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	<title>Comments on: The Network Effect Multiplier, or, Metcalfe&#8217;s Flaw</title>
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	<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/</link>
	<description>Thoughts about information, social networks, and privacy</description>
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		<title>By: syferium</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-815</link>
		<dc:creator>syferium</dc:creator>
		<pubDate>Fri, 06 Jul 2007 09:31:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-815</guid>
		<description>I saw your website is very good, so you have the opportunity to sell space ads on you blog...&lt;br/&gt;&lt;br/&gt;i receive 72$ every month doing nothing, there is just 6 links at my website)))And you&#039;re website is much more better then mine.&lt;br/&gt;Payments via PAYPAL and CHECK!!&lt;br/&gt;&lt;br/&gt;http://www.text-link-ads.com/?ref=29747&lt;br/&gt;&lt;br/&gt;try them...&lt;br/&gt;&lt;br/&gt;&lt;br/&gt;After you&#039;ll sign up here write to me... and i&#039;ll tell you how to optimize it for well... and give you several good tips...&lt;br/&gt;&lt;br/&gt;&lt;br/&gt;1. &lt;a HREF=&quot;http://fraudchina.blogspot.com&quot; REL=&quot;nofollow&quot;&gt; Chinese Scammers, Worldwide Business &lt;/a&gt;&lt;br/&gt; &lt;br/&gt;&lt;br/&gt;2. &lt;a HREF=&quot;http://ipodtechnology.blogspot.com&quot; REL=&quot;nofollow&quot;&gt; Ipod world &lt;/a&gt;&lt;br/&gt;&lt;br/&gt;3. &lt;a HREF=&quot;http://online-offers.blogspot.com&quot; REL=&quot;nofollow&quot;&gt; GIFT CARDS &lt;/a&gt;&lt;br/&gt;&lt;br/&gt;4. &lt;a HREF=&quot;http://goodphones.blogspot.com&quot; REL=&quot;nofollow&quot;&gt; Mobile Phones &lt;/a&gt;&lt;br/&gt;&lt;br/&gt;&lt;br/&gt;5. &lt;a HREF=&quot;http://goodlaptops.blogspot.com&quot; REL=&quot;nofollow&quot;&gt; Laptop NEWS &lt;/a&gt;</description>
		<content:encoded><![CDATA[<p>I saw your website is very good, so you have the opportunity to sell space ads on you blog&#8230;</p>
<p>i receive 72$ every month doing nothing, there is just 6 links at my website)))And you&#8217;re website is much more better then mine.<br />Payments via PAYPAL and CHECK!!</p>
<p><a href="http://www.text-link-ads.com/?ref=29747" rel="nofollow">http://www.text-link-ads.com/?ref=29747</a></p>
<p>try them&#8230;</p>
<p>After you&#8217;ll sign up here write to me&#8230; and i&#8217;ll tell you how to optimize it for well&#8230; and give you several good tips&#8230;</p>
<p>1. <a HREF="http://fraudchina.blogspot.com" REL="nofollow"> Chinese Scammers, Worldwide Business </a></p>
<p>2. <a HREF="http://ipodtechnology.blogspot.com" REL="nofollow"> Ipod world </a></p>
<p>3. <a HREF="http://online-offers.blogspot.com" REL="nofollow"> GIFT CARDS </a></p>
<p>4. <a HREF="http://goodphones.blogspot.com" REL="nofollow"> Mobile Phones </a></p>
<p>5. <a HREF="http://goodlaptops.blogspot.com" REL="nofollow"> Laptop NEWS </a></p>
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		<title>By: Charles</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-260</link>
		<dc:creator>Charles</dc:creator>
		<pubDate>Fri, 01 Sep 2006 15:40:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-260</guid>
		<description>The weakness in your analysis is that you assume that people joining the network benefit the network.&lt;br/&gt;&lt;br/&gt;Consider: 10 people on an early phone network. They swap tips and gossip.&lt;br/&gt;&lt;br/&gt;Then a salesman gets a phone and realises sales can be made over the phone rather than at doors. Voila, telemarketing.&lt;br/&gt;&lt;br/&gt;The 10 people who were on the network perceive a drop in the network&#039;s utility: if they answer the phone, they might not get a tip, they might have their time taken up by someone selling them something.&lt;br/&gt;&lt;br/&gt;To the telemarketer, it&#039;s a great thing. 10 people discomfited, one person pleased. Is the network better for the extra connection?&lt;br/&gt;&lt;br/&gt;Similarly for spam and email. And blogs and comment spam. And, IME, for social software tools. You have to accommodate the likelihood of a downside too - in fact, people joining the network will (I&#039;d predict) add value according to a normal curve, centred near zero. Most people don&#039;t add much. Some take away. A few add hugely; a few take away hugely. What&#039;s key to the usefulness of a network is how wide the variance of those on it is - not how big it is.&lt;br/&gt;&lt;br/&gt;On that basis, you&#039;d expect that small will almost always be better. Social software, therefore, contains the seeds of its destruction if it expands.</description>
		<content:encoded><![CDATA[<p>The weakness in your analysis is that you assume that people joining the network benefit the network.</p>
<p>Consider: 10 people on an early phone network. They swap tips and gossip.</p>
<p>Then a salesman gets a phone and realises sales can be made over the phone rather than at doors. Voila, telemarketing.</p>
<p>The 10 people who were on the network perceive a drop in the network&#8217;s utility: if they answer the phone, they might not get a tip, they might have their time taken up by someone selling them something.</p>
<p>To the telemarketer, it&#8217;s a great thing. 10 people discomfited, one person pleased. Is the network better for the extra connection?</p>
<p>Similarly for spam and email. And blogs and comment spam. And, IME, for social software tools. You have to accommodate the likelihood of a downside too &#8211; in fact, people joining the network will (I&#8217;d predict) add value according to a normal curve, centred near zero. Most people don&#8217;t add much. Some take away. A few add hugely; a few take away hugely. What&#8217;s key to the usefulness of a network is how wide the variance of those on it is &#8211; not how big it is.</p>
<p>On that basis, you&#8217;d expect that small will almost always be better. Social software, therefore, contains the seeds of its destruction if it expands.</p>
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		<title>By: Joe</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-210</link>
		<dc:creator>Joe</dc:creator>
		<pubDate>Fri, 21 Jul 2006 19:11:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-210</guid>
		<description>Hi Fred,&lt;br/&gt;&lt;br/&gt;Thought-provoking post as usual - I commented on my blog as well.  &lt;br/&gt;&lt;br/&gt;I&#039;m not sure I follow the point about the network effect multiplier (NEM) being under &quot;the direct control of the application designers.&quot;  That seems like network effect is predetermined, valued during developement, without factoring in adoption by users.  You clarify the statement later by saying that our actions on the network compose the NEM.  &lt;br/&gt;&lt;br/&gt;So is it our participation in the network or the features/functionalities in the network?  If the former, we almost have to go back to a Metcalfe-type model.  Granted it&#039;s binary (or digital) approach is oversimplified in analyzing the analog nuances of SNS...  &lt;br/&gt;&lt;br/&gt;Looking forward to a follow-up to this WIP...</description>
		<content:encoded><![CDATA[<p>Hi Fred,</p>
<p>Thought-provoking post as usual &#8211; I commented on my blog as well.  </p>
<p>I&#8217;m not sure I follow the point about the network effect multiplier (NEM) being under &#8220;the direct control of the application designers.&#8221;  That seems like network effect is predetermined, valued during developement, without factoring in adoption by users.  You clarify the statement later by saying that our actions on the network compose the NEM.  </p>
<p>So is it our participation in the network or the features/functionalities in the network?  If the former, we almost have to go back to a Metcalfe-type model.  Granted it&#8217;s binary (or digital) approach is oversimplified in analyzing the analog nuances of SNS&#8230;  </p>
<p>Looking forward to a follow-up to this WIP&#8230;</p>
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		<title>By: Hans Gerwitz</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-198</link>
		<dc:creator>Hans Gerwitz</dc:creator>
		<pubDate>Mon, 17 Jul 2006 14:28:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-198</guid>
		<description>You are right to point out the flawed reasoning behind valuing social apps by the number of available connections.&lt;br/&gt;&lt;br/&gt;I think we&#039;re talking about two different &quot;flaws&quot;, though:&lt;br/&gt;&lt;br/&gt;First, an applications &quot;core&quot; value is, of course, distinct.  You make this point regarding Flickr.  The social network aspect also has a variable value that seems to often be discounted, though.  Simply tracking who your connections are is basic, sending messages is basic, but we also have many apps today that let us browse our circle&#039;s content and even use the preferences of our friends as input for recommendations.  These different models have distinct basic values that are then amplified by a &quot;Metcalfe multiplier.&quot;  This difference in the value coefficient is perhaps your &quot;nuance.&quot;&lt;br/&gt;&lt;br/&gt;Second, that Metcalfe multiplier is not necessarily as straightforward as the original network value law.  Rather, the &quot;granularity&quot; is in how connections are made (and utilized) in practice.  If my site has 100,000 users, but each one has only 2-3 connections, then my multiplier is much lower than if each had 10.  Of course, if each user has 1000 connections, then some &quot;nuance&quot; values might be diluted (such as group messaging) but others (such as fashion-related affinities) might scale linearly.&lt;br/&gt;&lt;br/&gt;Maybe the best takeaway is that network tracking is a type of value that&#039;s easily portable.  If social nets were as sticky as their creators like to tell investors, then we&#039;d all still be using Friendster.</description>
		<content:encoded><![CDATA[<p>You are right to point out the flawed reasoning behind valuing social apps by the number of available connections.</p>
<p>I think we&#8217;re talking about two different &#8220;flaws&#8221;, though:</p>
<p>First, an applications &#8220;core&#8221; value is, of course, distinct.  You make this point regarding Flickr.  The social network aspect also has a variable value that seems to often be discounted, though.  Simply tracking who your connections are is basic, sending messages is basic, but we also have many apps today that let us browse our circle&#8217;s content and even use the preferences of our friends as input for recommendations.  These different models have distinct basic values that are then amplified by a &#8220;Metcalfe multiplier.&#8221;  This difference in the value coefficient is perhaps your &#8220;nuance.&#8221;</p>
<p>Second, that Metcalfe multiplier is not necessarily as straightforward as the original network value law.  Rather, the &#8220;granularity&#8221; is in how connections are made (and utilized) in practice.  If my site has 100,000 users, but each one has only 2-3 connections, then my multiplier is much lower than if each had 10.  Of course, if each user has 1000 connections, then some &#8220;nuance&#8221; values might be diluted (such as group messaging) but others (such as fashion-related affinities) might scale linearly.</p>
<p>Maybe the best takeaway is that network tracking is a type of value that&#8217;s easily portable.  If social nets were as sticky as their creators like to tell investors, then we&#8217;d all still be using Friendster.</p>
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		<title>By: Bertil Hatt</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-197</link>
		<dc:creator>Bertil Hatt</dc:creator>
		<pubDate>Mon, 17 Jul 2006 11:31:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-197</guid>
		<description>Thanks for your post and your comments: the idea that usage can be different is interesting, and very new. I&#039;d love to comment, but as it is quite precisely my PhD topic, I feel a bit overwhelmed.&lt;br/&gt;I was wondering: having other people use flickr or Wikipedia a way different than yours, does it improve your own experience? If not (e. g. using phone lines to send faxes) than what you have is simply two different parallel services, with little externalities; if it does (e. g. you are an amateur historian, and having developpers improving the wiki engine is usefull) then you face a completely new ploblem: I can&#039;t think right now how to model it, but I promise to point you to any early ideas on the topic.</description>
		<content:encoded><![CDATA[<p>Thanks for your post and your comments: the idea that usage can be different is interesting, and very new. I&#8217;d love to comment, but as it is quite precisely my PhD topic, I feel a bit overwhelmed.<br />I was wondering: having other people use flickr or Wikipedia a way different than yours, does it improve your own experience? If not (e. g. using phone lines to send faxes) than what you have is simply two different parallel services, with little externalities; if it does (e. g. you are an amateur historian, and having developpers improving the wiki engine is usefull) then you face a completely new ploblem: I can&#8217;t think right now how to model it, but I promise to point you to any early ideas on the topic.</p>
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		<title>By: raymond</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-196</link>
		<dc:creator>raymond</dc:creator>
		<pubDate>Fri, 14 Jul 2006 17:50:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-196</guid>
		<description>Just a joke, but to lighten up you day:  Your actual network layer of friends can increase with the telephone if you are Paris Hilton and someone downloads all your telephone numbers and puts them on the Internet for all to see!</description>
		<content:encoded><![CDATA[<p>Just a joke, but to lighten up you day:  Your actual network layer of friends can increase with the telephone if you are Paris Hilton and someone downloads all your telephone numbers and puts them on the Internet for all to see!</p>
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		<title>By: Fred Stutzman</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-195</link>
		<dc:creator>Fred Stutzman</dc:creator>
		<pubDate>Fri, 14 Jul 2006 17:21:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-195</guid>
		<description>Everyone - thanks for responding.  All your takes on this have been extremely thought-provoking.  Let see if I can&#039;t respond a little.  Michael and Jason - I think a lot of what you say is correct and absolutely fleshes out this idea.  We have the power to control the sociality of a service.  Indeed, a number of social networks have caught on in new places because of their simplicity (going back to Michael&#039;s response).  There&#039;s a lot of value there.  The actions in the network are not binary - we&#039;ve got many different ways we can wander and connect in the network now.&lt;br/&gt;&lt;br/&gt;Raymond, your response illustrates the challenge I feel in making this argument.  At one level, both Reed and Metcalfe are only interested in valuing a network.  They have divorced &quot;content from presentation&quot; in a sense.  The phone provides the binary access to the network (call/not call), but of course over the phone you can do many things that are siimilar to things you can do in social networks.  However, when you do these things over the phone, you aren&#039;t creating new paths in a network.  That you are friends with someone doesn&#039;t mean more or less people will be able to call that person.  In a social technology, the process of friending actually does add complexity to the network, increasing paths of transversal for others. Even though the actions are similar, the network (as in the actual network layer) does get more valuable only in one of these contexts.  I hope this makes sense.  I&#039;ve struggled with the problem of enumeration in trying to keep my thoughts straight on this.  I think I need to do some diagrams, really ;)</description>
		<content:encoded><![CDATA[<p>Everyone &#8211; thanks for responding.  All your takes on this have been extremely thought-provoking.  Let see if I can&#8217;t respond a little.  Michael and Jason &#8211; I think a lot of what you say is correct and absolutely fleshes out this idea.  We have the power to control the sociality of a service.  Indeed, a number of social networks have caught on in new places because of their simplicity (going back to Michael&#8217;s response).  There&#8217;s a lot of value there.  The actions in the network are not binary &#8211; we&#8217;ve got many different ways we can wander and connect in the network now.</p>
<p>Raymond, your response illustrates the challenge I feel in making this argument.  At one level, both Reed and Metcalfe are only interested in valuing a network.  They have divorced &#8220;content from presentation&#8221; in a sense.  The phone provides the binary access to the network (call/not call), but of course over the phone you can do many things that are siimilar to things you can do in social networks.  However, when you do these things over the phone, you aren&#8217;t creating new paths in a network.  That you are friends with someone doesn&#8217;t mean more or less people will be able to call that person.  In a social technology, the process of friending actually does add complexity to the network, increasing paths of transversal for others. Even though the actions are similar, the network (as in the actual network layer) does get more valuable only in one of these contexts.  I hope this makes sense.  I&#8217;ve struggled with the problem of enumeration in trying to keep my thoughts straight on this.  I think I need to do some diagrams, really ;)</p>
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		<title>By: raymond</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-194</link>
		<dc:creator>raymond</dc:creator>
		<pubDate>Fri, 14 Jul 2006 15:16:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-194</guid>
		<description>Fred,&lt;br/&gt;&lt;br/&gt;Of note, the more you write, the more interesting you get.  I&#039;ve read your blog and news about your activities for some time now.  What I have a hard time grasping about your social networking ideas is, other than volume and opportunity, how have social networks changed us over time?  I suggst people have not changed much, just their opportunities to join in on the network.  &lt;br/&gt;&lt;br/&gt;You mention MySpace giving you the same option as the telephone to connect or not connect, but MySpace also provides &quot;nuance and granularity.&quot;  I think the telephone gives you many more options than to connect or not connect.  Who you call, what you talk about, plans you make, etc, vary greatly with each caller as, I assume, with each MySpace member.  (BTW- the preview stops here, I don&#039;t know if you are getting the rest of this post)&lt;br/&gt;&lt;br/&gt;I remember when telephone users were on party lines and one could get quite a bit of local news (gossip) by just picking up the phone and listening.  In a way, I equate this eavesdropping with the telephone similar to someone reading your profile on MySpace.  With party lines you never knew who was listening in on your conversation and with MySpace and Facebook you never know who is looking at your profile.  I&#039;m not arguing our new social networking has not changed us, I&#039;m just not sure how.</description>
		<content:encoded><![CDATA[<p>Fred,</p>
<p>Of note, the more you write, the more interesting you get.  I&#8217;ve read your blog and news about your activities for some time now.  What I have a hard time grasping about your social networking ideas is, other than volume and opportunity, how have social networks changed us over time?  I suggst people have not changed much, just their opportunities to join in on the network.  </p>
<p>You mention MySpace giving you the same option as the telephone to connect or not connect, but MySpace also provides &#8220;nuance and granularity.&#8221;  I think the telephone gives you many more options than to connect or not connect.  Who you call, what you talk about, plans you make, etc, vary greatly with each caller as, I assume, with each MySpace member.  (BTW- the preview stops here, I don&#8217;t know if you are getting the rest of this post)</p>
<p>I remember when telephone users were on party lines and one could get quite a bit of local news (gossip) by just picking up the phone and listening.  In a way, I equate this eavesdropping with the telephone similar to someone reading your profile on MySpace.  With party lines you never knew who was listening in on your conversation and with MySpace and Facebook you never know who is looking at your profile.  I&#8217;m not arguing our new social networking has not changed us, I&#8217;m just not sure how.</p>
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		<title>By: Jason Griffey</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-193</link>
		<dc:creator>Jason Griffey</dc:creator>
		<pubDate>Fri, 14 Jul 2006 15:13:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-193</guid>
		<description>One of the outcomes of this that I find interesting is that you can use this reasoning as a predictive tool for future social networking sites.  The Flickr analysis shows us that sites can use social networking aspects as value-added features to arrive and something new and different, and that value can be quantified in some way. &lt;br/&gt;&lt;br/&gt;It also points to the most interesting prediction, I think...that if we meta-network, the outcome expected from a pure Metcalfe analysis would be a many fold increase in network value. But of course, that might not be the case in real life. If MySpace could suddenly interact fully, at a social level, with Facebook, would that benefit each network? I&#039;m almost certain it wouldn&#039;t. At the same time, a mediated interactivity might produce a great deal of value...this is a ripe area for Web 2.0 sorts. A site that allows us to mediate between our social networks in a robust way (a more &quot;connected&quot; sort of ClaimID) would be an absolute winner.</description>
		<content:encoded><![CDATA[<p>One of the outcomes of this that I find interesting is that you can use this reasoning as a predictive tool for future social networking sites.  The Flickr analysis shows us that sites can use social networking aspects as value-added features to arrive and something new and different, and that value can be quantified in some way. </p>
<p>It also points to the most interesting prediction, I think&#8230;that if we meta-network, the outcome expected from a pure Metcalfe analysis would be a many fold increase in network value. But of course, that might not be the case in real life. If MySpace could suddenly interact fully, at a social level, with Facebook, would that benefit each network? I&#8217;m almost certain it wouldn&#8217;t. At the same time, a mediated interactivity might produce a great deal of value&#8230;this is a ripe area for Web 2.0 sorts. A site that allows us to mediate between our social networks in a robust way (a more &#8220;connected&#8221; sort of ClaimID) would be an absolute winner.</p>
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		<title>By: Paul Cox</title>
		<link>http://fstutzman.com/2006/07/12/the-network-effect-multiplier-or-metcalfes-flaw/comment-page-1/#comment-192</link>
		<dc:creator>Paul Cox</dc:creator>
		<pubDate>Fri, 14 Jul 2006 15:10:00 +0000</pubDate>
		<guid isPermaLink="false">http://127.0.0.1/~fred/projects/blog/?p=272#comment-192</guid>
		<description>I posted &lt;a HREF=&quot;http://innovation-in-oil-and-gas.blogspot.com/2006/07/metcalfes-law-social-networks-and.html&quot; REL=&quot;nofollow&quot;&gt;some more thinking on this topic.&lt;/a&gt;</description>
		<content:encoded><![CDATA[<p>I posted <a HREF="http://innovation-in-oil-and-gas.blogspot.com/2006/07/metcalfes-law-social-networks-and.html" REL="nofollow">some more thinking on this topic.</a></p>
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