millions of users posting millions of updates, many from mobile devices, every day is why Twitter is now valued at almost £5 billion.

Twitter is still a multibillion pound firm in the making, as I am sure it has may more money making schemes and pans up it’s sleeve ready to launch in the near future.

Other sites

How do Foursquare make their money? Well a lot of it comes from their recent deal with American Express, in which I believe it is making around the same amount as Facebook per transaction, although it doesn’t have the same sized member base that Facebook has.

Many other sites like Flickr and Bebo currently don’t appear to be making any money, as their founders set out with a goal of improving the web, not making money. However in years to come no doubt these sites too will become as successful and profitable as Facebook and Twitter, that is of course if we don’t all just switch to using the two giants: Facebook and Twitter!

All about cloud computing

What is cloud computing?

Cloud computing is the management and provision of data and applications via the internet. In non technical jargon that basically means is that it is the storing your programs and documents on the internet, rather than on your computer.


What is an example of cloud computing?

If you watch the tv, you will probably have seen those adverts that promote laptops and phones which allow you to work anywhere because of the ability to store your data in the cloud.

This basically means that your device merely holds the operating system and sometimes the software. The date you access is stored on a server somewhere. This means that you can access your data from almost anywhere with multiple devices.

The good and the bad…

As with most things in life, cloud computing has positives and (you guessed it) negatives. Here is a list of the pros and the cons of cloud computing:

The Pros

  • Less hard disk space needed
  • Your computer runs much faster – like the Chromebooks are meant to (this is dependant on your internet connection)
  • You can access your data from anywhere at anytime
  • Most providers of cloud services, regularly backup your data, meaning if you loose some data or if they loose some, it shouldn’t be too hard to recover
  • Avoid costly hardware (and to some extent software) upgrades

The Cons

  • If your internet dies, you can’t access your data, and in the case of a Chromebook, you can’t even access your programs
  • Some security risks are removed (like if your PC is stolen, someone may steel your data too) but loads of new threats from corrupt employees, hackers etc. are born
  • The services (initially) probably won’t be as reliable as you would like them to be
  • Big brother is watching you! – every move you make online or in a cloud based application can be monitored by your provider
  • You need a really fast internet connection, both download and upload, to really feel the benefit of it – the problem is, most peoples download speed is really fast, but their upload speed is rubbish!

Where is cloud computing data stored?

Good question – presumably not in the clouds! Applications, data etc. would be stored in server farms. Server farms are massive, usually very cool (air conditioned to increase machine performance and to prevent overheating) areas, full of loads of server towers.

Server Room

A Server Room in a Server Farm

Google, Facebook and similar massive sites generally have their own server farms, which they often store underground, and they make sure that they are very well connected!

What’s your opinion on cloud computing? Is it the way of the future, or will it do more harm than good?