- See Also
- “The Man Who Discovered Network Effects Isn’t Sorry: Bob Metcalfe, Inventor of Ethernet, Coined the Law That Explains the Power and Pathologies of Social Platforms. He Also Just Won Computing’s Highest Honor”, Levy 2023
- “How’d You Come up With Metcalfe’s Law?”, caseysoftware 2023
- “Moore’s Not Enough: 4 New Laws of Computing: Moore’s and Metcalfe’s Conjectures Are Taught in Classrooms Every Day—these Four Deserve Consideration, Too”, Dedeke 2022
- “Metcalfe’s Law As a Model for Bitcoin’s Value”, Peterson 2018
- “Testing Metcalfe’s Law: Pitfalls and Possibilities”, Hove 2016
- “Metcalfe’s Law and Network Quality: An Extension of Zhang Et Al 2015”, Hove 2016b
- “Tencent and Facebook Data Validate Metcalfe’s Law”, Zhang et al 2015
- “Metcalfe’s Law: Not so Wrong After All”, Hove 2014
- “Empirical Validation of Metcalfe’s Law: How Internet Usage Patterns Have Changed over Time”, Madureira et al 2013
- “Metcalfe’s Law After 40 Years of Ethernet”, Metcalfe 2013b
- “A Refutation of Metcalfe’s Law and a Better Estimate for the Value of Networks and Network Interconnections”, Odlyzko & Tilly 2005
- Link Bibliography
Metcalfe’s law was made famous by the Internet bubble as a justification for investing in growth & disregarding losses: if the value of a ‘network’ increased nonlinearly, then at some future point, the profits would materialize past an ‘inflection point’. This “law” has been blamed for inflating the bubble, and has been supposedly debunked by 2005.
However, 2005’s arguments are quite poor, and turn out to be both theoretically flawed and contradicted by all available empirical data directly testing Metcalfe’s law: it turns out that networks do scale in value much like Metcalfe guessed.
But on the gripping hand, the constants involved are not that large so networks may have to scale enormously to show economically-important effects, and there are hints of diseconomies of scale. So it may be that in practice, Metcalfe’s law is true but too dangerous to hold as an overriding strategic principle.