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Most social media companies have invested millions of dollars to develop and maintain their websites. Unlike other commercial media, such as television, radio, and newspapers, advertisements generally are not used to fund the majority of operating costs, nor are users required to pay monthly or annual fees for basic services that they receive at no cost. One method that social media sites use to generate start-up and ongoing subsidies is through venture capitalists’ funding. These investors scrutinize business plans and market trends in an effort to locate Internet start-up companies with the potential to generate substantial returns. Once the businesses are running, additional monies are needed to maintain and improve the websites. At this point, some websites display advertisements. The charge for companies to place an advertisement generally increases as the number of subscribers grows. Another method of generating income is to charge users for accessing premium content. Online dating services use this tactic successfully, for they allow people to browse online profiles free of charge but require them to pay to contact a potential dating match. Research This: Locate venture capitalists who are seeking Internet start-up companies. Which criteria do they use to make investment decisions? Who are the successful venture capitalists, and which companies have they funded? Which types of advertisements are displayed on specific social media and online social networks? How does the content of these ads pertain to the demographics and interests of users?

Most social media companies have invested millions of dollars to develop and maintain their websites. Unlike other commercial media, such as television, radio, and newspapers, advertisements generally are not used to fund the majority of operating costs, nor are users required to pay monthly or annual fees for basic services that they receive at no cost. One method that social media sites use to generate start-up and ongoing subsidies is through venture capitalists’ funding. These investors scrutinize business plans and market trends in an effort to locate Internet start-up companies with the potential to generate substantial returns. Once the businesses are running, additional monies are needed to maintain and improve the websites. At this point, some websites display advertisements. The charge for companies to place an advertisement generally increases as the number of subscribers grows. Another method of generating income is to charge users for accessing premium content. Online dating services use this tactic successfully, for they allow people to browse online profiles free of charge but require them to pay to contact a potential dating match. Research This: Locate venture capitalists who are seeking Internet start-up companies. Which criteria do they use to make investment decisions? Who are the successful venture capitalists, and which companies have they funded? Which types of advertisements are displayed on specific social media and online social networks? How does the content of these ads pertain to the demographics and interests of users?

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