Social media companies are not as concerned as traditional businesses with breaking even, as their importance lies in how many users they reach, says an expert.
Breaking even is not as important as other factors for social media sites, even during the current economic climate, says an industry insider.
Tim Gibbon, founder of Social Media Portal, pointed out that many people are seeing websites such as Twitter as channels of communication rather than a conventional business opportunity.
He highlighted the way new technology can change the way consumers act and express themselves, as well as allowing businesses to engage with their customer base.
Mr Gibbon explained: "For many Web 2.0 companies the value lies with the number of users, its brand and profile, the market share it may hold and its potential in turning a profit."
Another key factor in the popularity of social networks is how easy it is to set up an account.
Last week, Twitter announced that it had secured new funding from a group of companies including Morgan Stanly, Institutional Venture Partners and Spark Capital.
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