Reverse network effects, and how to combat them

Edited excerpt from Reverse network effects: Why scale may be the biggest threat facing today’s social networks by Sangeet Paul Choudary:

There are three sources of value created on networks: Connection, Content and Clout. As networks scale, the value for users may drop for several reasons:

1. Connection
Networks allow users to discover and/or connect with other users. As more users join the network, there is greater value for every individual user. However, new users joining the online community may lower the quality of interactions and increase noise/spam through unsolicited connection requests. To prevent this, an appropriate level of friction needs to be created, either at the point of access or when users try to connect with other users.

2. Content
Users discover and consume content created by other users on the network. As more users come on board, the corpus of content scales, leading to greater value for the user base. However, the network may fail to manage the abundance of content created on it. To ensure that the content is relevant and valuable, the network needs strong content curation and personalization of the user experience. Reverse network effects set in if the content curation and personalization systems don’t scale well.

3. Clout
Some networks have power users, who enjoy influence and clout on the network. The larger the network, the larger is the following that a power user can develop. However, the network may get inadvertently biased towards early users and promote them over users who join later. These networks need a mechanism to ensure new users have equal access and exposure to the community to develop network clout.

2 thoughts on “Reverse network effects, and how to combat them

  1. Pingback: Why network effects matter so much | A Founder's Notebook

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