State Library of QLD with network effects


In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When a network effect is present, the value of a product or service is dependent on the number of others using it. Telephone is an example. The more people who own telephones, the more valuable the telephone is to each owner. This creates a positive externality because a user may purchase a telephone without intending to create value for other users, but does so in any case. Online social networks work in the same way, with sites like Twitter and Facebook becoming more attractive as more users join.

Direct network effects: An increase in usage leads to a direct increase in value for other users. For example, telephone systems, fax machines, and social networks all imply direct contact among users. An example is online gamers who benefit from participation of other gamers as distinct from how they benefit from game developers.

Indirect network effects: Increases in usage of one product or network spawn increases in the value of a complementary product or network, which can in turn increase the value of the original. Examples of complementary goods include software (such as an Office suite for operating systems) and DVDs (for DVD players). This is why Windows and Linux might compete not just for users, but for software developers.

Cross network effects: An increase in usage by one set of users increases the value to and participation of a complementary and distinct set of users, and vice versa. An example is developers choosing to code for an operating system with many users, with users choosing to adopt an operating system with many developers.

State Library of Queensland presently bring some basic online services by using their e-services. They includes access One Search (online library resources), and book a computer. They also have Twitter and Facebook account with thousand of followers. This could bring more value for them because they have many followers and users. However, their online content need to be upgrade which user can interact with and access easily on many platforms not online on the desktop web browsers and online contents for different group of people like play-study area for kids. For the direct network effect, the more the new users use and get involved on the services on their website, the more value they gain. For the indirect network effect, users often visit their website and use their online services, new users could be brought by currents user and their interesting online services. So they could find other social networks like Facebook and Twitter to keep in touch with new updates and events for SLD. On the other hand, cross network effect could happen when their users spend much times on their online contents, they interact with Library and other users by feedbacks and comments. Library can gain more value from the feedbacks and comments of users and their frequent of visiting the pages.


2 thoughts on “State Library of QLD with network effects

  1. Very helpful and informative post.never thought an online website would have these 3 type of effect.Im impressive how you explain current situation of State Library of QLD and your recommendation for the development of its online website


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