The Gravitational Power of Network Effects
https://www.nytimes.com/2021/05/11/style/social-media-stuck.html
Online social platforms draw much of their allure from the number of users they already have. No one is going to spend much time on social media if they are the only one that uses that platform. When a company releases an app such as Instagram or Snapchat they are only providing the framework. It is other users that provide the content and therefore the entertainment that draws in more people. This is why social media acts as a great example of a good affected by network effects. Network effects come into effect when a good becomes more valuable the more people that use it. There is of course a limit to the increase in value, but the general idea is that for each additional person that adopts a certain technology, the value of that technology increases for every current user. The New York Times talks about this in their article, How Did We Get So Stuck on Here? They discuss how despite the countless number of times social media has been proven to be bad for its users, it never seems to go away. Even if an app like Facebook takes a hit in the media every once and a while, it always bounces back. So many users reside on a select few popular apps that it is almost possible for a healthier substitute to move in. They would have to reach such a large mass of initial users in order to get others to join in.
Network effects can work the opposite way as well, however. If a specific platform received a serious amount of bad publicity, so much that the number of users drops below a tipping point, then they may not be able to bounce back. Then network effects would start working against them. “Each network could fail as quickly as it succeeded if a critical mass of users had enough reason to leave.” That is because users have to value a good at a certain amount for them to use it. But since part of the value of social media comes from other users, when enough people quit using an app, so does everyone else. For this reason, large companies still have to care about their image as well as making sure that users needs are met.