I was motivated to start this discussion after learning about the concept of network externalities in an Economics of Entrepreneurship class I am currently taking. The coursework has stated that “the more people that consume a good, the more each is willing to pay to acquire the good”. This is after an implication was stated that said to “offer very cheap access to create a market”. This made me think about some of the Network Markets that many of us are constantly a part of: telephones, software, and social networking sites. Network markets are defined as those where the value of a product to a consumer depends on how many other consumers purchase or use them.
So this leads to my question regarding the social networking sites we use on a daily basis: if, hypothetically, Facebook or Instagram or Snapchat decided to start charging its users a low monthly cost (perhaps less than 10 cents), does the caucus think people would adhere to this? Do you think that people would be annoyed so much by this to a point where they stopped using them altogether? Do you think this would lead to the formation of other sites meant to replace the current big names while allowing free access? And if so, do you think these new sites would be able to gain enough traction to actually compete with the ones we are all used to using?
Similar to how drugs or alcohol or cigarettes may be seen as addictive substances, Facebook, Instagram, and Snapchat are seen as “addictive” as well. Therefore, how do you think the world would react to a price charged for using them? Would you yourself pay 10 cents a month to be able to use Instagram?