Activating Network Effects

 



Activating Network Effects 
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Activating Network Effects
Due to the increase in the rate at which the internet is used, there are websites that are created every day. These websites need to attract more users in order for them to gain value. Web 2.0 is known for its ability to enable people to collaborate and share information online. Therefore, it can be said that the value of web 2.0 platforms depends on the users. The four aspects that are usually used in increasing the value of web 2.0 platforms are referred to as network effects. These aspects are: Direct, Indirect, Cross-network and Local network. A web 2.0 platform such as Tumblr highly depends on these aspects in increasing the number of users.
 
Tumblr is a microblogging platform that allows users to post multimedia and files to form blogs. Users can follow each other’s blogs (Jackson, 2015). However, users have the freedom to make their blogs private. Tumblr has a storyboard which makes it different from other platforms. The storyboard features videos and stories on Tumblr blogs and users.
 
Figure 2: Tumblr logo
Direct
This is the effect whereby the value of a Web 2.0 platform increases as the number of users increases (Katona, Zubcsek, & Sarvary, 2011). A direct network effect can be measured as part of Tumblr’s Web 2.0 platform as the importance ofTumblr is affected by millions of users who post multimedia and other files. As the sharing of files on Tumblr increases, the number of users who want to view the files and even posts becomes more.
Indirect
Under an indirect effect the value of a product or a service is always increased through the availability of complementary products or services (Binken, 2010).  Over the recent past, there has been a significant increase in Tumblr’s unique visitors. The unique visitors are attributed to various other websites through which some of the posts on Tumblr can be shared.
Cross-network
A cross-network effect which is also known as a two-sided effect refers to a situation where the use of a Web 2.0 platform by a certain group of users leads to an increase in the value of the platform and also increases the benefit that other set of users get from using the platform (Parker & Van Alstyne, 2005). In the case of Tumblr, it can be seen in the fact that when there is an increase in bloggers there is an increase in the benefit of viewers because they will obviously have more files to view. Also Tumblr are earnsbenefits when more viewers join the platform because they get the opportunity to collect Tumblr users’ behavioural data and use it for selective promotion.
Local (Social influence)
The 4th network effect is local or social influence network effect. Under this kind of effect the choice made by the users of a Web 2.0 platform is usually influenced by decisions made by other users (Kemper, 2010). This concept can apply to Tumblr because the influence of social platforms is crucial for Tumblr to become really popular as a web 2.0 platform. Tumblr enables their users to share on social networks such as Facebook, thus broadening its community.
 

References
Binken, J. L. G. (2010). System markets: Indirect network effects in action, or inaction?. Rotterdam: Erasmus Research Institute of Management (ERIM), Erasmus University Rotterdam. 
Jackson, A. (2015). Tumblr: How David Karp changed the way we blog. Mason Crest Publishers, Broomall.
Katona, Z., Zubcsek, P. P., &Sarvary, M. (2011). Network effects and personal influences: The diffusion of an online social network. Journal of Marketing Research, 48(3), 425-443.
Kemper, A. (2010). Valuation of network effects in software markets: A complex networks approach. Heidelberg [u.a.: Physica-Verlag.
Parker, G. G., & Van Alstyne, M. W. (2005). Two-sided network effects: A theory of information product design. Management Science, 51(10), 1494-1504.