Two Formulas for Success in Social Media: Learning and Network Effects

Forthcoming in Journal of Management Information Systems

41 Pages Posted: 18 Nov 2012 Last revised: 5 Oct 2015

See all articles by Liangfei Qiu

Liangfei Qiu

University of Florida - Warrington College of Business Administration

Qian Tang

Singapore Management University - School of Information Systems

Andrew B. Whinston

University of Texas at Austin - Department of Information, Risk and Operations Management

Date Written: October 4, 2015

Abstract

Recent years have witnessed an unprecedented explosion in information technology that enables dynamic diffusion of user-generated content in social networks. Online videos, in particular, have changed the landscape of marketing and entertainment, competing with premium content and spurring business innovations. In the present study, we examine how learning and network effects drive the diffusion of online videos. While learning happens through informational externalities, network effects are direct payoff externalities. Using a unique data set from YouTube, we empirically identify learning and network effects separately, and find that both mechanisms have statistically and economically significant effects on video views; furthermore, the mechanism that dominates depends on the video type. Specifically, although learning primarily drives the popularity of quality-oriented content, network effects make it also possible for attention-grabbing content to go viral. Theoretically, we show that, unlike the diffusion of movies, it is the combination of both learning and network effects that generate the multiplier effect for the diffusion of online videos. From a managerial perspective, providers can adopt different strategies to promote their videos accordingly, that is, signaling the quality or featuring the viewer base depending on the video type. Our results also suggest that YouTube can play a much greater role in encouraging the creation of original content by leveraging the multiplier effect.

Keywords: Learning, Network Effects, User-Generated Content, Social Contagion, Social Media

JEL Classification: D83, C23, M31

Suggested Citation

Qiu, Liangfei and Tang, Qian and Whinston, Andrew B., Two Formulas for Success in Social Media: Learning and Network Effects (October 4, 2015). Forthcoming in Journal of Management Information Systems, Available at SSRN: https://ssrn.com/abstract=2177077 or http://dx.doi.org/10.2139/ssrn.2177077

Liangfei Qiu (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

HOME PAGE: http://sites.google.com/site/qiuliangfei/

Qian Tang

Singapore Management University - School of Information Systems ( email )

80 Stamford Road
Singapore, 178902
Singapore

Andrew B. Whinston

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States
512-471-8879 (Phone)

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