Newspapers and Technology – Network Effects
http://www.economist.com/node/15108618
This article focuses on the future of the newspaper industry. With evolving technology, the question of network effects comes into the picture. As the article alludes to, will the internet be the reason physical newspapers go out of business? It appears that this may be the case. This can be explained through network effects.
Say, everyone in a network is choosing behavior B of reading paper newspapers. Let behavior A be people not reading paper newspapers. With the introduction of the telegraph, as noted and explained in the article, there was this idea that behavior A would begin to spread throughout the network – making paper newspapers obsolete. However, it was observed that the telegraph helped paper newspapers spread news faster. So, behavior B stayed strong within the network of people interested in the news. With the arrival of the Internet, however, it appears that the threshold q has weakened, and behavior A has begun to take over. People are exhibiting less and less of behavior B simply because behavior A is deemed as better. Over time, this very low threshold q will cause behavior A to fully spread throughout the network.