Network effects- what on earth are they?

Earlier in the year, we were asked to look at network effects. Network effects, which are also known as Metcalfe’s Law, happen when higher sales of a product, or a service, increase its value and therefore make further sales. One of the simplest examples is the telephone network. There would be no point in owning the only telephone in the world, because you would have no one to talk to and the equipment would be useless. If a few hundred people had telephones connected to the same network, then they would start to become useful. Another example would be the internet, where thousands of people connect to the same network, creating a valuable business market. Direct network effects occur if the user’s act of adopting a good encourages other people to adopt that good, and so on, branching out. Indirect network effects arise if adoption is complementary because of its effect on a particular market. For example, users of hardware or software may gain when other users join them, not because of any direct benefit, but because it encourages the provision of more and better software, such as torrent sites like the popular Pirate Bay or a torrent such as Limewire.

One of the best examples of network effects in the media is the VHS. Once VHS video tapes gained the significantly greater market share than the old Betamax, the latter disappeared. However, DVDs have now come taken over, and VHS has sadly disappeared off the shelves. Recently though, we have seen Blu ray creep into our shops, probably coming to replace DVD’s just as DVD’s did the VHS. The rate technology is developing; it won’t be long after that until a brand new one is created.

Metcalfe’s law describes how more users increase the value of a network, which would explain the uprising of Facebook and the downfall of MySpace, as discussed in a previous blog entry. Twitter is now attempting to take the lead. When a new Twitter user talks to an existing user, it creates value to the old user, and if Twitter adds a new application, more people will join that application, making it more popular. This is network effects being put to use in our every day lives, and yet few know what network effects mean! I know before I took this class, I didn’t!

In conclusion, Network Effects are a useful tool in media society. They support media trends, and fuel business networks. Without them, business would probably crumple, as they are the hidden framework to our economy.

Second Life and virtual worlds

For an inside look on virtual worlds, we were asked to create a Second Life account online. Second Life is a place where people create human like figures called Avatars and use them to explore a computerised world where you can interact with other people from all over the world. It was created in 2003 by Linden Labs, and Jonathan Richards from The Times said that it “has become synonymous with what many believe will bring about the next wave of technology innovation: ‘the 3D internet’”. There have been many attempts at online virtual worlds, such as Coke Music (2002), Habbo Hotel (2000), and Virtual Magic Kingdom (2005), but ones such as Second Life and the popular World of Warcraft have set the standards much higher for graphics and online activities.

Many people flock to virtual worlds to get away from their everyday lives, like a holiday for the mind, but some tend to go too far. They can go so far that it would appear that a virtual world is their everyday setting, and reality is the holiday. While this seems like I am taking the extreme angle on this one, I have seen what a virtual world can do to a person’s social life if the user buries them self too deeply into it. Because anybody from around the world can access them, virtual worlds are full of new people- people who do not know a thing about you. The allure of creating a new identity attracts quite a few, especially those that are unhappy with their current identity in reality. My brother is quite addicted to World of Warcraft, and it has gotten so bad that he barely leaves the house anymore and often doesn’t acknowledge that a person has spoken to him because he’s too absorbed in the game. But, because he has so many friends just like him online, he doesn’t seem to feel the need to return to the real world, and believes that his loved ones just nag at him for no reason. So it seems that, quite ironically, the virtual worlds created to get a person more in touch with society and to venture out globally has in fact done the opposite and encouraged people to sit at home alone in a room, with no actual social contact.

I tried to understand what the fuss was about, so I created a Second Life account for class, and gave the account a test run. While at first it seemed fun tweaking the Avatars appearance, over an hour n a half later I grew frustrated. Why did there need to be so many options to change the angle of this Avatars eyebrow or nose etc? I set myself the challenge to attempt to make my Avatar appear as much like myself as possible, but I cannot deny that the desire to change a few things crossed my mind more than once. Out of all the people I asked, none had decided to make theirs like themselves, simply because no one is completely happy with the way they look, and we would all like a little control over how we appear to others. I could now relate to my brothers desire to create a new person, but I was still at a loss to what I should do in this new world. My class mates and I explored the Second Life world, but found very few people willing to have a normal conversation- one even asked my friend for online sex. This reminded me of the risks of creating a virtual world so open to the public- anyone could pretend to be any age or gender, and could easily lure in younger and more naive people, maybe even children. My cousin is only 9, and he goes on World of Warcraft often. Any member of the public could approach him and take advantage, maybe even try and meet up with him in real life. This is a worrying issue, and while these worlds may appear great fun and open up social gateways, we cannot forget that sexual predators are out there, and will take advantage of any device which allows them easier access to their prey.

Digital Divide

Today in the workshop we researched the term “Digital divide”. This use to mean the divide between those who have (regular) access to a computer and those who do not, though these days, with computer usage becoming so heavily relied upon, it has changed. Some say it now refers to the different levels of broadband access, or inequalities between people who have the ability to fully use IT and those who lack it. The term became more common in the middle of the 90’s, but was probably coined a few years earlier.

You may be wondering what, if any, impact this will have on the world. Well, it may help for you to think about a few things first: Many people, when they do not understand something, or need to find out something, head straight to the Internet for solutions. What do those who do not have the Internet do? Sure, they can look something up in a book, but then their resources are limited. The Internet is vast and varied, and is probably the best place to go to learn something new. So, we can assume that those who do not have access to the Internet are at an intellectual disadvantage, relating the digital divide to the knowledge divide. The most obvious example would be the techno-savvy Western civilization in comparison to 3rd World Countries, who have no mobile phone communications, no social networking sites, lack of fast broadband Internet connections, no advanced Internet applications and so on. This shows a digital divide on a global scale, as the differences in technology vary from country to country.

I said there could be an intellectual divide because of this, but there could also be impediment on economic levels, too. If a country lacks the technology to progress their speed and efficiency in work, and also to keep constant communications to widen their area of trade (such as the internet), then they will fall behind in comparison to other countries, and earn less money from global investments than those companies included in the changing global market.


Education within schools is not only made easier by Internet and computer access, but the necessary skills children need to learn while handling a computer should be taught while they are still at a young enough age to absorb them easily. Should a school not have computers, the children within it could be at a serious disadvantage later in life when they need computing skills for their jobs or home use. In the 1990’s, rich schools were much more likely to have regular computer access, and a few years later, more likely to have available Internet access. Coming from a public primary school, I didn’t have computers available to me until I was around 8 years old (1998), and I don’t think we ever used the Internet, so I would presume we didn’t have it. I know children a lot younger than that now who even own their own laptops. Once I got to upper school, this drastically changed, and we were expected to use computers often, but I had to learn quickly to catch up after my disadvantage compared with the other youngsters who obviously could use computers at an earlier stage than me, and also the Internet. I’m perfectly fine with computers and the Internet by now, but had I not gone to an upper school with such an enthusiasm for computing, I would likely have struggled harder to learn, as neither of my parents could teach me. Even now, I’m still helping my mum out with anything bigger than e-mail checking.

Apparently, governments are trying to bridge the digital divide by devising strategies and creating practical measures to increase computer access.
Even now, in western society, some people do not have the access they need. I have a friend in University who is at a disadvantage because she cannot use the Internet except at the library because she cannot afford to pay for the net on top of everything else. I lost my internet for a few days, and the effect it had on my work was unprecedented, forcing me to waste time going to the library, and then becoming uncomfortable being surrounded by people constantly coughing and making noise, distracting me from my work, and I was therefore rushing to leave. People cannot ignore this digital divide and say that it doesn’t occur in our society anymore, because for some reason or another, it actually does, and is a serious issue.