Digital platform and network effects
https://hbr.org/2018/06/why-network-effects-matter-less-than-they-used-to
One of the reasons why people follow the crowd is because of the direct benefits that come along with it, despite whether or not it is a good decision for each of the individuals. And network effects was one of the key business model which describes the positive relationship between the number of users and the value of the products. The products becomes more valuable if more people are using it.
This article points out a new perspective that relates digital products to the network effects. Recently, the network effects has become less and less significant. The author, Catherine Tucker, suggests that this phenomenon is due to the reduced cost for customers to try new products. Along with the fast growing of digital technologies, digital platform allows people to have similar products at the same time and choose whichever is more beneficial at different instances(e.g. Lyft vs. Uber). Because of this, the products become less “sticky”, which means there are less consistent and active user for each product as they could leave anytime. This inconsistency of which product the customers will choose to use limits the network effects.