Metcalfe's law applied to social networks

Metcalfe's law applied to social networks

!!!TAKE NOTE: This page is under construction by Daniel Peters EMBA09. In case of any questions/remarks or if you feel like sharing thoughts on the topic, by all means contact me.

Description

Metcalfe's law states that the value of a (telecommunications) network is proportional to the square of the number of connected users of the system (n2) [1]. Metcalfe's law has also been said to appy to (social) networking websites. This presents interesting prospects for sites such as Wikipedia, Facebook, LinkedIn, etc. with growing numbers of users each year.

For example, the number of facebook users grew by a factor of more than 5 between 2007 (40 million users 3) and 2009 (250 million users 4). This would suggest the value of the site increased by a factor 25 in two years time.

Enablers

• Reduction of organizational and technological complexity
• Development of informatiion search technologies
• Increasing use of digital media on internet
• Increasing user-generated content
• Low cost of Internet Connections
• The Increasing Use of Internet

Inhibitors

1. ToDo

Paradigms

The number of users on social networking sites increases daily. For "generation y", social networking sites have become an essential extension of 'offline' social interaction and 'real life' social phenomena can be observed on these sites (e.g. status, social team formation, social exclusion, outcasts). As users spend a significant amount of time on these sites, they provide an attractive platform for advertisers.

Timing

2006: Facebook launched 6

2007: Microsoft acquires 1.6% stake in Facebook for $240M, valuing Facebook at $15 billion 4

2009: Google unveils plans to launch 'Google Wave', its own collaboration and social networking application 5

Web Recources

1. Wikipedia on Metcalfe's law
2. Bob Metcalfe on his law
3. Microsoft takes 1.6% equity stake in Facebook
4. Google vs. Facebook
5. Google wave
6. http://en.wikipedia.org/wiki/List_of_social_networking_websites
7. http://en.wikipedia.org/wiki/Facebook