Network Effects of Digital Information Goods : (A Proposal for the Operationalization of Direct and Indirect Network Effects)

Network effects ubiquitous with information goods (content, software) are a phenomenon being discussed more and more recently. Despite strong empirical support on network effects generally, there is a need in research regarding their operationalization and measurement. Our aim was to specify network effects in order to answer the question ‘What exactly are network effects?’. We have identified and developed a set of indicators that determine network effects and assessed them on the information good mobile operating system. Using the mobile operating systems iOS and Android as a case most of the indicators developed for measurement of network effects are measurable. The findings of this work contribute to the ongoing exploration of network effects by demonstrating the interdependence of direct vs. indirect network effects with the growth of an installed base of an information good.