Metcalfe's law applied to social networks

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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 7.5 between 2007 (40 million users 3) and 2009 (300 million users 9). This would suggest the value of the site increased by a factor of more than 50 in two years time.

Enablers

Inhibitors

  • Violence in computer games: this can be extended to (promotion of) violence on social networking sites
  • Governmental/Societal: pressure against the adverse effects of excessive time spent on sociel networking sites
  • Governmental/Societal: pressure against cyberbullying/stalking
  • Societal pressure against social networking sites based on:
    • Privacy issues: although people can determine the information they post on a social networking sites themselves, privacy issues are raised around the question how secure this information is in the hands of the party that owns/administrates the site
    • The inability of site administrators to effectively deal with abusive/offensive content
    • Censorhip by governments (e.g. Iranian government blocked access to the site during 2009 presidential campaign period)
  • Data Mining/data ownership: the large amount of specific user data is valuable for marketeers targeting specific sectors. But is the site administrator the owner of this data?
  • Use of social networking sites by government intelligence agencies [11]

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, online bullying). 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
  8. http://mashable.com
  9. Facebook has over 300 million users
  10. Criticism of Facebook
  11. IRS uses social media to track down tax evaders
  12. Advertising spend of MySpace and Facebook
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