network effect
Definition
The phenomenon whereby a service becomes more valuable as more people use it, thereby encouraging ever-increasing numbers of adopters.
Information
The network effect is often the result of word-of-mouth testimonials. The network effect can be perpetuated indirectly, as well, through analysis of a network's size and projected growth.
While the word-of-mouth method is often more influential in the beginning, analysis may play a significant role later in the cycle. In other words, you may adopt a service initially because someone you know uses it; later, you may adopt a service because "everyone" uses it.
Synonyms
n/a
Related Terms
first-mover advantage
Sites
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Articles
Network Effects
Fast Company (September 1999)
Network Externalities (Effects)
University of Texas at Dallas (1998)
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