ReedsLaw

# ReedsLaw - .)cte 9 = derauqs 3( ti no sedon lla fo eulav...

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Reed’s Law and how multiple identities make the long tail just that little bit longer… David Cushman, August 2007 Reed’s Law or Group Forming Network Theory as Dr David P Reed* originally and rather modestly called it, is the mathematical explanation for the power of the network. As with all great ideas it’s breathtakingly simple, easy to understand and enormously enlightening. This paper sets out to explain what Reed’s Law describes and includes more recent understandings of the collaborative power of networks which I hope helps make sense of and gives context to the exponential. It also suggests that the multiple complex identities we are adopting in multiple communities are not necessarily a ‘Bad Thing’. My contention is that the different modes of thought these actively encourage are to be welcomed when viewed in the context of unleashing the power of self-forming collaborative communities of interest and purpose. In the beginning In the beginning we had Sarnoff’s Law – a mathematical description from a broadcast, mass media age. It was first applied to cinema screens – and latterly to TV. Sarnoff’s law states that the value of a network grows in proportion to the number of viewers. It’s a straight line. The more viewers, the more value the network has. Most audience measurement techniques have simply followed this ever since. Some (such as unique users/visitor counts) have, inappropriately, continued to apply it to websites and social networks. It’s a serious underestimation when you move out of broadcast models. Metcalfe’s Law offers a better fit. It offers a better way of measuring the relentless growth of the power of the internet. This law states that the value of the network grows in proportion to the number of nodes on the network. For example: One fax machine is useless (1 squared = 0). Two (2 squared = 4), has more utility. And each one that’s added to the network increases the value of all nodes on it (3 squared = 9 etc).

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So if your website is getting 10,000 more unique users a month more than a rival – the gap between you and them in terms of potential value created is 10,000 squared (100m!). 10,000 more nodes on a network – even linking from one to one - is way more valuable than 10,000 passive viewers of a broadcast (assuming you’ve gone to the trouble of doing more digitally than simply replicating the broadcast model…). Metcalfe’s N squared value is why the growth of networks used for one-to-one communication (eg phone services, email, IM) follows the pattern it does. Simply, new users will almost always join the larger network because they will reason it offers more value to them. Frankly – it usually does. A tipping point is reached. Floodgates open.
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## This note was uploaded on 01/23/2011 for the course BMGT 301 taught by Professor Wang during the Spring '08 term at Maryland.

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ReedsLaw - .)cte 9 = derauqs 3( ti no sedon lla fo eulav...

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