How Social Media is Changing the Traditional Business Model
How Social Media is Changing the Traditional Business Model

In 2015, Emilie Wapnick conducted a TED Talk on a rather radical idea and labeled herself a “multipotentialite”. She defines this term as “someone with many interests and creative pursuits,” and coined it after she realized that every time she gets passionate about one thing, she excels in it and moves on to the next thing. A multipotentialite, then, is someone who is both a scientist and a surfer, or a painter who decided to take on videography for a year and then became a reporter the following year.

Some would go as far as to say that most people are multipotentialites. In the Middle East, the idea is not very new, as most scientists during the Abbasid era (from the 8th century to the 14th century) were also artists. Al-Khawarizmi, known as the father of Algebra, produced works on geography and astronomy alongside his study of mathematics. Another renowned scientist at the time, Jabir ibn Hayyan, a prolific chemist, produced works in cosmology, numerology, astrology, medicine, and philosophy. Therefore, the idea of being an expert at more than one area is not new – quite the opposite, really. Multipotentialites existed hundreds of years ago – and the term is making a comeback.

Addiction to constant change

Fairly, several ‘new’ waves are making a comeback and companies are noticing it. Gen Z (who will be 32 percent of the global population this year) and millennials (who account for 31.5 percent) are growing less sentimental, as they celebrate ‘Marie Kundo’s ‘Tidying Up’ – a series encouraging people to ‘tidy up’ and remove unnecessary items and clothes from their households. [1]

The trend of ‘uncluttering’ stems from minimalism, a movement that calls for having fewer things, which entails; fewer clothes, fewer spoons, and essentially, less clutter. This can pose a problem for production companies, since more consumers are limiting the ‘clutter’ that new purchases add to their life.

Consequently, the young consumer base now prefers buying trips or experiences that they can post on social media websites, placing more value on experiences like a night out, travel or a good meal.

Companies are reacting to this trend through paid advertisements and social media posts that can cost up to $1 million – the cost of one sponsored post on Kylie Jenner’s Instagram profile.

According to a survey conducted by Pew Research Centre in 2018, 45 percent of teenagers in America say they are online ‘almost constantly’, with YouTube, Instagram and Snapchat topping the charts for most use, while research by WVEA states that American teenagers spend an average of 9 hours per day on digital media. In 2018 alone, Facebook generated US$55 billion in online advertisements. [2] [3] [4]

Algorythma, a technology service company based in the heart of the UAE, recognizes the impact and role that digital media and emerging technologies have on today’s sectors. Therefore, it is building technology solutions across education, artificial intelligence, real estate, finance and new media, in efforts to cater services to the needs of the new generation – as technology has taken a fundamental role in their daily lives.

Say goodbye to one-time purchases

Personal assistants on phones have been around for years. Recently, apps powered by artificial intelligence (AI) have been helping people deal with loneliness.

Every day, you may read a newspaper or magazine (online or offline), watch a show on Netflix or Hulu, listen to Anghami or Spotify and use social media through your mobile data. We are all partaking in the subscription economy, which some experts say is the future. The subscription-based model has grown by over 100% a year and has generated $2.6 billion in sales in 2016 compared to $57 million in 2011. [5]

Innovative startups saw what was missing in the market: the need for constant newness, for cheaper, in favor of a minimalistic lifestyle.

Complementing the subscription economy, a circular economy makes the most out of resources: you rent an item which someone else uses after you, until the item is worn out and recycled.

Joining the circular economy and in its efforts to be more environmentally friendly, IKEA is proposing rental furniture, which it will be testing soon in Switzerland. [6] Soon enough, you may be changing your entire home’s furniture every 6 months – or even less, if you prefer.

Stanford graduate, Tien Tzuo, wrote a book on the importance of the subscription model, and he argues that, “The reality of ownership is dead; now it’s really about access as the new imperative.” [7]

For consumers, they can own more things for less, at the cost of not keeping them forever. Instead of making many big purchases, such as purchasing music albums that stack up in cost and space, consumers can listen to entire choreographies for much less of the price – a win-win situation.

For businesses, this sheds light on the significance of changing the traditional business model into a subscription-based model; companies that lead the way for a more sustainable future by adding value to the circular economy will also be able to save on costs.

From having many interests to changing up your wardrobe every week, social media is influencing the global economy and the way businesses work; businesses that stay updated with the trends of the market continue to lead the way, while others may not be able to continue.

Sources:

[1] Bloomberg, Gen Z Is Set to Outnumber Millennials Within a Year, 2018
[2] Pew Research Center, Teens, Social Media & Technology 2018
[3] West Virginia Education Association, Teens Spend 'Astounding' Nine Hours a Day in Front of Screens: Researchers
[4] Statista, Facebook's advertising revenue worldwide from 2009 to 2018 (in million U.S. dollars)
[5] Stanford Business, Why Every Business Will Soon Be a Subscription Business, 2018
[6] Fortune, Data Sheet—Why You May Be Renting Your Next Kitchen Sink From Ikea, 2019
[7] Tien Tzuo, Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It