A sane business model for social media.

Anil Nimmagadda
11 min readApr 4, 2018

Considering the recent scandals and controversies emerging from data mining of social media, I wanted to put together the following thoughts and present a framework for a win-win solution for all parties involved in the social media ecosystem.

What is the problem ?

Presently, the predominant business model for social media appears to be one of free membership to users in return for providers making money via marketing and advertising, based on mining the user data. This setup, structurally and inherently, is incentivizing the providers to maximize profits, even if at the expense of the users.

How does it work ?

Let’s use a metaphor. You have an issue ( psychological ) for which you want a solution. You look around and find several qualified psychiatrists, but one of them stands out .. at least initially, to you, because this doctor is providing a free service . That’s right, free service. You are initially sceptical, but the reviews check out. So, human nature being what it is, you quickly overrule your own misgivings and questions under the pretext that your otherwise expensive sessions are now offered free by a psychiatrist who is good per reviews. How can you go wrong ? Fine. You go and start having sessions. Maybe these sessions are helping a little bit .. maybe more. However, you failed to realize that this is a for profit practice by that psychiatrist. For profit ! Not a charity, not a voluntary self help organization. For profit ! So, how is this psychiatrist making money ? Why, he is selling the data derived from his sessions with you and other such people that consult him ? To whom is he selling data ? Maybe drug companies. Maybe movie makers. Maybe to authors of books . Maybe all of them or a combination. Doesn’t matter. Just the fact that he is selling. Also, significantly more important, is the fact that you DO NOT KNOW that he is doing it or to whom he is selling to and what information is being sold. Is this acceptable? It’s a big NO from you. But, before you begin accusing the psychiatrist, shouldn’t you share blame too ? For fostering the flawed model ? Of course you are guilty. It takes two to tango.

How much does it cost to store and maintain data on social media ?

Anil Nimmagadda

Private investor ( value investing ) and Blockchain researcher, contrarian, consultant, E-Resident of Estonia, #eResidency

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