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Shape of network-effects

This brings us to an interesting question with regard to the shape of the function of network-effects, as opposed to the production-function for content. Namely, how will the perceived value of network-effects change, as more people join an application? As it is unlikely that they will look the same to all (prospective) users.

Peter Swann noted that if we assume people to differ in their predispositions towards new technology, it is likely that there are local network effects with regard to such preferences as well. In other words, pioneers are most likely to want to call other pioneers, and thus for pioneers, a small network of early adopters will have critical mass. In figure you can see the different utility functions as set out by Swann.

Strategies such as introducing an application in a high-tech region first or featuring certain topics on the main-page, can all help to pull people together that value working together (on a certain topic). Starting out an application in a scalable way will also offer a good start. Even a very small Wikipedia, for example, could already be considered a success as encyclopedias come in varying sizes. In addition, as Wikipedia is written by its readers, its content reflected their interests from the start (at least of readers that became contributors).

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