New Social Media and Network Effects
A classmate once asked me, “do you think you could invent the next social media?” My first thought was instantly no, and the reason is something which I now understand is called network effects. In a Wired article, Sangeet Choudary explains that network effects add value to sites in three ways: connection, content, and clout. In brief, connection adds value because with each additional user that join the network, there is greater value for individual users. Content increases value, because with more users more content is uploaded to the platform. Finally, value is increased through clout when the networks has many users because they have access to a larger follower base. When all three of these elements are in play the value of a large user base is large. Many of the established social media sites like Instagram, Twitter, and Facebook all have enormous value from network effects due to their huge users bases. For a newer smaller app without the same user base breaking over the tipping point and getting to the point where network effects can help grow the network is very difficult.
This article connected to a lot of what has been discussed around network effects in class. Although it was more of a popular press article and did not go into many specifics, some of the details surrounding probably be calculated using bayes rule. It may also be possible to explain the importance of the three elements Choudary explained in the article through bayes rule. This could be used to determine which area of each platform is most appealing and which area needs work. If I find a reason to develop a social media app it will be important to consider how to develop the network enough to be successful.
Source: https://www.wired.com/insights/2014/03/reverse-network-effects-todays-social-networks-can-fail-grow-larger/