The network effect can work in reverse

The same powerful forces that create a virtuous cycle of growth in the Network Model can also work in reverse, leading to a rapid and devastating decline. This is the risk of a negative or reverse network effect.

The cycle works like this:

1. Users Become Dissatisfied: A portion of the user base becomes unhappy with the service, perhaps due to a perceived drop in quality, a lack of new features, or the rise of a better competitor.
2. Early Adopters Leave: The most engaged or influential users start to leave the network.
3. Value Decreases: With each user who leaves, the network becomes less valuable for everyone who remains. In a multiplayer game like World of Warcraft, when your friends stop playing, the game becomes less fun for you.
4. Negative Word-of-Mouth: The same users who once evangelized the service now tell their friends to quit. The powerful user-driven marketing that fueled growth now accelerates the decline.
5. Cascading Failure: As the network's value plummets, more and more users leave, creating a "death spiral" that can be very difficult to stop.

This makes it critically important for businesses relying on network effects to have a robust system for listening to their subscribers and reacting quickly to dissatisfaction. The same word-of-mouth that builds the company can also tear it down.