Creative network effects

"A million dollars isn't cool. You know what's cool? A billion dollars.” – The Social Network. What made Facebook so valuable? The answer is ‘Network Effects’ a phenomenon by which the value you derive from a product depends on how many other people use it. For example a phone is useless unless your friend has a phone. The value of a network – according to Metcalfes law – increases in proportion to the square of the number of connections. If a third friend buys a phone, now there are three possible connections instead of one. I can talk to both friends, and they can talk to each other. Once we get to ten friends with phones there are forty-five different connections. The value of the network increases exponentially, so networks are natural “winner take all” markets. Facebook was the winner in the social network market, and is worth at time of writing half a trillion dollars.

Plenty has been written about network effects in Silicon Valley, and billions have been made by tech start-ups leveraging its value. However until now, the tech industry has been largely ambivalent to what what’s being transmitted across the network. Post photos on Facebook. Type text into Twitter. Upload videos to YouTube. None of these platforms provide tools to make your content better. It was Instagram filters that first demonstrated the value of making it easier to improve the quality of content on the network. Suddenly in a few taps, anyone could look like a professional photographer by adding one of Instagram’s photo filters. In just over 18 months Instagram attracted 27 million users and was acquired by Facebook for $1 billion. Under the stewardship of Facebook (now Meta) Instagram have since reached over 2 billion monthly users. Snapchat brought the next wave of innovation in frictionless content creation – disappearing messages, short video stories, augmented reality lenses – but ultimately failed to supplant Facebook, who simply copied the features and leveraged the value of their existing large network. Creator tools are important, but not sufficient in themselves to overcome Metcalfe’s law. You need both quality and quantity.

TikTok clearly learned this lesson, and have gone the farthest out of any social media app in building creative network effects. Rather than only posting to your friends and followers, on TikTok any video posted by anybody can be seen by anybody else. That maximizes the number of connections making the network more valuable in theory, but in practice anything our ability to maintain relationships caps out at 150 – Dunbar’s number – so that many connections can be overwhelming. They escape that natural limit through the clever use of machine learning recommendation algorithms powering the FYP, or “For You Page”, the main window through which you view the feed. Every video is shown to a small initial pool of people, but if it gets high engagement it could be shown to near everyone on the platform.

TikTok users don’t have to follow anyone for the service to be useful. Their feed is immediately full of the very best contributions from the entire network of users. As they watch, like, comment, and share, their preferences are quickly catered for by the algorithm, which leads them down infinite rabbit holes until they regain the self-control to log off. When they’re not passively swiping through the feed, they can visit the Discover page, and see what’s trending, to capture the zeitgiest of the moment. There’s also Search, which is so unexpectedly powerful in surfacing interesting and useful content, that it has Google worried. Prabhakar Raghavan, the SVP in charge of Google Search, said, “In our studies, something like almost 40% of young people, when they’re looking for a place for lunch, they don’t go to Google Maps or Search. They go to TikTok”.

That alone would make TikTok worth billions of dollars, but the value of their network doesn’t just form more connections than Facebooks’, it also comes from the quality of the content flowing through it. It has achieved a high quality bar by removing a lot of the friction that comes with being a creator. As well as the filters and effects popularized by Instagram and Snapchat, and a world-class mobile-first video editor, they have atomized the component parts of each video, and each one is available as lego blocks to copy or remix together.

You can take the music from a video and make your own to the same soundtrack. The Duet functionality lets you put your video side by side someone elses. Users can also incorporate clips from other videos in theirs with the Stitch feature. You can do instant Reaction videos, the mainstay of late night comedy shows, packaged as an app feature. Comments on a creator’s video can be responded to with another video, with the question overlaid as text on top. Further more it’s a semi-open ecosystem: memes from other social networks regularly make their way to TikTok, but also it’s easy to export videos from TikTok to other social networks. These are flat video files that are being shared however, so creators always come back to TikTok to edit, mix, and remix their content.

The net result of all of this engineering is that TikTok creators never have to create anything from scratch. They don’t suffer from blank canvas paralysis – the fear from not knowing what to create – they simply riff on memes and trends that other users make. You see a viral dance and decide it’d be fun to try it with your friends. You stumble upon a funny joke format, and figure out a better punchline. Imitation is seen as a form of flattery in the TikTok community. It validates the quality of their content. You’re signalling that you’re one of them. You’re in on the joke. Often it’s not the originator that goes viral with a new idea, it’s one of the many people who iterated on it and made it better, and maybe got a little lucky.

You don’t have to painstakingly build a follower list before you make it big. TikTok literally offers overnight success. Someone with no followers who posts something good can be seen by millions of people. Even someone with millions of followers isn’t guaranteed distribution if what they post is bad. We have TikTok celebrities now, and music charts are dominated by songs that made it first on TikTok. Memes spreading on the network are even dramatically influencing movie ticket sales, as we saw with Morbius and the Minions.

Combined with the extreme selection pressure in the FYP ecosystem, memes are mutating at a faster rate than is possible on any other social network. The entire network into a Darwinian Battle Royale for memes. Survival of the fittest memes at massive scale. As a result, anything that passes the great filter and goes viral against such extreme competition for attention, is hyper mutated and optimized to deliver exactly what resonates with us, and maximizes our reward for watching. In the words of Eugene Wei, “memes of uncommon fitness”.

About the Book 📕

← Back to Essays 📝