Metcalfe's Plateau

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Noah Brier [1]:

"Metcalfe's Plateau, a place where the value of the network no longer increases with each additional node. In fact, thanks to spam (as deemed by me), the value of the network had started to decline, I was looking for other places to spend my time online.

I've been noodling on this idea for a while and been trying to figure out just what to say. I don't think it's a particularly new problem. Anyone who's "discovered" a new bar can attest to the initial rise, as you tell all your friends and they tell their friends, which inevitably ends with a place that's so full of random folks that everything you loved about it is gone. In the world of email we see Metcalfe's Plateau even more clearly: Spam. When the network hit a point large enough that you couldn't afford not to have an email, it also hit a point where you could afford to reach massive amounts of individuals for little to no money. Thanks to spam filters, we're able to hold back the flood waters. However, I think it's pretty safe to say for me that new additions to the network are unlikely to provide any additional value to me, since everyone I know or likely will ever know (minus those not born yet or too young to have an email) already has an email. Therefore each new email address (node) holds a certain likelihood to be spam or at least some unrequested contact. (I am not entirely sure about what I'm saying there, it's just a theory now. Feel free to tear it apart.)

As Jeffrey Stibel wrote in a piece called Networks Don't Grow Forever (which inspired me to finally get these thoughts down), "Networks do not always grow more powerful with size and scale. To be sure, Metcalfe’s Law applies to networks up to a point, call it a growth phase. But let us stake our claim to a new Law: all networks eventually hit a point of diminishing returns."

Thinking about it further, I think the distinction probably lies in who reaps the benefits of the network. In other words, the value of the Facebook network to Facebook likely does increase exponentially with each new user, as it allows them to attract even more people to the site. However, for the individual users like us, that value isn't necessarily passed." (http://www.noahbrier.com/archives/2008/07/metcalfes_plateau.php)


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See also: Metcalfe's Law