Characterizing Network Multipliers

Fred Stutzman is a PhD student at UNC whose blog "Unit Structures" focuses on social networking and Identity.   His post "The Network Multiplier, or Metcalfe’s Law" compares LinkedIn, Friendster, Facebook and MySpace to highlight the impact that social relevance has on network effects and the core value users get from social networking software.

"The value of a social technology’s network simply can’t be divorced from what you do in the network – the actions you can take are deeply nuanced. We’ve matured from the binary assumption of communicate/not-communicate that network effect theory is built upon. Of course, Metcalfe’s core theory still holds for things like telephony and ethernet networks. However, humans are not computers; our actions, and the derived actions of network participation have variable values. The compound effect of our actions is the network effect multiplier. As we develop socially-enabled applications, consideration of this network effect multiplier will prove useful in determining the value of our labor."

Fred also references the limited network effect of telephony versus web social networking sites:

"…since the final value of the network is a function of the core value and the network effect, we see a balancing function.

This balancing function is the key to valuing social technologies. The core value is the raw economic value the service provides to the user. The telephone was useless without the network; however, a service like flickr, or even Myspace would provide value stand-alone. With the telephone, you only had two options when using the network – call or not-call. In flickr and Myspace, you literally have millions of ways to use the network, each with a different value outcome."

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