Theory of network effects

The theory of network effects suggests that the value of a service or product increases as more people use it. For instance, social media platforms become more valuable when more friends and family join because users can connect and share. Similarly, telephones are more useful when more people own them, as you can reach more contacts. This principle applies to various industries, including technology and communication, where the overall effectiveness and user satisfaction grow with the size of the network, creating a positive feedback loop that encourages even more users to join.