Case Study in Negative Network Effects
Network effects are known in economics as a phenomenon whereby a product or service gains additional value as more people use it. Social media networks are a classic example because they become more valuable to a user as more of their connections join them. As discussed in class however, these effects are not always positive. An article published earlier this fall by The Verge describes how a viral TikTok video disrupted thousands of users and scientific studies on the platform Prolific.
The video published by user sarahndom on July 23rd was part of a series on “side hustles” to help viewers make extra cash. It encouraged viewers to participate in paid studies on the platform Prolific, which scientists use to recruit participants for behavioral research. After it accumulated over 4.1 million views in the month after it was posted, tens of thousands of new users joined the platform. The effects were multifaced. For researchers, their studies gained a sudden influx of young women participants that biased their results. For long-time users, a source of income was suddenly cut off as paid surveys became scarce. The result was a decrease in the value of the platform for both researchers and users. The Prolific platform later reimbursed the affected researchers and enabled demographic restrictions for studies, but the scenario demonstrates how network effects can negatively impact users despite their positive connotation.
Source: https://www.theverge.com/2021/9/24/22688278/tiktok-science-study-survey-prolific