Reverse Network Effects in Social Media
Article: https://www.wired.com/insights/2014/03/reverse-network-effects-todays-social-networks-can-fail-grow-larger/
This article dives into a deeper understanding of network effects, but from a less conventional perspective. Generally people analyze network effects and other factors to figure out how to maximize their benefits to create the most successful products, but they often overlook the factors that can lead to a product’s demise. This article examines three sources of value for networks (connection, content, and clout) and how they could potentially lead to the implosion of social networks such as Twitter and Facebook.
What I found interesting was that I had only ever associated these factors with the growth and reason behind Facebook/Twitter/other successful social media company, but it’s more of a double-edged sword than anything. Take Facebook for instance. While Facebook thrives off of its large network of users, as more users join the platform, there is more potential for spam and less genuine connections/posts on the user’s feed, which could cause users to leave the platform (connection reverse network effect). Likewise, with the millions of Facebook users and friendships, there are too many posts every day. If Facebook were unable to regulate and curate all of this content to fit the needs of each user, the user would derive less value from the platform, also causing them to leave the platform (content reverse network effect). Lastly, there are naturally hierarchies within social media platforms as they show follower counts, subscriber numbers, and other metrics that can be used for comparison. This leads to a potentially adverse effect where the initial users have more of an advantage and are more likely to gain recognition on the site compared to newer users. If such a platform were unable to make this behavior more normalized, it would create an effect where the platform would cease to continue growing due to imbalances in user power (clout reverse network effect).
As we can see, these three network effect factors can heavily influence the trajectory and success of companies and even determine whether they succeed or fail. It certainly takes a degree of balance in these areas, but it’s important to not only look at network effects so one-sidedly. This article has helped remind me to consider not only the pro’s of topics like network effects covered in class thus far, but also the potential con’s of these proposed solutions.