This Post Trended in Russian Online Community
This post trended in a Russian social community this weekend and two engineers sent Thank You for the perspectives.
If markets are perfect, the marginal cost of a digital (online) product will be absolute zero. Marginal cost of a digital product comprises mainly of transaction and distribution costs.
Most times, transaction costs (e.g. debit card fees) are expended whether offline or online, and consequently unavoidable. But distribution costs (e.g. the cost of serving an additional user in your blog) tend to near zero in the digital space.
It is this inherent feature of the marginal cost that makes online scaling easier. Scaling means adding more users, triggering network effects – a positive continuum where just having more users makes digital ecosystems more useful and valuable to users. The most important feature in Facebook is that it has many people therein; every other thing is sub-optimal in value. Yes, if you make a better website than Facebook but without the people, not many people will care.