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Community Networking and Network Externalities
by Kate Degelau
Community Connector Staff

One of the governing principles of the internet and the new "information economy" is network externalities. It applies to community networks in that the user of the community network must be getting value from that network, even though they are not being charged for it. People will not use one network that gives them less value than another network.

Definition of Network Externalities

A network externality is made up of two parts: a network and an externality. The definition of an externality is the value that is produced (it can be on the consumer side or the producer side) that is not directly gotten from the product itself. This value can be positive or negative. An example of negative externalities is pollution and cars. Pollution is an indirect product of driving a car. The negative value that you get from polluting is small enough, and indirect enough that the value of having your car is greater than adding a bit of pollution to the air. You concentrate on getting the car, not the pollution. Network externalities are one type of positive externality. Consumers get positive value from other people using the network. This is from knowing that there will be support and knowing that the information will be continuously updated. A user is more likely to continue to use a product or service that allows them to have that type of reassurance.

What this means for community networking

This means that your community network will become more useful to your community as more people use it. It also means that if there are very few people using your community network, it is exceedingly unlikely that you will get more people to use it if there is another source of community information that is noticably being used more often.

So you need to get the community using your community network as a source of information or as the primary ISP in your area in order to stop the fight to live and to think about the fight to expand your services.

What this means is that people will go with the brand name source of community information because even if it has information that is not quite as good, there will be more willing to go to that network because they will get more overall value from it.

What will be helpful for you? A higher profile within the community. Get a few influential people to use your network and say good things about it. Advertise in or work with the local newspaper. Chances are that your site is a unique resource in the community. However, network externalities are one force that will ensure that if only a few people know about or use your site, then very few people will ever use it.


Originated: 12/21/98 | Maintained: si.cn@umich.edu
URL http://www.si.umich.edu/Community/connections/
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