Subject: Re: near/medium future digital media economics
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Fri, 19 May 2006 09:32:46 +0900

>>>>> "Ben" == Ben Tilly <btilly@gmail.com> writes:

    Ben> I'm sorry, but Metcalfe's Law is certainly wrong in all but a
    Ben> very small number of circumstances.

One of which is arguably Tom's setting. ;-)

    Ben> Under normal circumstances a far more reasonable scaling rule
    Ben> is n log(n), which does not pose the same level of
    Ben> irresistable network effects that Metcalfe's Law does.  There
    Ben> are network effects, but they are far smaller for mature
    Ben> networks than Metcalfe's Law would suggest.

Ah, the strange attraction of asymptotics.

Tom isn't talking about a mature network, he's talking about one in
its infancy.

Also, you should remember that in terms of dynamics, a mature industry
will be increasing with the rest of the economy, ie, exponentially.
In an industry where costs can be expected to fall while prices are
rising linearly with time ... I'm sure you can draw the picture, too.

In other words, they don't need to be as big as Metcalfe's Law
suggests to be bi-i-ig.

-- 
Graduate School of Systems and Information Engineering   University of Tsukuba
http://turnbull.sk.tsukuba.ac.jp/        Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
        Economics of Information Communication and Computation Systems
          Experimental Economics, Microeconomic Theory, Game Theory