Barriers to Entry
Barriers to entry are obstacles new sellers must overcome in order to enter a
market. Often barriers to entry consist of capital requirements (funding) and/or
regulatory hurdles. The social media industries have very low barriers to entry in
regards to both of these areas. While it does cost money to develop websites and
mobile applications for a new social media startup, these are low in comparison to
other forms of media. No significant regulatory barriers exist as well (at least in the
United States), as no permits or licenses are required from the government. Firms
must adhere to existing laws and regulations involving any business activity, but
there are no unique requirements for social media firms.
The lack of significant barriers to entry makes it possible for even the smallest
size entity to set up social media accounts/profiles quickly and easily. This is especially valuable for new startups, as social media provides opportunities for
marketing and branding without incurring significant costs. It is one reason why
there are so many social media platforms in existence early in the 21st Century.
While it is easy to enter the market, a new startup must still achieve market share
and interest among consumers in order to survive.