The network effect occurs when the value of a product or service increases as the number of users increase:
The first type of network effect occurs when the users themselves add value to the product or service. The user-generated content that powers Facebook, forums, and search engines, for instance, adds value to these services, effectively transforming users into assets.
The Platform Effect, which is considered by some to be another type of network effect, refers to the amplification of value that occurs when a company is able to offer a platform - an array of services - rather than just a single product. As more business partners add services to the platform, the value increases.
Both of these effects are eminently visible in today's technology industry.