Glassdoor has an admirable mission, but the site faces major challenges with reliability. Glassdoor has no way to verify salary data or ensure that company reviews are accurate, and studies have shown that Glassdoor ratings have little correlation with actual employee satisfaction. As a result, the challenges of managing anonymously crowdsourced data present a critical limitation in the company’s ability to create real value for many users.
I wonder whether the growth of GasBuddy has had an effect on gas prices themselves. With increasing price transparency for both customers and gas station operators, I would suspect that local gas prices are now less likely to differ greatly than before GasBuddy existed. If that is true, GasBuddy would be a great example of how a crowdsourced business is driving greater market efficiency.
It is interesting to compare this example of crowdsourced government with the White House petition platform (which was detailed in another post). Whereas the petition platform has been largely unproductive, Iceland’s experiment seems to have gone much better even though the document was not finally adopted by Parliament. Perhaps a key difference was that Iceland limited the crowd’s ability to write/edit directly and instead relied on the drafting committee as a filtering and control mechanism.
On this chicken-and-egg question of how Waze got initial users to contribute, I found an interview of a Waze co-founder who mentions that they relied on gamification and user altruism to drive user input at the beginning. From CMS Wire (http://www.cmswire.com/cms/customer-experience/how-waze-grew-from-startup-to-billion-dollar-google-acquisition-demo2013-022835.php):
“Eisnor and her team didn’t set out to build maps, she said. Instead, the goal was to find the best routes to use for getting around, and early on, the app made it a bit of a game to get people to drive to areas no one had covered yet. They were the pioneers who built roads that would then show up on Waze maps for others to use. ‘People really do want to help each other and if they feel like they are part of something that is helping make a difference, they become passionate about it,’ Eisnor said. […] Waze grew in three phases: build, play phase and monetize. The first was making it fun for people to create roads and get points and those early adopters were really into helping people, Eisnor said. During the play phase, the routes still weren’t really helpful for saving time, but if someone was the first one on a road, they’d get to be a Pac Man and eat dots on that route, for example, she said.”
BlackBerry’s network effects did not defend RIM against Apple very well, but perhaps they could have if they had been stronger. As AP mentioned, if BlackBerry had capitalized on its leading market share by strengthening its indirect network effects (via stronger 3rd-party developer/app support) and locking in users with high switching costs (in the form of platform-specific apps), perhaps the market would look quite different today.
On HelloSof’s points, I do agree that BBM was a key feature for users. However, I don’t think that opening up BBM to all devices would have saved BlackBerry. BBM alone generated no revenue for RIM, and opening it to non-BlackBerry devices would have removed one of the only few switching costs that existed for BlackBerry users who wanted to defect to iPhones.
As one of those 2 million daily Clash of Clans players, I completely agree that direct network effects are a critical factor in the game’s popularity and stickiness. While I do not have the retention statistics, I am confident that few if any other mobile games have achieved as high a level of sustained user engagement over time as Clash.
I believe the success of Clash of Clans comes from not only the presence of direct network effects but also from their unusual strength: in Clash, direct network effects take the form of social pressure to continue playing in order to contribute to the success of your clan (which may contain some of your real-life friends as well). This is unlike most other mobile games, which may incorporate some weak direct network effects but rarely can achieve such strong direct network effects. For this reason, I would guess that user retention in Clash is highly correlated to user membership in a Clan. I would love to get the usage data and test this hypothesis!
As an avid NYT reader and digital subscriber, I was excited to read this post. I definitely agree that the NYT digital subscription model has worked out relatively well for the company. However, as you noted, the NYT is still struggling to compensate for lower circulation and print advertising revenue. The share price has lost nearly 2/3 of its value in the past 10 years, and I fear the NYT’s internal digital innovations like paywalls and mobile apps won’t be enough to protect the company from the external trends that are transforming the industry. I hope time proves me wrong!
Awesome post! I almost wrote about Steam as a digital winner too.
To H’s question about whether someone else could replicate Steam’s success, I believe that Valve has created a platform that benefits greatly from both direct and indirect network effects. Users chat with friends on Steam and enjoy community-generated content like mods and forum discussions, and developers have added Steam-specific content to games like Steam achievements. Given the high switching costs for users (e.g., losing purchases, save files, game stats, and achievements), I don’t see a competitor unseating Steam as the leading digital retailer of PC games any time soon.
The point about price competition is interesting, especially since flyers rarely choose which in-flight internet provider they use. I would add that dynamic pricing is another way that Gogo is using technology to improve its business. By predicting demand based on corporate travel trends and adjusting prices accordingly, Gogo has been able to influence in-flight purchases upward or downward to fit its bandwidth constraints. NYT did an interesting piece on this topic last month: http://www.nytimes.com/2015/08/27/technology/personaltech/in-flight-wi-fi-prices-jump-as-demand-surges.html