Sarnoff, Metcalfe, GFN?

The change from a broadcast dominated model of mass communication to a network oriented ecosystem that includes many-to-many interaction is perhaps the most important change in communication structure since the explosion of the printing press.
I recently re-read this article written by the MITs David P. Reed, in which he makes the argument that there are three stages of value production in the history of modern electronic communication, each described by its own "law": the first one, named after David Sarnoff, states that in a classic broadcasting system, the value of a network is equal to its viewers. According to the second, Metcalf's law (named after the inventor of Ethernet, an important networking standard) the value a communication structure with connections between every node (like the Internet) is proportional to the square of the number of users it has.

But Reed doesn't stop there; he goes on to distinguish a third kind of network that "directly enables and supports affiliations (such as interest groups, clubs, meetings, communities)". In such a network structure, which he calls Group Forming Network (GFN), value scales even faster, exponentially that is.

While I think that the mathematics behind his approach is bogus (as others have shown: potential for connection does not equal connections made - that fact that every user on the net can connect to every other doesn't mean that they actually do), I think that this paragraph fits perfectly into some of the questions we have been looking at:

What's important in a network changes as the network scale shifts. In a network dominated by linear connectivity value growth, "content is king." That is, in such networks, there is a small number of sources (publishers or makers) of content that every user selects from. The sources compete for users based on the value of their content (published stories, published images, standardized consumer goods). Where Metcalfe's Law dominates, transactions become central. The stuff that is traded in transactions (be it email or voice mail, money, securities, contracted services, or whatnot) are king. And where the GFN law dominates, the central role is filled by jointly constructed value (such as specialized newsgroups, joint responses to RFPs, gossip, etc.).

This seems rather fitting for the whole Web 2.0 thing, doesn't it? The article is from 1999 though...

B.