Blue Ocean Strategy in Web 2.0

Just stumbled onto this great article about how to create a "web 2.0" product, which is really in-depth. There's 50 strategies! Buried deep within at #38 is a paragraph about blue ocean strategy. The takeaway point is that established network effects are very hard to compete with. Services such as Digg and Del.icio.us got so large so quickly because they were offering something new in an uncontested market. These types of services fulfilled unmet demand for non-editorialized interesting news and a (somewhat) semantic search engine.

From the article:
38. Design your product to build a strong network effect. The concept of the network effect is something I've covered here extensively before and it's one of the most important items in this list. At their most basic, Web 2.0 applications are successful because they explicitly leverage network effects successfully. This is the underlying reason why most of the leading Internet companies got so big, so fast. Measuring network effects and driving them remains one of the most poorly understood yet critical aspects of competing successfully online. The short version: It's extremely hard to fight an established network effect (particularly because research has shown them to be highly exponential). Instead, find a class of data or a blue ocean market segment for your product and its data to serve.

http://web2.socialcomputingmagazine.com/50_essential_strategies_for_creating_a_successful_web_20_pr.htm