Passage: 'Network effects' occur when the value of a product or service increases as more people use it. This phenomenon is particularly powerful in the digital economy, especially for social media platforms and communication tools. A social network with only ten users is of very little value, but one with ten million users becomes indispensable because that is where most of a user's contacts are located. This creates a 'winner-take-all' dynamic where the dominant firm in a market becomes nearly impossible to dislodge. New competitors face a significant barrier to entry because they lack the established user base, even if their technology is superior. However, network effects can also work in reverse; if a critical mass of users begins to leave a platform, its value can plummet rapidly, leading to a 'death spiral.' Maintaining a high-quality user experience is therefore essential for dominant firms to prevent the initial exodus that could trigger a total collapse.