Minnesota Researchers Debunk Metcalfe’s “Law”
A recent article from ZDNet — Researchers: Metcalfe’s Law overshoots the mark — reports that two researchers at the University of Minnesota have released a preliminary study in which they conclude that Metclafe’s law significantly overestimates the rate at which the value of a network increases as its size increases. The study was published March 2, by Andrew Odlyzko and Benjamin Tilly of the university’s Digital Technology Center.
Here’s some snippets from the paper:
“The fundamental fallacy underlying Metcalfe’s (Law) is in the assumption that all connections or all groups are equally valuable.“
I’m always happy to find a declaration in support of quality as a differentiator. Of course, quality is a complex and subjective measurement, and so it is no surprise that Odlyzko and Tilly first recall it to relevance, and then continue to say, “The general conclusion is that accurate valuation of networks is complicated, and no simple rule will apply universally.“
It makes me happy when I see smart people saying complicated things are complicated. Odlyzko and Tilly are academics, and so it’s in their interest for mostly everyone else to believe the things they study are complicated, but I think that there’s less danger in this than in basing your business plan or your investment decisions on a fallacious assumption that a very clever entrpreneur transmogrified into an equation — which somehow by exaggeration became a ‘law’ — in a moment of self-serving marketing genius. I know this from experience, because Im guilty of both of these mistakes.
Moving on, as an example, Odlyzko and Tilly declare,“Zipf’s Law is behind phenomena such as ‘content is not king’ [21], and ‘long tails’ [1], which argue that it is the huge volumes of small items or interactions, not the few huge hits, that produce the most value. It even helps explain why both the public and decision makers so often are preoccupied with the ‘hits,’ since, especially when the total number of items available is relatively small, they can dominate. By Zipf’s Law, if value follows popularity, then the value of a collection of n items is proportional to log(n). If we have a billion items, then the most popular one thousand will contribute a third of the total value,
the next million another third, and the remaining almost a billion the remaining third. But if we have online music stores such as Rhapsody or iTunes that carry 735,000 titles while the traditional brick-and-mortar record store carries 20,000 titles, then the additional value of the ‘long tails’ of the download services is only about 33% larger than that of record stores.” {citations available in the original report}
This last begs the question of value, but of course that’s also a complex and subjective judgement…
And with this they’ve introduced context as another important criterion. Context of course can take many forms; they make most use of geographic locality, and then extend their analysis by looking at how common interest in content on the part of academics functions as another index of locality, saying, “Communication networks do not grow independently of social relations. When people are added, they induce those close to them to join. Therefore in a mature network, those who are most important to people already in the network are likely to also be members. So additional growth is likely to occur at the boundaries of what existing people care about.“
The references alone make this paper worth downloading and scanning. Read more of Odlyzko’s work.
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