November 2018
Beginner to intermediate
265 pages
6h 56m
English
Content preview from Web 2.0: A Strategy GuideBecome an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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Chapter 2. Networks Multiply Effects
FOR MOST OF US IN THE REAL (OFFLINE) WORLD, TRAFFIC IS A BAD THING. More cars on the highway at rush hour create negative network effects. Each driver reduces the quality of the experience by congesting and overloading the highway network past its limit. But in the online world, traffic is a powerfully good thing.
Positive network effects created the Web 2.0 network platforms and contributed to the online hypergrowth of networks such as Google, Yahoo!, eBay, Skype, Wikipedia, Craigslist, Flickr, and others. These enterprises have strategically combined different kinds of network effects—including direct, indirect, cross-network, and demand-side—to multiply the overall positive impact of network value creation. Positive network effects explain, for example, why it could make brilliant but counterintuitive economic sense for GoTo—an early search engine innovator—to pay 5 cents to acquire a new search user just to get advertisers to pay 1 cent or more for that search user’s pay-per-click keyword advertising.
Latecomer Google demonstrated a complete set of two-sided network effect multipliers that enabled it to be the first to reach critical mass and sustainable profitability in the paid keyword search race, even before first-movers GoTo and Excite. Ad-revenue-based online competitors, like Google, are disrupting the rules of the game for their offline rivals in the technology and media industries by providing free services to search engine users
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I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.