Network effect is a proper noun used in economy or business. The value of a product will depend on how many people use it. For example, if there is only one fax machine in the world, its value will be zero because there is no another fax machine can communicate with it. However, the value of fax machine will increase if more and more people start to use it. To apply in the e-business, network effect could infer the ability of the development of the Internet society. Network effect is just like rolling a snowball on the Internet. The people using the Internet have continued increase since 1990. The value of each Internet user depends on the total other Internet users. It means that other people will join an Internet community when critical mass of users are attracted by this community. In other words, a successful website requires techniques, marketing, and price strategy to attract customers so as to trigger network effect.

The interpersonal interaction is a big power to detain customers. Various types of hypothesized community help to affiliate the relationship between enterprises and customers, or customers and customers. The interaction between users may raise its centripetal force and their loyalty (Lu, 1997). The forum in Myspace and the blogsearch of Google’s blogspot are the examples why enterprises value network effect.

Once users confess themselves to belong to the network community, this network community may understand network effect more. It is helpful for a successful e-business to create the advantage of the original market occupying and increase market share. It makes competitors more difficult to vacillate our community members. Also, old members could use the network community to bring other new members and facilitate positive cycle in the community such as advertising companies. However, the success of enterprises will be decided by the ability to give the hypothesized social group trust and maintain users’ interaction continually.


Network in Digital Age

The biggest change of the digital age is the significant increase of broadband of the Internet. The Internet broadband is the foundation of network media. Several phenomena are worth us to observe:

1. Broadband enhance the network advertisement: the present websites strat to apply massive Flash animation and advertising banner because of the development of the Internet broadband. The increase of visual effects brings more customers comparing with traditional media like newspapers. People also believe that more brilliant network advertisement will appear in the future.
2. The specialized medium production team: The network market will have a flood of medium production teams who specialize in playing the dynamic medium techniques. Comparing with traditional industry, the network market will be getting more and more difficult to ask for cheap.
3. The development of wireless broadband: Broadband also brings the Internet the third generation of information transmission prospects such as wireless handset, telecommunication satellite.


The Impact on Economy

Another issue is the impact that network effect brings economy. The research of the new economy is called “Californian Ideology” (Barbrook and Cameron, 1996:53). The main idea is: the existing social, political, and legal structure will collapse and be replaced by the interaction between each individual freed from the shackles. The employers will become many scattered small Internet businesses. Service industry will also become more significant than manufacturing industry under such weightless economy. It indicates that products will no longer have entities and contain more information technology. Those products are called dematerialize products or intangibles such as online broadcast, computer software, advertising marketing, online banking, and even the Internet users’ writings, designs, trades, or conversations. Under the new information economy, people need to use more brain than user their physical strength. Therefore, novel idea and abundant information are the most important resources.


Conclusion

When I was doing this assignment, it remained me of a book which I just finished: Sweet Spot by Mr. 6. In this book, the author researched the key reason why some websites become famous in a very short period of time. He indicates that some website became famous because of some additional functions and the development of the Internet such as how Facebook extended its user database rapidly, how Wikipedia become the authority of online encyclopedia, and how Youtube creates large traffic. I have been looking for the trend of webpage developing for some time already. However, the key point is not the knowledge of web2.0 or to follow other successful websites’ steps. To become a successful website developer, I have to find out the fashion and the tread of design and programming so as to reach my sweet spot.


Reference

Lu, Hsi-Peng and Jyun-Yu Wang, “The Relationship between Management Styles, User Participation, and System Success over MIS Growth Stages,” Information & Management, 1997

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