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This makes no sense. Natural monopolies arise when there are extremely high fixed costs of distribution, like Utilities, Railways, things that are difficult to

This makes no sense. Natural monopolies arise when there are extremely high fixed costs of distribution, like Utilities, Railways, things that are difficult to build. That is not what social media is at all, and there is absolutely nothing guaranteeing that what those Princeton researches predicted will not become true, precisely because software on servers is so easy to replicate, and distribution is inherently word of mouth. Facebook had to purchase Instagram because they couldn't figure out that type of social media. They may not be able to do that for the next Instagram. Facebook has started to suck hard because they inherently live based upon outrage and fake news. If they can't figure out ways to constantly reverse various trends that come up over time, they could get caught in a crap information spiral and fail.

prewett 10y ago
I think you might find that the fixed cost of distributing pictures and video to 1+ billion users who check their FB hourly to be rather expensive. I think you would also find that storing all those pictures and video might be expensive. Additionally, the database requirements to search through those billions and billions of posts are not going to be small and on top of that, FB's database returns the results very quickly. Sure, distributing the software to new servers is free. Procuring the software that needs to be on the server is another matter. This isn't a slap a load balancer on top of a few servers and a Postgres instance sort of problem.
- x2398dh1 10y ago
  It's not just, "I think you might find," but rather, that is precisely correct - server costs for 1 billion users is expensive. However, do you need to set up for 1 billion users in year one? Which is more expensive to start up: a railway or an internet-based software application with a very high growth rate based upon word-of-mouth?
edblarney 10y ago
"because software on servers is so easy to replicate, and distribution is inherently word of mouth. " Networking effects are extremely difficult to break. Also - brand power is stronger than you'd imagine. Coca Cola is not better than many other colas. Taste tests confirm this. Yet coke and pepsi have a 'brand duopoly' on colas. Cola should be a commodity, like water, but no, it's a weird duopoly/oligarchy. Aside from brand, and networking effects - there is usage history etc. - Facebook also has all of your social history. Facebook does exhibit many monopolistic advantages, as does Google.

prewett 10y ago

I think you might find that the fixed cost of distributing pictures and video to 1+ billion users who check their FB hourly to be rather expensive. I think you would also find that storing all those pictures and video might be expensive. Additionally, the database requirements to search through those billions and billions of posts are not going to be small and on top of that, FB's database returns the results very quickly. Sure, distributing the software to new servers is free. Procuring the software that needs to be on the server is another matter. This isn't a slap a load balancer on top of a few servers and a Postgres instance sort of problem.

x2398dh1 10y ago
It's not just, "I think you might find," but rather, that is precisely correct - server costs for 1 billion users is expensive. However, do you need to set up for 1 billion users in year one? Which is more expensive to start up: a railway or an internet-based software application with a very high growth rate based upon word-of-mouth?

edblarney 10y ago

"because software on servers is so easy to replicate, and distribution is inherently word of mouth. " Networking effects are extremely difficult to break. Also - brand power is stronger than you'd imagine. Coca Cola is not better than many other colas. Taste tests confirm this. Yet coke and pepsi have a 'brand duopoly' on colas. Cola should be a commodity, like water, but no, it's a weird duopoly/oligarchy. Aside from brand, and networking effects - there is usage history etc. - Facebook also has all of your social history. Facebook does exhibit many monopolistic advantages, as does Google.