Most of the time, when people talk about the network effect, their focus is on its benefits — As new people join a network, the network grows exponentially in value to the next person who joins. While in reality, the “value” of something is ultimately determined by whatever someone is willing to pay for it on eBay, people who discuss theories about things like the network effect have been know to suggest the theoretical value of a network is supposed to be proportional to the square of the number of users. But you knew that already, I’m sure. Less noted are the downsides of the network effect. These relate to its diminishing value as each new person joins — if the resources necessary to the maintain the network do not scale appropriately. This is especially true if the network includes a critical mass of early-adopting tech bloggers. This phenomenon, which some people are beginning to call “the Twitter syndrome,” can be illustrated thusly.:
Bonus link:Mark Evans points out another event that will test Twitter’s mettle – Super Tuesday.
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