Networks

Reverse Network Effects and How to Prevent It

Source: https://www.wired.com/insights/2014/03/reverse-network-effects-todays-social-networks-can-fail-grow-larger/

Since we live in a technology-driven world where social media platforms are pervasive, many may be inclined to think that the larger the social network, the more beneficial it is. However, they forget to take into account one caveat: once the network reaches a certain scale, it grows too large to be useful and thus becomes unsustainable.

The article above sheds light on the three ways value is created through the formation of a network:

1. Connection — networks allow user to add/connect with other users and as more users join the network, the value increases for each individual user
2. Content — users discover and consume content created by other users and as more users join the network, the amount of content increases thus resulting in greater value for each individual user
3. Clout — some networks have power users that have a large following and as more users join the network, it becomes more plausible for the power users to expand their follower base

The article then delves into each aspect of the value proposition and explains how too large of a network could compromise the quality of each:

1. Reverse Network Effects: Connection
   • Connection-building networks such as dating websites can lose value if newly joined users lower value for preexisting users
   • For example: women who use online dating sites often complain of online stalking and thus abandon the site after the community (and the probability of a user being a stalker) grows
   • In order to mitigate this problem, creating barriers to restrict access from certain users is helpful. For instance, Cupid Curated decides who is eligible to join the network by curating male users in order to maintain the value of the network.
   • Example: LinkedIn prevents users from connecting/communicating with distant connections in order to stop unsolicited messages
2. Reverse Network Effects: Content
   • If the network grows too large, it becomes difficult to manage the abundance of content and to curate customized content to users for personalization purposes
   • As more users join the networks, it becomes more likely that the content available may not be relevant to/catered towards certain groups of users
   • Therefore, networks should create some level of friction and restrict certain users’ ability to create content to avoid flooding of irrelevant/inappropriate content
   • Example: Youtube censors and removes videos that contain graphic content and in some extreme cases, potentially revoke the right to upload videos
3. Reverse Network Effects: Clout 
   • The network is inadvertently biased towards earlier users and promote them to users who join later
   • Users who join early have more time to create content and gather a following, while those who join later may have difficulty attracting followers and building an online presence
   • Example: Twitter recommends new users to follow super users who are already in a position of influence and thus perpetuates the cycle of power
   • In order to prevent later users from quitting the network, networks must ensure that new users have equal access and exposure to the community to develop network clout

Reverse network effects have fatal consequences and could cause large networks to collapse. One crucial precautionary action to take is to maintain a high signal-to-noise ratio (an indicator of a network’s usefulness), as outlined below:

1. An appropriate level of friction in terms of user accessibility and usage to avoid abuse of the platform
2. A strong curation system that scales well with the size of the network
3. A relevant and personalized user experience
4. A democratic model for users to build influence

 

 

 

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