Most of us are familiar with network effects. This is something regularly discussed, including the concepts of Metcalfe's and Reed's law. These try to value networks and go back to the study of communication systems. The approach was applied to social media networks (Facebook in particular) and it was shown to be true.
Here we see what most people understand as network effects. Therefore, it is always the same answer for platforms: more users.
After all, isn't this what network effects are all about?
Not exactly. The problem with this is it only covers a portion of the whole. It is the missing piece for many platforms, including Hive.
Let us take a look at the concepts and what truly needs to be done.
Source
Non-Primary Network Effects
The primary network effects are what we just described. Grandma has a Facebook account because there is where she can find her family. It centers on the idea that people are their because of others who are also utilizing the platform. This is very powerful, as we know, and extremely difficult to break. It is also why, regardless of what Zuckerberg does, these usage on his platforms keeps growing.
Naturally, this is not absolute. The network effect can be broken. What we need to take away is how difficult it is to break.
This is why newcomers like Hive will repeatedly fail. Even the associated applications are going to have a tough time.
Which brings us to secondary effects.
Not all platforms are dependent upon our friends and family. Do you know which of those people utilize Google search? Stay at AirBNB? Ride in Uber vs Lyft? Listen to Spotify?
All of these are example of platforms yet they do not have the primary network effect. They do, however, have one which means there is something else in play.
Here is where platforms needs to focus their attention. Sadly, little is given.
Industrial Revolution
We are embarking upon a massive shift in the economy. This has not been seen since the Industrial Revolution.
What made that period of history so revolutionary from an economic perspective. The advancement during (and post) that era saw a massive rise in the economies of scale. Here we had the supply side part of the equation explode.
Through the economies of scale, prices became cheaper as products were more prevalent. Production from factories increased, impacting the entire supply chain. As a secondary factor, the demand, overall, increased as more was available. It was not, however, the demand that drove things.
When efficiencies of this nature are gained, the entire "pie" gets bigger. The consumption occurs in a couple of different ways. Population growth is the most obvious since more people require more output simply to provide everyone with the same level as everyone else.
Our second area is the standard of living. As people utilize smartphones, automobiles, air travel, and personal computers, the affordability keeps growing. Let us take computers. Half a century ago, they filled an entire floor of a building and were only available to entities such as insurance companies. Today, we have kids walking around with them.
Demand Side Revolution
Platforms are another revolutionary force. This affects the demand side in ways never seen before. At the core of this are platforms.
Essentially, these economies of scale are driven by the users creating more value for each other. This ends up, eventually, creating more users as the appeal of the platform grows.
Here is where the secondary network effects are so evident. It does not matter who is on Google, AirBNB, or Uber. The experience is enhance by the design of the network effects.
For example, search is enhanced with each one that is undertaken. Even though the individuals are not related in any manner, their activity is benefitting other users. AirBNB doesn't require millions of options for each user. In fact, one room (house) is all that is required.
Platforms specialize in internalizing the externalities. It is not always about more as much as alignment. After all, you do not want 2x more responses to your search query. Instead, you want the one or two accurate answers. Quantity is not required.
This comes from different participants offering up what is needed. For something low value, such as social media, this requires numbers. When we move up the value curve, it is the opposite.
Creating Stickiness
Have you come across anyone who asks why the retention is so low?
Once again, this is where network effects enter. It is also why marketing of these types of systems is doom to fail.
Platforms can push the demand curve further out. However, without the network effects, no impact is seen. The digital world allows for rapid entering and exiting, something people utilize regularly.
What is missing is the design of network effects that make it sticky. Without this, one is simply marketing a leaky boat. There is nothing there to keep the majority of those who arrive. Isn't this exactly what Hive experienced?
The most successful platforms layer network effects on top of each other. This is what Google, Amazon, Apple, and Netflix all have in common. They are the leaders which is evident in their market capitalization.
Apple is the master at network effect design. To start, they offer a smartphone at a price that is many times the competitors. That means, to enter their platform, requires a significant investment. Think about it, people are paying to join Apple's world.
Once inside, they are an assortment of secondary network effects that arise. People are given storage space for their data, including photos. They have access to a host of applications that are utilized. Most of these are designed by third parties that have nothing to do with Apple. Here we see the company taking the positive benefits from outsiders and spreading it across the entire ecosystem.
Apple is not a social media platform yet it has some of the most powerful network effects in the world. The company did generate some of the primary effects with an application such as Facetime. However, with the abundance of video messenger applications, this is not much of a moat.
Nevertheless, it remains as the most valuable company in the world. It all stems from the design.
Hive Needs To Do This
Hopefully it is evident where Hive went off the tracks.
Unless there is a concerted effort to create what is described here, applications will fail. It is really that simple. If we do not understand the waters we are swimming in, drowning (or getting eaten) will result. We all know where Hive has gone.
Let us harken back to what is talked about on Hive: marketing.
Many assert this is what is needed. The mantra is we need more people on Web 2.0 promoting Hive. Can you see why I think this is completely wrong? Why have all marketing efforts on Hive failed? Why is the message falling on deaf ears?
The answer lies in we have no message. Show me the network effects built into any part of the system. Where is the design by applications to generate this? The answer is we do not have it. Thus, there is really nothing to keep people on Hive.
It is useless to market when there is a major hole in your boat. Without the basics of platform building, the ecosystem is going to suffer.
To be clear, this is not a base layer situation. This does not apply at that level. The basic offering of the blockchain is all that is required. We have decentralized data storage, account management, and feeless transactions. This is the basis to utilize.
Instead, we are referring to the platforms (applications/games) that are on here. This is where the failure resides. Until projects fill their holes, they are going to suffer the same fate.
Ultimately, it is transactions that create the value. This is true whether it is rides, rooms, or other products. Hive does have one advantage, feeless transactions. Platforms become prevalent as the cost of each transaction declined. This allowed for large scale aggregation of smaller network effects.
What have I been discussing regarding building databases?
This is one critical way the demand curve can be pushed further out.
Posted Using InLeo Alpha
There is simply not a good way to communicate and learn what is going on within hive and all of the games and projects here on hive. Hive has blog posts instead of forums. And we need Wiki pages. "Build it and they will come" as the saying goes. These are the reasons hive is reliant on discord for communications which requires running a separate app and then the information is even more not available and discussed on hive.
Hive has the potential to become similar in use to reddit if we can figure out the way to develop a better communication system where people feel the sense of community that comes with a discussion forum where each community has its own forum and wiki page.
Amen, we have been trying but I must say: We failed so far...
We need to keep trying to find an effective way.
We failed because the focus is on attracting users instead of implementing other network effects.
I just put up a post about the flywheel effect.
This comment strikes a chord with me since I originally joined Steem/Steemit specifically to use as a blockchain-base Reddit replacement. @taskmaster4450 wrote in the post about "stickiness". I had cashed out all my Steem because early on it was even harder to find anything "sticky" in the way I found value. Recently I've spent more time on Hive, and I feel it has become a lot more "sticky" once I learned how to use the communities and other feeds properly. We have a HUGE amount of potential with Hive, both as a social media experience and a medium of exchange, but I don't think it's built out well enough yet. I don't know what would be THE thing that would change that, but if we can find that I believe we'd see a lot more retention and activity. It's probably something as simple as a well designed app (I quite miss Steepshot, the Instagram replacement), but I'm not someone that could make it happen.
So why not build Wiki pages?
I already have over 5,500 pages in LeoGlossary of different information. Anyone can use Hive's decentralized database.
Something Hive can offer (but does not currently) is a CDN (content delivery network) that is largely immune to the supply chain attacks that are becoming more prevalent in the software industry.
I know that I have said it before but on chain file storage (and all the related services that enables) would be a boon for Hive. Imagine if something like GitHub, GitLab or even AWS was being offered!
Agreed although I dont know the technical development required. But I agree, anything in this direction is helpful.
What would it take to create something like that?
The ability to chunk files into small enough pieces to either store them as custom JSON or in posts and/or comments. A ledger of all the chunks which could also be stored as custom JSON. Then the ability to reconstruct the chunks into the original files.
One thing HIVE can build on is it's community and design a content delivery network that will make more of a dependable communication platform that is built on its community.This may attract more users and traffic to the platform.
From what some of the technical people are saying, this is a viable option. Not my area of expertise so I defer to what you are saying. I hope someone takes up the project and runs with it.
I hope so too, something new and innovative needs to be done to take HIVE to the next level.
A lot need to be done here, I wish developers would read and apply what you've just said. Adverting in your competitors platform seems not the solution we need. We need to make this platform more user friendly(taking advantage of feeless transaction) so any new comer will be persuaded to stay. Wonderful piece, keep it up.
This is more than just developers. In fact, I would state it is more important to get the community and individuals to understand these concepts.
personally, I have had a way I would have used to advertise hive and inleo to the brighter audience but I have been limited with the needed finance. Have been thinking of putting it up if I would get that support. But first I don't know if anyone in the platform would buy my idea. Don't know if you have any idea on how to go about this?
What are you going to advertise?
Project To Create Sustainable Hive Platform
My Little Contribution to build quality hive community
Recruiting the right people to the hive platform is key for a sustainable community. I want to start running seminars and conferences about hive ecosystem first starting within the nearby communities in my area.
I am an entrepreneur and since I entered the hive ecosystem I must say I love it and want to make it part of all angles of my business both online and offline.
How to get this done
Truth be told, result plays a vital role in attracting the right people to every ecosystem. I aim to get my hive account to a substantial standard to be able to achieve this. The small earnings I have been making on through my hive account has been used to improve my offline business. The reason this is done is that I aim to make my business one of the open source of how real the hive community is by accepting it as a means of exchange for goods and services. I am currently into laundry and fashion design with vision to expand into other ventures which needs some funds to take it to that influential standard.
I wish to achieve this using two procedures; the first as mentioned above is creating an open offline business that trades with hive and inleo. The second is getting my hive account to standard; getting the orange tick and having enough Hive power(HP) and inleo staked in the community.
It is one of the ways of boosting newcomer's confidence. Having an offline reference point plays a vital role in building a good community. Also, having a high stake on the platform goes a long way too; as the saying goes, 'seeing is believing'.
Will there be a refund?
All the funds I tend to borrow will be refunded with interest. I am looking at a win-win project that favors all parties involved.
How do I intend to refund
High stake (HP and Leo power) plus the orange tick will improve my article upvotes and curation rewards. I will put more effort to produce quality content and also take advantage of the inleo evergreen rewards.
Resource credit will be needed for new account which through this stake will be made possible.
Secondly, having a registered standard business as an entrepreneur will help provide substantial revenue on monthly basis which I will use to pay off every investor that will be interested in this project.
What we are after as you said is a reason for someone to choose hive over other platforms. I wish to leverage my account and offline business to get not just people here but the right people who will have where to seek the needed solution even in an offline business environment.
Hoping you find this project and idea to be a positive one. Also, your contributions are welcomed, you know we are all humans; no man is an island of knowledge.
Hive sucks because you retards auto upvote your other rich friends. It will never be good. Its just a scam to try and trick new people into investing. Yeah invest 25 grand so i can get 5 bucks for a post no one reads.
Obviously the idea of a decentralized database is being overlooked.
Platform effect is so important and it is hard to reap any substantial benefits until you reach it. #Netflix $NFLX just did 12 months ago and is now printing money. Literally went from -132mn FCF to 6bn+ in 2 years!
#Spotify $SPOT just did last quarter and will finally turn on the profit machine (this is a free tip!). Hive has a long way to go to be able to bring enough user so we could get some sizeable benefits in the token price or Ads revenues.
Until we do, we have to keep grinding!
That is true although I would say there is a difference between Web 2.0 platforms and Web 3.0. The idea of profitability carries a different connotation when the users/customers are owners.
This will take things, in my opinion, in a different direction regarding network effects. It is a new realm that has yet to be explored.
The essence of the points being made here are part of the motivation behind the worker proposal I am creating to address these issues. I can see ways to improve Hive's support for the ongoing design/evolution of Hive Dapps. Once the points I am focused on are addressed we can find the missing marketing puzzle pieces for Hive too.
I learned a long time ago that making software for the web is not enough, we need to have a continual process of measurement, feedback, experimentation and development in order to grow. That's part of what I offer through my digital marketing company. I've long wanted to direct my skills to Hive but haven't been in a position to have the time to do that until recently. Stay tuned :)
Development is certainly key. However, this extends far beyond the technical side, although there is that component. In fact, I would say the devs have done a decent job in rolling out some of the vital components. What you allude to could certainly be lacking, not my area of expertise.
What is required, in my view, is more a Hive (or project) centered approach. The flywheel effect is not implement simply by getting users. This is where value is built, at least in web2. Plus the focus upon "node" being the only aspect to network effects is a mistake. In this regard, Hive, and its projects, have to think more like Spotify or Google search than FB or Twitter.
Sorry, my previous comment had some typos - was tired - they are corrected now and it makes more sense.
I didn't really describe what I am focussing on. I am focused on the data driven enhancement of user experience, features and all manner of other factors in marketing in order to improve the retention here. Development is relevant in that the dapps are operated by independent groups who do as they please, so I am looking at ways to independently help them to make better design/feature/expansion decisions.
Ultimately, I am talking about shifting away from opinion driven design/strategy and towards data driven design/strategy. Without this, we are stuck in perpetual division and disagreement as a group, with momentum being stifled.
Ah okay. I get you now. Yeah that will be very helpful. Of course, to do that, we still need some allure. People are trying to market without much of a product or service.
Hive, overall, offers very few of these, especially ones that leverages the power of platforms. Hopefully some pick up on it.
One of the main reasons why the proprietary platforms perform well is that they are able to fund their operation behind the scenes through surveillance capitalism. Since Hive generally operates on a different paradigm and has very different goals to the people who run the large platforms, the dapp operaters don't generally have the resources to hire the experts to make things grow continually. This is part of why I want to get funding to try to decentralise some of that in ways that all the projects can benefit from.
At the risk of inserting my own opinion ahead of responding to real world market data 😄 ...
I suspect that Hive's true value has yet to be fully explored and it comes in the shape of it's own unique ability to empower communities, just as Bitcoin empowers people financially. We need to get more advanced and accessible layer 2 community and smart contract technology in place before we can really find the truth here.
In any case, establishing a framework and process for decentralisation of effort towards sharing actionable intelligence is something that will be extremely beneficial if it can be achieved well.
For as much as Hive is supposed to be a social blockchain with post and vote based rewards, and communities, at times it feels like there is isolation, and the communities and apps are different islands. I don't know if it would require a different interface, but it would be nice if different communities will promote and collaborate with other communities and apps. The Foodies can work with 3Speak to promote cooking videos, Weekend experiences can collaborate with Actifit to have a Hive fun run or something.
I have seen some collaborations lately, like DCrops and Splinterlands, POSH and Holozing. But it would be nice to see more, so that new and old users can do more in the Hive ecosystem.
Why is that? I disagree.
Perhaps people need to expand their vision.
For me, at its current state, it is a social blockchain. The way to get Hive is through posts that other people upvote, or by upvoting others. We have communities. I'm not saying it can't be more than that in the future. But that is what it is right now, and will continue to be until a major shift happens.
Actually I see it as a text database. That is why Hive is lagging in my view. The fact everyone wants to stress the social media instead of actually using the database which then provides data that many apps can use.
There is a ton of social media out there. Nobody is going to come here if all their news, info, contacts, and digital life is on the other platforms.
People need to realize that. We build for us and then expand it out. However, we have to build for us.
I can understand that. And that's why I said there needs to be a major shift for that to happen.
No one is stopping anyone from posting all those things you listed here on Hive. But the problem is, news won't get votes here, and might even get downvoted. I've seen some whales say they don't want simple updates to generate hundreds of dollars worth of votes everyday. But getting the latest and accurate news need funds. Without the votes, it will be difficult to finance it.
As for the contacts, personal info, and digital life, not a lot of people are too keen to share that in Web3 at the moment. Because of the monetary value, and risk, a lot want to remain anonymous and keep their personal life private. I've seen the amount of pushback of SPL players against KYC.
I think Hive's complexity is hurting it in the short term. It isn't simple like the other blockchains where only the transactions are recorded. But I do think its potential as a text database will help make it popular long term.
Look at the original version of reddit and how insanely popular it became because people could simply communicate anonymously without the personal aspects of social media. To view and use old reddit replace www with old , https://old.reddit.com . Because of this simple text and image forum we were able to create groups with some of the best conversations on the internet and reddit grew and grew until they sold it. The better option would have been to make it decentralized and more democratic. They then created the much less useful reddit 2.0 and placed it on top of old reddit and combined with censorship they tamed what was a very prominent force on the internet to communicate about any topic.
The main issue seems to be , How do we develop a better communication system without a better communication system to communicate about the development?
I think one of the things that can really help hive currently now is more developers much more than marketer's