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by weareallcowards 2068 days ago
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.
1 comments
gamblor956 2068 days ago
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).

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weareallcowards 2068 days ago
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.

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gamblor956 2068 days ago
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.

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read_if_gay_ 2068 days ago
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.

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