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
- 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?
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]