network effects
Users attract users
Network effects describe the phenomenon where a product or service becomes more valuable as more people use it.
A telephone is useless if you're the only one with one; with millions of users, it becomes essential.
Social media platforms, payment systems, and messaging apps all depend on network effects for growth.
The term appears frequently in discussions of tech monopolies, since strong network effects create barriers to competition: Facebook's network effects make it hard for new social platforms to gain traction.
Tendency to spread exponentially
- contagiousTransmissible between people
- spreadableAble to be spread
- word-of-mouthInformation shared through conversation
- infectiousAble to spread disease
memetic · exponential growth · tipping point · critical mass · diffusion · cascade · snowball · positive feedback
virality
Tendency to spread exponentially
- contagiousTransmissible between people
- spreadableAble to be spread
- word-of-mouthInformation shared through conversation
infectious · memetic · exponential growth · tipping point · critical mass · diffusion · cascade · snowball · positive feedback · amplification
- market economicsmonopoly, oligopoly, perfect competition, duopoly, monopsony
- business ecosystemstakeholders, partners, suppliers, customers, competitors
- Market Forcespricing power, market share, monopoly, competitive advantage, barriers to entry
- Platform Economymarketplace, gig economy, digital marketplaces, sharing economy, Uber
- runaway effectschain reaction, domino effect, snowball effect, runaway effect, feedback loop
- Growth Marketinggrowth hacking, viral marketing, referral programs, retention, conversion rate
network effectsovercrowding
Capacity exceeded dangerously
diminishing returns · tragedy of the commons · resource depletion · crowding out · intrinsic value
network effectseconomies of scale
Cost advantages from size
cost reduction · vertical integration · proprietary technology
network, effects, netting, networks, networking, networked, subnet