Subject: Re: near/medium future digital media economics
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Sat, 20 May 2006 14:37:42 +0900

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

    Ben> OK, this is the copy that I intended to send. :-)

Say "hi" to your secretary for me.  The first one seemed very
familiar. :-)

    Ben> Of course most of us are interesting to someone.  My point
    Ben> was that very, very few of us are interesting to _everyone_.
    Ben> Therefore most people do not derive much value from the
    Ben> potential connections to most other people.

A meaningless qualititative statement.  There are plenty of ways to
define "most", "much", and "most" to get any result you want between
badly sublinear and Metcalfe's Law.

    Ben> Bradford's Law says for a large number of journals n, the
    Ben> number of articles of interest that can be found will be
    Ben> proportional to log(n).  The number that a researcher will
    Ben> find using a traditional library search will be fixed because
    Ben> researchers do not actually search more than a few journals.
    Ben> So the actual value (measured here in number of articles
    Ben> found)

I think that's an extremely questionable measure of value.  For
example, consider a patent search.  The marginal value, as measured in
probability of a successful application, of finding an additional
"near-precedent" increases as you near 100% of near-precedents.  It's
arguable that searches for academic papers show a similar increasing
marginal return, because (after "your math is wrong") the most common
reason for rejection is "we already knew that, see the paper by So An
So in the Singapore J. of Unsearchable Results."  Or, as the proverb
has it, "you always find what you're looking for in the last place you
look".

    Ben> Whichever one you argue for [...] you're going to find that
    Ben> the general scaling behaviour is VERY different than
    Ben> Metcalfe's Law projects.

You're forgetting that I'm a coarse-filtered economist, who only knows
of three kinds of scaling behavior: decreasing returns to scale,
constant returns to scale, and increasing returns to scale.
Obviously, I will find that O(n^2) and O(n log n) are in the identical
class.

    Ben> However this alternative scaling law (which Bob Briscoe,
    Ben> Andrew Odlyzko, and I have tenatively nicknamed the BOT law)
    Ben> says that as long as the smaller network can reach sufficient
    Ben> size, network effects do not longer pose an insurmountable
    Ben> obstacle to its continued survival.

Huh?  The alternative scaling law says no such thing in the absence of
assumptions about costs.  What are those assumptions?

    Ben> This is a significant prediction.  It can help explain why,
    Ben> for instance, Apple has been able to survive despite the
    Ben> positive feedbacks from Microsoft's far larger installed
    Ben> base.

Help, yes, but how much?  I think "niche market" is a much better
explanation.  It's very easy to predict who will use Macs vs Windows
in my experience.

[...]
    >> This industry is not going to be competitive unless its
    >> organization changes radically.  That's Tom's thesis.

    Ben> Tom's thesis seems rather idealistic to me.  If his
    Ben> fundamental thinking is right, then there is an opportunity
    Ben> for some proprietary company to be first to create this
    Ben> network, and first to make it grow.  After that network
    Ben> effects will give them the momentum to beat all oncomers, and
    Ben> they'll have a persistent monopoly.  I would expect someone
    Ben> to try this anyways.

    Ben> I predict, by contrast, is that while a company can establish
    Ben> themselves, the barrier for a second competitor will be
    Ben> significant but not insurmountable.

Two is not competition.

[...]
    >> It is nonetheless extremely useful, because for any given human
    >> the set of knowledge for which he has even wannabe status is of
    >> measure zero.  And it may be successful enough to evoke a
    >> Gresham's Law of Encyclopedias unless somebody figures out a
    >> way to take advantage of the medium for high quality
    >> encyclopedias.  That's where Tom is going.

    Ben> I wish him luck.  Based on my past experience, I think that
    Ben> high quality collaborative content depends on having some
    Ben> barrier to entry, which can be subtle or overt.

I believe that that is what Tom means by his talk about "Wikipedia is
not a true network."

I wish him luck, too, and he's going to need it.  But he doesn't need
a miracle.  Remember that the set of networks you can draw on a set of
nodes is pretty damn big[1], and we have not gotten very far in the
process of examining how to design "productive networks" to support
the "social networks" that actually produce "final value".  It is not
clear to me that we can't find some networks that provide a useful
compromise between the chimeric promise of Metcalfe's Law and the
inefficiency of the collection of all pairwise networks.

Footnotes: 
[1]  That's a technical term that means "you don't get to correct my
math today".  I also don't feel like dealing with issues like
multigraphs.

-- 
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