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Metcalfe’s law states that the value of a network increases exponentially as the number of users increases. It was developed by Robert Metcalfe in 1980 and applies to various communication networks. The law has been controversial, and Metcalfe clarified that affinity between users is also important for social networking sites.
Metcalfe’s law is a mathematical formula for measuring the value of a communications network. It was developed by Robert “Bob” Metcalfe, an electrical engineer who became a pioneer in Web technologies.
Metcalfe’s law puts the success of a communications network on the number of users. More specifically, this law argues that the value of the network grows exponentially as the network accumulates more users. Metcalfe first formulated the law regarding Ethernet, a local area network (LAN) technology invented by him and researcher DR Boggs. This technology connects personal computers, but can be applied to the Internet in general, Web 2.0 technologies, or any number of telecommunications networks (telephones, fax machines, etc.) where cross-connections for the entire network need to be of value.
For example, a social networking site with only one registered user would be essentially useless. If 100 users sign up, however, it becomes more attractive and beneficial to each individual user. If 1,000 people sign up, even better. The more people who sign up, the more useful, fun, or valuable the site becomes.
Expressed mathematically, Metcalfe’s law states that V = n2, where V stands for value and n stands for number of users. Metcalfe first illustrated this concept in a 1980 presentation given to early adopters of Ethernet; it was brought to public attention in a September 1993 Forbes magazine article written by George Gilder.
Over the past two decades, Metcalfe’s law has become somewhat controversial, especially in recent years. Some have argued that Metcalfe’s law is completely wrong; others say it’s simply misunderstood.
Since its original conception, Metcalfe has made several points clear. He added that when the Metcalfe Act is applied to social networking (and therefore to social networking sites like MySpace, Facebook and LinkedIn), it’s not just the number of users that needs to be considered, but also the affinity between users. He also pointed out that the law works best when applied to smaller networks and loses value when concepts like “connected” and “value” cannot be quantified.
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