For anything continue to operate, it has to be, in some form, financially viable. (I regard economics as one of the key decision making tools available to people – see How do we decide ?). I am also suspicious of systems which try to conceal their economic model. (see Transparancy and Trust, and Who pays for WhatsApp).
Monolithic Social Media
Western commercial social media, by which I mean systems such as Facebook, YouTube, TikTok, WhatsApp etc has two primary funding streams.
- Selling advertising space on their own platform
- Selling information about their users.
As some users are starting to find the advertisements when using the platform intrusive, they are developing a new stream, where users pay to use the platform without seeing any advertising, but this does not interfere with stream 2, the gathering of data about their user base.
The Chinese Social Networking system WeChat also has an eCommerce system, WeChat Pay, which gives it another revenue stream, an area in which Meta group and Alphabet have struggled to establish a foothold.
Federated Social Media
Federated social media systems have the following funding options:
Donations from users
This is the model which funds, in theory, many Federated social media sites. Generally they are free to use, and the system relies on some people being sufficiently generous to keep the site in operation. The sites are generally run by someone with a good technical understanding. The users, prior to joining the site, did not have a particular relationship with the person/group who runs it, although it may be set up for some general class of users, for example those with an interest in the environment.
Funding by Governments and large companies
The main present example of this is the European Commission. For a government or large organisation with a Public Relations department, or similar, funding a Federated site is a trivial expense and has the potential to extend their reach, particularly as it is unlikely to be impacted by controversies related to that platform. (for example people may like what you do, but stop following you on, say Twitter – if they do not like what you do they will not follow you on any platform anyway).
Some large organisations may fund their own social media system, for example Truth Social, generally with a particular political slant.
Journals, Newspapers, TV channels
Large media organisations i.e. newspapers and television channels are a natural fit for Federated Social Media, as I point out in Federated Social Media and Journalism. They also have a role as a conduit for funding from readers (if those readers pay some form of subscription to the journal or media outlet) to the journalists. Other means of financially rewarding journalists, writers and artists exist, such as Patreon, but they too involve a middle-man. The journals add value for the reader by associating, and risking, their reputation on the quality of the writing they publish, and take a cut for that. The relationship between the size of the cut and the value added too complex to discuss here, but compared to the other costs involved the technical side of running servers is (probably) small.
Funding by small organisations and individuals.
If the technical knowledge needed to run a social media system could be reduced then the cost or running one for the benefit of members is within the reach of many small organisations. The advantage of running their own system and federating with others is that the content can be more focused. By funding directly, without advertising, there is less risk that the social media feed will end up carrying content which does not match the goals of that organisation.
Although nobody, as far as I know, is doing this yet, it should be possible to support a social media site through advertising sold through a broker, without needing that broker (which in many ways is what Facebook etc are) needing to own the site outright. Being federated users could post content onto those sites, which would be visible to their followers on other sites, who would also see some advertisements. Google, Facebook, and Amazon already act as advertising brokers and have mechanisms to place advertising on third party web sites. It might require and extension to the ActivityPub protocol to insert the advertising posts.
People who make a living being an influencer could run their own site, and, clothing and lifestyle companies, who currently sponsor them could do so directly.
Finance, Ownership and Control.
For all forms of mass media there is a complex, but important, relationship between the sources of revenue which pay for it, who owns it, and who can control it. For example while WeChat is owned by Tencent and TikTok is owned by ByteDance, in both cases the Chinese government has (according to some people) a substantial degree of control over their activities.
The control of Federated Social Media systems is different, in that the name of the system, for example PeerTube – a Federated Video sharing system, and individual ‘instances’ have their own ownership and agendas. There are Peertube systems which host videos about technical subjects, such as https://peertube.debian.social/ and Framasoft, and big creator of Free Federated Software, both funded by donations.
You could think of, say Twitter, as an unfederated Social Media system, which provokes thought about the balance between who pays for it (a mixture of advertisers and investor(s)) and who controls it.