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[G2] PR-2 Network effects (Network effects (other market-building tools…
[G2] PR-2 Network effects
Network effects
driven by technological innovation
new economy
other market-building tools
price effects
evanescent
brand effects
too expensive to sustain
only network effects can create the virtuous cycle
turn firms inside out
externalities
Two-sided network effects
four kinds of network effects
positive cross-side effects
Visa , Windows
not symmetrical
OKCupid , Uber
negative same-side effects
Covisint
positive same-side effects
Bell Telephone , Xbox
negative cross-side effects
Sharing of digital media , Uber
Internetera
demand economies of scale
demand aggregation
app development
social media
Industrialera
supply economies of scale
negative network effect
hard to find best match
frictionless entry
ex: Google
Threadless
curation
control
limit the access
filter
ex: OKCupid , ChatRoulette