Network Effects in Predicting Popular Media
https://www.cbsnews.com/news/the-rich-get-richer-effect/
http://www.nytimes.com/2007/04/15/magazine/15wwlnidealab.t.html?_r=1&oref=slogin&pagewanted=all
A significant application of network effects in popularity is Hollywood and the prediction of hit media such as movies, songs and books. Without considering basic network effects and the rich get richer effect, it is baffling that most artists and producers cannot seem to regularly predict what is going to become successful or not based on just the content. Songs thrown into albums at the last minute become the greatest hits and books such as Harry Potter are rejected multiple times by printing companies before being put into print, while movies expected to be wildly popular with massive budgets and high publicity can flop. The fact that two extremely similar instances of media can have dramatically different outcomes means that network effects play a large role – it is not dependent just on the conventional marketing knowledge that you must anticipate and appeal to the preferences of the majority.
This conventional view is false mainly because of a false assumption – that consumer’s choices are independent of one another (which is where network effects come into play). In choosing media based on the choices of others, consumers see both an information based benefit of thinking their friends know that it’s preferable material, as well as the direct benefit of being able to share the experience. This concept gives rise to the Rich Get Richer Effect, which explains that one media, product, person et cetera can become wildly popular just from a small upward fluctuation in popularity, because the growth in popularity depends on the current popularity, meaning it can grow exponentially very quickly (or shrink quickly as well).
This is a challenge for those whose job it is to predict what will be popular, mainly because when network effects are involved there is much less correlation as to popularity and quality of media. It’s hard for a consumer not to believe that a media is objectively ‘better’ when everyone around them is choosing it, which in turn will further endorse the media when this consumer chooses it as well. This blurs the rankings of media based on merit or quality and shades what the consumers actually want, independently, all along.