Monetizing Network Effects

In an attempt to contribute towards this blog and therefore this class I spent minutes, no hours, no days contemplating a subject or topic or dilemma or article or something to post. My professional life is not exactly the most exciting or relevant to Marketing and Internet class, but perhaps this is....

Internet is always attached to network effects. But what is a network effect and who really cares if you have a network effect unless it results in more cold hard cash. So I thought of a paper we did for another class outlining if and when network effects can be monetized.

What we found is that network effects can only be monetized when:

1. you are dealing with a marketplace

2. goods and services exchanged have a defined value

3. the company (or website) can take a piece of each transaction

4. there is a sense of stickiness in that users have a stake in the website beyond the traditional more users more value.

Now, I have not posted all the interesting tidbits we found in developing this paper, but if you are curious just let me know.