http://bits.blogs.nytimes.com/2008/01/17/youtubes-traffic-continues-to-snowball/?scp=21

The above article, an entry from the New York Times’ “Bits” blog, reports that YouTube, through what it calls “the network effect” has become the number one site in the fast-growing online video industry. Google, the owner of YouTube, has a 31.3% share of the market, while Fox Interactive Media, the next largest player in the online video game has just 4.4% market share. Bits also notes that less than half of all videos viewed online are found on the top ten video sites. These facts illustrate an interesting concept that we have been talking about in class.

The extraordinary success of YouTube, demonstrates the power of network diffusion. According to Bits, Google’s market share grew three percent from September to November 2007. Of course, YouTube began as a very small, not widely viewed website. It makes sense however, that as more people started to use it, it quickly became incredibly popular and began to experience high growth rates in website traffic. Because YouTube videos, as well as other online videos, primarily gain popularity through word of mouth, it follows that cascades through a network would be especially apparent in this case. Additionally, people are able to gain entertainment value from YouTube even if only a small fraction of their friends (or “network neighbors”) use the site—you only need one other person to have seen the same video in order to have a conversation about it.

This blog entry also points out that, aside from YouTube, there are not many clear frontrunners in the online video field, as users are watching videos from a wide variety of sites. This points to the fact, possibly, that it has been difficult for a secondary site to gain popularity because of the ubiquity of YouTube. Using another, less popular site, lowers the chances of seeing the same video as a friend, meaning that it is not in the viewer’s best interest to use a site other than YouTube. As a result, these sites may have trouble establishing a large user base.