Network effect

Due to the network effect, the perceived value of goods and services keeps increasing with the growth of the customer or user base. For example, for the telecom network, the perceived value of subscription keeps increasing with the growth of the user base, as it keeps opening additional communication channels. This is a vital effect and plays a strong role in creating a demand-side economy of scale effect. This is one of the three factors in fueling the natural tendency of monopoly in the network-centric service industry. For example, Facebook has leveraged it to monopolize the global social networking service industry.