Fans (geeks) of tech history will remember that at one point, a war was waged bertween Betamax and VHS - two competing video tape standards. Betamax, a superior standard, lost out.. simply because VHS was cheaper, and had a better selection of movie titles (well, that, and the fact that all the ahem, adult content was on VHS).
The VHS/Betamax war is a good way, I suppose, to introduce the idea of the network effect, and to a lesser extent, the first mover advantage.
Essentially, a fax machine is useless when you are the only person that owns it. Facebook sucked when it had 10 people. However, when 20,000 businesses have a fax, it suddently becomes a useful device.
Hostels aimed at the youth/backpacker market are somewhat similar.
Ideally, you want a nice hostel, clean rooms, cheap.. but more importantly, you want to be where the other backpackers are. This gives you access to travel info from people who've recently been there, people to chat, flirt, drink, etc with. Books to exchange, chess partners, and people with whom you can split the cost of large expenditures (i.e. taxis).
Often times, the place that gets the backpacker crowd is not the nicest or cheapest hostel on the island. It's the one that the lonely planet or rough guide (travel books) recommend. And once a place has the backpacker crowd, it's very very tough for another hostel to steal them - even if that other hostel is cheaper, cleaner, or has a swimming pool.
Which is sorta where I find myself now. The lonely planet recommends that backpackers head to "little corn", a smaller island 70km away, where for $10 per day, I can have an unlocked bamboo hut on the beach, where each meal cost at least $7-10, and where I have to shower and shit into a bucket (not the same one, of course).
I've found myself a kickass spot on the beach, $10 per day, two huge beds, a fan, electricity, a cheap supply of beer and a reasonably reliable supply of beans and rice, coconuts, and even some bannanas on occasion. However, I have no other backpackers nearby.
My neighbors are, on one side, a fairly nice American 35 year old man here for 10 days, and on the other side, a 30 something totally crazy/borderline psychopathic English scuba-instructor and his israeli girlfriend, whom he seems to jealously suspect that every other male on the island is after. Thats it. No other foreigners.
As my supply of 8 books (3 read in one week) shrinks, I'm sorta wishing I had a few people my own age, who are sane, and preferably, play chess nearby.
I really don't want to have to lose my place, and move to a bucket toilet just to find someone to chat with.