Failed Incentives on Social Media

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The economic principle I am exploring is how people generally respond to incentives in predictable ways. My research question to help me study this economic principle is: How do social media companies design apps to incentivize people to use them longer? What effect does this have on individuals, society, and business? The article published in the Huffington Post titled, “Myspace Collapse: How The Social Network Fell Apart,” demonstrates this economic principle because it argues why Myspace, a once extremely popular social media site, failed and how it lost touch with its users.

Social media sites attempt to incentivize users to continue to use their product. Myspace is an example of how a company failed to do so. Myspace, once ruling the social media kingdom, fell from its reign in 2008 when FaceBook took over. MySpace was created by people in the entertainment industry, so could not continue to keep up with the other sites that were designed by techies. One thing that really brought MySpace down was its lack of focusing in on a certain motive. This site attempted to create every feature in the world so that a third party wouldn’t be able to do so. This negatively impacted them because they spent more effort on a wide variety of assets rather than making a few key features that were outstanding and unique to MySpace. Multiple other things contributed to their decline in popularity, including MySpace being named unsafe due to explicit photographs taking over the site. MySpace paired with Google, and it doubled the amount of ads presented on the site page. FaceBook had many less ads and was much more attractive to users because of this. MySpace was even being called an “eyesore.” MySpace is an example of how a company failed to keep up with competition and changing technology, therefore no longer incentivizing users to continue coming back.

In my next blog post I will research the effects and contributions of social media in a person’s daily life, especially teens and young adults.