"There is a strong correlation between scale and value in businesses with network effects.Greater scale leads to greater value for users, which in turn attracts other users and further increases scale. This rich-becomes-richer dynamic allows networks to scale rapidly once network effects set in."

"There are three sources of value created on networks: Connection, Content and Clout."

"Connection: Networks allow users to discover and/or connect with other users. As more users join the network, there is greater value for every individual user."

"Content: Users discover and consume content created by other users on the network. As more users come on board, the corpus of content scales, leading to greater value for the user base."

"Clout: Some networks have power users, who enjoy influence and clout on the network. Follower counts (Twitter), leaderboards (Foursquare) and reputation platforms (Yahoo Answers) are used to separate power users from the rest."

"More prospective connections for the user"

"A larger corpus of potentially relevant content"

"Access to a larger base of potential followers (greater clout), for power users"

"On most networks, value for users is created through more than one of these three sources."

"However, as networks scale, the value for users may drop for several reasons:"

"Connection: New users joining the online community may lower the quality of interactions and increase noise/spam through unsolicited connection requests."

"Content: The network may fail to manage the abundance of content created on it and may fail to scale the curation of content created and the personalization of the content served to users."

"Clout: The network may get inadvertently biased towards early users and promote them over users who join later."

"These networks may suffer from reverse network effects as they scale if new users joining the network lower the value for existing users."

"LinkedIn creates friction by preventing users from communicating with distant connections. This ensures that users do not receive unsolicited messages. This also allows LinkedIn to offer frictionless access (OpenMail) as a premium value proposition."

"In general, networks of connection scale well when they create appropriate barriers to access on the network."

"Most networks of content have low friction in content creation to encourage activity from users and reach critical mass faster. To ensure that the content is relevant and valuable, the network needs strong content curation and personalization of the user experience."

"Reverse network effects set in if the content curation systems don’t scale well."

"Content networks create a curation mechanism through a combination of moderation, algorithms and community-driven tools (voting, rating, reporting etc. ). Voting on YouTube, flagging a post on Facebook and rating on Yelp are examples of curation tools."

"Curation mechanisms often break down as the volume of content increases. When curation algorithms and moderation processes do not scale, noise on the system increases."

"Inability to maintain relevance of the consumption experience, with scale, may create reverse network effects."

"When networks like Facebook and Twitter implement monetization models like Promoted Posts/Tweets, the signal to noise ratio suffers further as promoted content is less relevant than organic content."

"Networks of content are constantly faced with the risk of reverse network effects as they scale. The poor signal-to-noise ratio in the news feed, not the size of the overall network, is Facebook’s weakest link as the network scales."

"Networks of clout tend to be biased against users joining in late. Clout is a consequence of content that the user creates and early users get more time to create content and develop a following."

"This is, ironically, aggravated by focusing on a high signal-to-noise ratio. Twitter recommends super users to prospective followers as these users are likely to create better content. Hence, the platform itself helps separate the power users from the rest."

"Users who join later find it more difficult to develop a following and may stop using the network. These networks need a mechanism to ensure new users have equal access and exposure to the community to develop network clout."