Network Effects

Introduction

Network Effects occur when the value of a product or service increases as more people use it.

Core Types

1. Direct Network Effects: Value increases directly with user numbers (e.g., social networks).
2. Indirect Network Effects: Complementary services enhance value (e.g., app ecosystems).
3. Critical Mass: A threshold where growth becomes self-sustaining.

Applications

• Technology platforms for scaling user bases.
• Business strategy for building network-dependent products.

Related Resources

• Book: "Platform Revolution" by Geoffrey Parker.
• Tools: Network growth analysis frameworks.