Reverse Network Effects: Why Today’s Social Networks Can Fail As They Grow Larger
In class, we learned about Network effects can affect a product. A product that gives more value to a user when it has a larger user base will have large Network effects. For example, social networks have large network effects, since people only get value from them if they know others using them as well. Products that have strong network effects tend towards low or high user bases, not anywhere in between. The Network effect in social networks makes intuitive sense, if a product gets value from people using it, either many people are going to use it, causing more people to use it, or no one will use it, making no one new use it. However, this article shows that the reverse Network Effect can also be true in some cases, even in a social networks. It may seem unintuitive, but there are cases where social networks can lose value if they gain too many users.
One reason why too many users can reduce the value given by a social network is because it can lower the quality of the interactions on the site. For example, if many people joined a site and repeated/spammed the same things repeatedly, then people on the site would gain less value from the site than previously. The site can also fail to filter through the abundant amount of user information if the amount of users get too high. Users that could previously find the information they wanted to can find it difficult to get the same information when there are many other users on the site. Another reason that can explain reverse Network Effects in a social network, is that the network may make it hard for new users to gain followers/views when older users gain so many viewers. These are some explanations for the unintuitive reverse Network Effect.
Source: https://www.wired.com/insights/2014/03/reverse-network-effects-todays-social-networks-can-fail-grow-larger/