What types of network effects exist?

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There are various types of network effects, however, we can focus on the three most common ones.

Direct network effect
The direct network effect is the simplest one, which occurs when the demand for a product or service grows as the number of users increases.

We can cite as an example the telephone network we mentioned earlier.

The more people had access to the telephone network, the easier it was to gain new users, since the power of communication grew as the network gained new members.

Two-sided network effect
The two-sided network effect applies to platforms that act as mediators between two groups of users.

Each of the two groups depends on the other; if the number of users in one of them increases, the other group sees the platform as more attractive and grows as well. This in turn generates growth in the first group.

We can mention the example of a job offer platform. If the pool of employers increases, the number of job offers will increase, so more and more candidates will want to be part of this platform.

At the same time, if there is a larger variety of taiwan mobile database candidates, employers will have more options to choose from, so they will also want to belong to this platform.

Local network effect
The local network effect occurs when a project is subdivided into small groups and it is these that will give value to the project as a whole.

Here again the example of social networks becomes interesting.

For users who only speak one language, the only thing they're going to be interested in are contacts, groups, and posts in their language, right?

However, what makes the social network great is the strength and commitment of the users of each of these small national or local networks, which together form the whole and give it greater reach.