{"id":206,"date":"2014-09-30T10:38:14","date_gmt":"2014-09-30T05:08:14","guid":{"rendered":"http:\/\/evoc.in\/blog\/?p=206"},"modified":"2014-10-03T00:32:17","modified_gmt":"2014-10-02T19:02:17","slug":"building-new-communities-overcoming-the-network-effect","status":"publish","type":"post","link":"https:\/\/www.evoc.in\/blog\/2014\/09\/building-new-communities-overcoming-the-network-effect\/","title":{"rendered":"Building new communities: overcoming the network effect"},"content":{"rendered":"<p><em>This is the first of a multi-part series on the relationships between brands and online communities.<\/em><\/p>\n<p>It\u2019s nearing the end of September 2014 and many of you would have already secured, or at least requested for an invitation to join Ello, the all new Facebook-replacement social network that counts ad-free and privacy as its USPs.<\/p>\n<p>As of today, Ello is the rage, but as some of the early <a href=\"http:\/\/www.theguardian.com\/commentisfree\/2014\/sep\/26\/ello-might-or-might-not-replace-facebook-but-the-giant-social-network-wont-last-forever\">media<\/a> <a href=\"http:\/\/gizmodo.com\/what-is-ello-1639054383\">reportage<\/a> wisely points out, the new\u00a0social network&#8217;s\u00a0real challenge is to retain the early adopters\u00a0as active users, while continuing\u00a0to draw in new users in hordes. Purely out of curiosity,\u00a0people in these early days will sign up to see what\u2019s it about, but will they stay after a week or two?<\/p>\n<p>The answer lies in whether\u00a0Ello can fight and ward off the <em><a href=\"http:\/\/oz.stern.nyu.edu\/io\/network.html\">network effect<\/a>,<\/em>\u00a0which\u00a0is well-known to favour incumbent networks with a high number of users. Think of Google+ (G+) and all of its (largely unsuccessful) efforts to gain user acceptance in the face of Facebook&#8217;s (and\u00a0even \u00a0Twitter\u2019s)\u00a0runaway popularity. While G+ succeeded it in getting users to sign up through various tactics that are perhaps a topic for another blog, it wasn&#8217;t able to\u00a0get them to stay and actually post updates like users do on Facebook.<!--more--><\/p>\n<p>What was it that actually stopped people from posting their vacation or party pictures, or sharing the latest Buzzfeed listicle or a John Oliver video on G+, as they are wont to do on Facebook? The answer is simple: people believed they had a better audience on Facebook \u2013 their social network is already built and remains well oiled on the Facebook platform (the same set of \u2018friends\u2019 are expected to like or comment on updates), whereas on G+ they had to start from scratch. Nobody likes starting from scratch. The G+ valiantly fought the network effect,\u00a0and as per the evidence on hand till date, succumbed to it.<\/p>\n<p>Understanding and leveraging the network effect is hugely important for any website, app, platform or service aiming to build a thriving community or network of users. Essentially, the network effect raises the switching costs to significantly\u00a0high levels for most users \u2013 the latter are just simply better off staying within the incumbent network rather than \u2018move\u2019 to a new network.<\/p>\n<p>This effect is the reason why it becomes nigh impossible to challenge any leader who has got market share on its side \u2013 think of Apple and other contenders\u2019 challenge to Microsoft Windows, Open Office to Microsoft Office, the continuing success of WhatsApp compared to dozens of equally easy-to-use and perhaps more feature-rich rival messaging apps, or Android\u2019s growing dominance.<\/p>\n<p>Which brings us to the crunch question for this post &#8211; how does an upstart fights the network effect, or at least reduces\u00a0its influence\u00a0on the existing users of an existing dominant network? This question is as important for rookies like Ello out to challenge the supremacy of Facebook, as it is for the leaders out to protect their network from the upstarts.<\/p>\n<p>Some of the clues on fighting the network effect come from carefully observing successful challengers in recent history \u2013 consider Apple iPhone\u2019s stealing the momentum from the then-entrenched BlackBerry through 2007-2010, how Facebook did the same to MySpace, or Gmail\u2019s success against Hotmail and Yahoo! Mail. The commonalities in these and other similar situations are drawn as under and serve as valuable lessons for the new networks.<\/p>\n<ul>\n<li><strong>Look beyond the existing users<\/strong>: A common theme to many successful challengers is that they expanded the addressable market and brought in a totally new class of users to themselves, and therefore did not entirely\u00a0depend on having to migrate users from the dominating network. Consider the early audiences iPhone drew, or how Facebook took the college\u2019s social network route to getting its first million users.<\/li>\n<li><strong>Create an unprecedented user experience<\/strong>: This factor worked most remarkably in the case of Gmail\u2019s early success, as the nascent email service provided a radically-different user experience that was so much more intuitive and simplified compared to the erstwhile leaders. Also consider the factors behind Tinder\u2019s <a href=\"http:\/\/techcrunch.com\/2014\/09\/27\/tinder-and-evolutionary-psychology\/\">success<\/a> against websites like Match.com or OKCupid.<\/li>\n<li><strong>Change the customer\u2019s value equation<\/strong>: At a fundamental level, any challenger to the network effect succeeds by significantly altering the value equation; or in offering consumers much better value at the same costs (and here we use costs in their true holistic sense). Consider how Gmail created initial buzz by giving away 1GB of mail storage space to all users; when Hotmail users only had 2MB to store all their mails. Or how iPhone succeeded by offering a desktop-quality web browsing and email experience, apps, and\u00a0remarkable media playback capabilities, for the comparable\u00a0price as BlackBerry sold its flagship Qwerty smartphone back in 2007. Alternatively, many challengers actually fail by simply attempting to mimic the precise value proposition already available with the leader without reducing the costs \u2013 an effort that is doomed right from the get go.<\/li>\n<\/ul>\n<p>Stripped down to its basics, fighting the network effect takes little more than understanding the users\u2019 switching costs and giving them a reason to migrate lock, stock and barrel. Remember, many users love to \u2018try out\u2019 any new service \u2013 there have been no dearth of new email services after Gmail. The big reason users leave any new service is because, well, they aren\u2019t really given a reason to stay. There\u2019s no radically different user experience that greets them or fundamentally, there is no real perceived value in staying with the new service or platform.<\/p>\n<p>All of which makes Ello as an interesting case study to watch \u2013 it already offers a slightly different user experience and hopes that users will find more value in its \u2018ad-free\u2019 promise to overcome their switching costs. Will it also attract a new class of users that Facebook doesn\u2019t have yet? We are watching.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is the first of a multi-part series on the relationships between brands and online communities. It\u2019s nearing the end of September 2014 and many of you would have already secured, or at least requested for an invitation to join Ello, the all new Facebook-replacement social network that counts ad-free and privacy as its USPs. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":209,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[33,28],"tags":[44,34,41,45,6],"class_list":["post-206","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-consumer-behavior","category-marketing-2","tag-communities","tag-consumer-behaviour","tag-digital-marketing","tag-network","tag-social"],"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.evoc.in\/blog\/wp-content\/uploads\/2014\/09\/network-effect.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p4fbZd-3k","_links":{"self":[{"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/posts\/206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/comments?post=206"}],"version-history":[{"count":4,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/posts\/206\/revisions"}],"predecessor-version":[{"id":211,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/posts\/206\/revisions\/211"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/media\/209"}],"wp:attachment":[{"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/media?parent=206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/categories?post=206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.evoc.in\/blog\/wp-json\/wp\/v2\/tags?post=206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}