A direct network effect (also called a same-side network effect) occurs when a product becomes more valuable to existing users as more users of the same type join. Telephone networks are the canonical example: the value of a telephone is zero if you are the only person with one, and grows as the number of people you can call increases. WhatsApp, iMessage, and most messaging products exhibit direct network effects.
An indirect network effect (also called a cross-side network effect) occurs when adding users of one type increases value for users of a different type. A marketplace is the standard example: more sellers on a marketplace makes it more valuable to buyers; more buyers makes it more valuable to sellers. The sides benefit from each other but not from each other in isolation.
A data network effect occurs when more user activity produces more data, which improves the product, which attracts more users. Search engines, recommendation systems, and fraud detection systems are the primary examples. The network effect operates through the model’s quality rather than through social connections.
A protocol network effect occurs when the value comes from standardisation rather than from the size of the user base. HTTP, TCP/IP, and email are protocol network effects. The value is in interoperability, not in direct social connection.