[gamblor956]

No, that's not how power companies are other utilities work and that's not what a natural monopoly is.

A natural monopoly is one that arises due to the high costs of entering the market and other barriers to entry that make it difficult for competitors to establish a footing.

Utilities are natural monopolies because it is very expensive to place pipes, transmission lines, etc., over large geographic areas. Consequently, a company must either have large starting capital or the ability to grab a large enough portion of the market to pay for the costs of the initial infrastructure outlay.

The barrier to entry for the short form messaging market? Nothing. Nada. Zilch. Any programmer can recreate the functional parts of Twitter in under a day, scaling aside. And there are already several Twitter competitors. They're simply not very popular because they're difficult to use.

[weareallcowards]

Isn't that what I said? That the cost of entering the market of mass-scale social media companies is extremely high?

I wholeheartedly disagree that the cost is "nothing, nada, zilch". The network effects of having everybody using a couple of sites is what makes the cost of switching high, not the technical triviality of creating a new website.

[gamblor956]

No, that's not at all what you said.

The cost of entering the mass-scale social media market is basically zero, since you can do that in a day with minimal cost other than a domain name and a server (or VPS or AWS/Azure account or similar), and you can scale your costs as you grow, but your costs don't grow as fast as your customer base.

A natural monopoly's costs start high, and just scales from there. It costs tens of millions for a utility just to enter a small market, and with utilities, growing may actually increase their costs (see, for example, power and water utilities).

[weareallcowards]

That isn't "mass-scale", because you don't have any users. Sorry, but I'm going to quote my original comment:

>The barrier to creating a new social network once network effects have locked in a few major players is enormous.

So...that is what I said, that the barrier to entering the market is enormous.

[gamblor956]

No, the entire history of social media has been low-cost entrants capturing market share from existing giants.

I'm definitely dating myself here, but Livejournal, Blogger, Myspace, Frienster, DailyBooth, Friendfeed, Yikyak, Snap, Vine, were all once the dominant social media website before losing to new entrants.

Facebook was started in a college dorm room. Twitter launched as an employee's side project. Instagram began with two roommates sharing an apartment. WhatsApp began as one guy.

[read_if_gay_]

These success stories don’t prove that it’s feasible to create a widely used social network, just that it’s possible. And that’s a pretty obvious statement, seeing that widely used social networks exist at all. What’s important is how many failures are there?

There’s no physical issue preventing competition like with power companies, but to a social media startup, getting enough users is a similarly hard challenge as constructing a new power grid.

And you’re not actually a social network until you reach some critical mass of users. The cost of entering the market is low as you point out, but that doesn’t imply that you can realistically compete. So I think it’s fair to call social networks a natural monopoly. Even if they don’t strictly fit the definition they’re still monopolies in practice.