>I find this line ironic since the Network Effect (or Metcalfe's Law) was created to describe literal computer networks.
The distinction is that it refers to physical networks (and iirc, referred initially to phone systems, not computer systems per se). At layer 1, the network effect is still very much valid and caused by the capabilities of the physical hardware. This is forgotten because today everyone is plugged into the same network. This was not always the case.
Because Metcalfe's Law exists, people have misunderstood it to apply to cyberspace and incorrectly believed it's simply the way things have to be. This is not so.
The compatibility concern at the core of real network effects, where the hardware buy will be dictated by what the most neighbors have, are not relevant once you have a physical hookup.
In cyberspace, layers 2 and up, there is no physical limitation on compatibility. There are only digits (hence the term "digital") upon which computations are made (hence "computers"). If the correct computations can be performed (i.e., if you possess hardware that can convert the electrical pulses to the expected digits and software (drivers, browsers, etc.) that can decode the digits to match expectations), the desired data can be presented.
Since network effects refer exclusively to physical compatibility, we only see this in the digital realm because it's artificially imposed. The law says that anyone who tries to extricate data from, e.g., Facebook will be severely punished, despite the fact that Facebook does not have a copyright interest in the data, and that as long as such extrication is done responsibly, it would have 0 impact on Facebook's ability to conduct its operations.
That's an artificial barrier that we've concocted, and it's the only mechanism by which network effects can work in cyberspace. Without the legal risk, people would read the data out from Facebook and recast, repopulate, etc. in alternate hypermedia. People would also make writable interfaces available. Facebook would then have to compete on its ability to provide a superior user experience, like most other businesses, not the availability of the data that they've misappropriated from users.
Social networks like Facebook have forced themselves between the open network and the data that used to be exposed to it, insisting that all traffic must be subject to their conditions. There's no reason to allow that!
Once the online marketplace is subject to the same types of competition that exist in the physical marketplace, i.e., once everyone is allowed to compete over the same core of knowledge, things are going to drastically improve.
I appreciate your thinking, but your understanding and application of networks, as well as your decidedly wishful thinking that they don't apply online, is simply wrong.
Mind: I'd much rather this not be the case, but it simply is.
Metcalfe's function is, by the way, also incorrect. Very few networks are comprised of nodes of equal value, instead the nodal (and inter-nodal) value tends to follow a power function (Zipf's Law), with one suggestion being that the value function of a network with peer-to-peer connections then be:
V = n * log(n) (Tilly-Odlyzko).
I see even that as incomplete, as networks also generate negative interactions, though by their nature, Metcalfe's formula applies, with some constant, such that the network cost imposed by nodes is:
C = k * n^2
Putting those together, a clear corollary is that the maximum feasible size of the network is dependent on the cost function constant.
What you're failing to consider is that the members of a network, including both the users and advertisers, are themselves components of that network, and have their own value and cost calculations to be applied. For large advertising networks, the fact that 1) larger markets with 2) more customers can be approached with 3) fixed costs for the advertiser and 4) efficiencies of scale for the network operator (e.g., Facebook or Google, approximately 2/3 of all online advertising), then there will automatically be an advantage to larger networks, provided k is sufficiently small.
There's nothing artificial about those barriers.
Incidentally, you can find network or dendritic structures in any system in which you have nodes or elements, and links or relationships: transport and communications systems, cities, even knowledge or information itself (think of the terms "knowledge web" or "information web").
I've never cared for Facebook and am finding Google increasingly evil and/or incompetent (and am torn as to whether that last is a good or bad thing on balance), but there's very little validity in claiming that the dynamics which have benefitted them are artificially imposed.
I agree that networks will continue to benefit as more users hop on the platform. What I mean is that the element of network effects that we consider prohibitive/oppressive -- the "walls" around the "garden" -- are artificial in cyberspace, whereas they are real in meatspace.
There is nothing in cyberspace to prevent that data from flowing freely; there is only the threat that meatspace thugs will come and take your liberty and property for failing to respect the imaginary lines. In effect, it's a political border.
Without the legal armaments at its disposal, Facebook could still be a central hub of activity, but the data could be freed from it and exported.
Instead of creating Google+ and hoping it caught on, Google, seeing Facebook's success, could get credentials from the user and automatically multiplex/multicast the user's streams from G+ and FB into the G+ interface. The user would be using G+ as an FB browsing device, and that should be legal -- just as legal as using any other software as a browsing device.
Yes, the browser could materially modify the content of the page, including stripping the ads off the child stream. But all browsers can do that. Should we make it illegal for Chrome or Firefox as well? The only difference is that Firefox is executed on a box a few feet away from the user, whereas a G+ browser is executed on a box that is (probably) much further away.
In this scenario, Facebook continues to directly benefit from the growth and expansion of its network, and more people hop on Facebook. The difference is that there is no barrier to get up against if you're viewing the network's growth from across the room, and you can tell people on your side of the room "It looks Alice from that other network is brushing her teeth". Facebook would no longer have a monopoly on the content generated by users who are "in their space".
Standards, access, frictions, legal obstacles, implementation costs, and much more.
How, precisely, do you distinguish "artificial" and "non-artificial" barriers?
There were open networks, with Usenet being a particular example. Usenet still exists, sort-of. It's entirely a non-starter in social networks. You might want to enquire as to why. Similarly, Diaspora, Friendica, FOAF, blog+RSS, etc., etc.
>How, precisely, do you distinguish "artificial" and "non-artificial" barriers?
An artificial barrier is something that constrains by fiat, especially when that barrier comes from a third-party like the government. It's "because I said so".
You're correct that things like standards, access, and costs are barriers that must be overcome, but with a relatively small amount of effort, these barriers are surmountable.
The ongoing cat and mouse game between something like Facebook and something that multiplexed its data on the user's behalf would be the most expensive/irritating "natural" barrier; natural because, while Facebook would be intentionally creating it, it's a real capability restriction that must be circumvented technologically and not the government saying "Don't do that, or else".
A natural barrier that may constrain some otherwise illegal activities would be the disdain of the public. In this case, there is no such disdain; copyright and IP law long ago exited the space that most people consider reasonable.
>There were open networks, with Usenet being a particular example.
Fixing the law would make the data open without requiring any material change in FB. They don't have to open up. The point is that in cyberspace, the data is natively open.
As Bruce Schneier says, "trying to make digital bits uncopyable is like trying to make water not wet". Easy copying is an intrinsic, inextricable mechanism of the medium. Indeed, it's the fundamental mechanism that allows computers to function at all.
Blog+RSS did extremely well. Facebook and Twitter succeeded because they were simple forms of aggregation. Throughout the 00s, before FB took off with the adult crowd, many people had personal/family blogs to share information about their lives with families and friends, and you'd add them to your feed reader to keep up. FB has supplanted that by having greater usability, but at the core, the concept is the same. The difference now is that FB can lock it up due to the favorable legal situation.
As for things like Diaspora, though I admittedly haven't studied them thoroughly and they probably suffered significant real flaws, they're hamstrung by the artificial effects discussed here.
Diaspora likely would've been an acceptable "social interface" if it could multiplex streams from Facebook and multicast out both to its own network and Facebook (and for all I know, there probably is software that allows this to happen on open protocols like Diaspora; it just can't be deployed in a usable way by anyone looking not to get sued out of existence).
True there are barriers like technology and cost to overcome, but the one intractable barrier is the one that is totally arbitrary: the laws that prevent it.
Anyway, I know that we don't agree, but I do appreciate your contributions to this thread. The discussions have been interesting and given me some good feedback on how to phrase this moving forward.
I think we're at about the limits of an HN discussion length here. I appreciate your thoughts, though I also think you're severely understimating the emergent properties which can lead to lock-in effects. That's not to say there aren't some imposed barriers, though I'd argue ultimately those legal bars themselves are in some sense emergent (virtually any empowered agent will seek to reinforce its power through available means).
The good news, if there is that, is that aspirational social networks tend to follow cycles, both online and off, and Facebook will all but certainly fall, eventually. The bad news is that the same dynamics which created it will create the next instance, and I'm really not sure those dyanamics can be disrupted, no matter how much I'd like to see that they are.
While it's hard to make digital information uncopyable, it's relatively easy to make it nonsensical. Obsolete or opaque formats, hoop-jumping, rate-limiting, and more, all impose costs. And the larger your population is, by definition, the less sophisticated it is (sophistication is a definitionally minority characteristic). So the harder it is to manifest a shift.
Something to keep in mind: any time someone pitches an idea to you with the line "all we've got to do is convince people to ...", run. Just run. Unless people would sell their children and mothers to get what it is you're selling, it won't fly.
Very cool. I think Tilly-Odlyzko did hint at cost interactions as well in their reference to spam. Curious why you agree with T-O in the nlog(n) valuation of networks, but judge that costs still grow quadratically? Surely not all negative interactions are equally negative to all members of a network? (an online bully doesn't bully everyone equally, etc.)
I've been kicking around the question of what the proper functional specification of the network cost function is. One rationalisation is that by specifying an absolute minimum cost function, you can set an upper bound on the size of the network.
The rationale for a constant cost function imposed, per node, on all nodes, is that simply by existing any node imposes some cost on others. This becomes a simple random probability function: there's some random probability in any given cycle that one node will interact in a negative way with any other.
A key realisation is that that negative interaction can literally be anything -- it's a lot easier to get things wrong than right. So odds are that any interaction with any other node is going to impose a cost.
Tossing this into a more concrete realm, I've been doing a lot of thinking on communications and media networks, and the rivalousness of attention. (On which there's a fairly interesting history I'm just starting to scratch, going back to Herbert Simon and Alvin Toffler's Future Shock, as well as before.) In the realm of "fake news" or cognates (propaganda, misdirection, misinformation, distraction, etc.), there's a question of how much news can the typical person process in a period? Say, a day, week, month, year, etc.
Most media publications have a top-10 story listing. I've found lists of the top-20 real and fake news stories posted around Facebook, and the drop-off in re-shares is 1-2 orders of magnitude from the top to bottom of the list. Discussions of "the big lie" (see Hitler and Goebbels, Nazi Germany) make clear that a small number of key points is key. Major news providers (WashPo, NYTimes, WSJ) produce ~150 - 300 original items daily. Newswire services (Reuters, AP, the French one (Presse ???) kick out about 2500 - 5000 pieces daily. Online media consumption (FB, mostly) is about 40-45 minutes daily, which you can divide amongst however many messages are processed (10? 100? -- that's 4 minutes, or 25 seconds, per message). Super-email consumers (Stephen Wolfram, Walt Mossberg) manage about 150-300 messages/day. The NY Times comment moderation team handles somewhat short of 800 comments/day, presumably over some fraction of an 8-hour workday. Attention per message is time divided by messages.
Which means that every message we see, regardless of quality, imposes some acquisition cost. And if we're on a network that streams and dumps messages at us without any filtering capability, then ... we're going to be overwhelmed.
And that's a minimum cost.
The network which retransmits the fewest bullshit, bogus, false, irrelevant, etc., messages, has the highest intrinsic attention value.
Now, on top of this, there are other costs, for which some variant of nlog(n) metrics probably apply: there is a small subset of sources whose content is actively malicious. The ability and capacity to filter against* that ... is useful. And this shows up in all sorts of contexts -- small portions of any population are the overwhelming sources of crime, disruption, corruption, etc., etc. The key problems are 1) identifying them and 2) doing something effective to limit their capacity to do harm.
(There are almost certainly second order and higher effects as well, that's ... another discussion.)
A few more examples of cost functions:
1. In workgroups, inter-member communications, coordination, resource conflict, management time, meeting time, etc., all impose costs. See Brooks, The Mythical Man-Month.
2. In cities, any number of problems arise from putting people in close proximity: noise, smells, disease, congestion, etc. By the 19th century, London, as an example, was killing off its inhabitants faster than they could breed. The only way to sustain (or grow) its population was by net in-migration from the countryside. I believe life expectency once moving to the city was on the order of 16 years. Installing a sewerage system (1850s) and freshwater supplies (roughly the same time) vastly improved on that. New York City saw similar problems for which there's a Department of Public Health graphic showing net mortality from about 1800 through ~2005. The biggest declines were 1850 - 1910. Everything since has been at best modest.
3. Email. Classic instance of message-acquisition conflicts, but also of a failure to standardise on conventions and message formats. I find the medium all-but-unusable presently. And that's before considering the absolute lack of security or authentication involved.
4. Computers. If nothing else, heat accumulation limits the density and scale of systems.
5. Mammals. From the smallest (a ~0.5g shrew) to largest (200+ tonne blue whale) there's a tremendous range of scale, and superlinear net scaling. But dumping heat becomes a problem. Ounce-for-ounce, the shrew has a far higher metabolism than the whale, but a whale's total metabolism is far higher -- on the order of a tractor-trailer rig. There've been some recent discoveries of odd organ-like features withing the whale mouth, including a tremendous vascularisation of the tongue. I suspect that may be a means of ridding excess body heat particularly during feeding activities, which are tremendously energy-intensive: ram-filling the mouth with water, then straining it out, for krill-feeders. The entire underside of the mouth baloons out massively during this process.
My theory is that in any dendritic or network structure, you can identify similar value and cost functions, though you might have to think for a while before turning them up. One of the more interesting questions for me is knowledge-as-network itself: the ability to come up with more individual models, and more complex models, creates value (better modeling, understanding, prediction, and control of reality), but, if my theory is correct, also imposes some costs. Transfer, maintenance, utilisation, and variances on the abilities of individuals (or AI systems?) on acquiring, utilising, and adapting those models may be part of that.
> I've seen no indication he doesn't think it's correct.
He explicitly told us this during a lecture. It was something to the effect of "I just made it up, it's an oversimplification, but it's good marketing."
I think you are right that there are necessarily network effects online as well. But who benefits from these network effects to what degree, and how stable any central control over that network can be is very much determined by laws that could be entirely different.
Network effects necessarily exist, but walled gardens don't.
So, yes, value creation and value distribution are two different coins.
Centrality-of-control ... somewhat depends.
Danah Boyd in a Medium piece pointed out that Google's central-point-of-control of Gmail:
"Many who think about technology recognize the battle that emerged between spammers and companies over email, and the various interventions that emerged to try to combat spam. (Disturbingly for most decentralization advocates, centralization of email by Google was probably more effective than almost any other intervention.)"
Though thinking a bit on this gives some indication of how and why, and by extension, what could be done to break this control point:
1. Gmail receives a tremendous amount of mail. It can recognise both repetitive content and patterns of behaviour, particularly by points-of-origin.
2. Gmail can standardise internally on forms of reporting and mitigation against spam. That is, it is its own standards-development organisation. Increasingly, I'm noting that one of the efforts of a would-be monopolist is to attack standards formation. Because standards lower the barriers of entry for other participants.
3. Google specialise in contextual analysis -- the mining of content, particularly (but not just) textual content -- for indicators. The same analysis which makes for improved ads targeting or SERP relevance features heavily in detecting and thwarting spam, phishing, and related antisocial behaviour.
4. Tightly integrated communications. Between formats, pipe-bandwidth (intra- and inter-datacenter), and processing, Gmail can respond rapidly to new threats.
In particular, Gmail has a "report spam" feature (as do many other mail service providers) which allows for rapid detection of what users consider spam. Where you won't find similar features is on any third-party email tools.
Take an extreme case: Yahoo. I've long had problems with spam originating or transiting Yahoo's server space. What I've found is that whist Yahoo have a standardised reporting tool, they have not provided any support, nor are there any third-party tools of which I am aware for reporting spam in that format to Yahoo.
Running mutt, it would be trivial for me to pipe any given email, headers and all, into a report-generating application. Hell, I could dump spam to a dedicated mailbox, and run shell tools on that to handle 100s to millions of messages. I've built and used tools to do just that, back in the day.
But ... Yahoo never did this. Nor have any of the other major email service providers.
(I was approached at a spam conference by several people at email service providers who'd told me they'd written programs to read and parse the mail my programs were generating, which was ... amusing and heartening.)
There are dynamics which tend toward and reinforce walled gardens. Busting those is ... hard.
The distinction is that it refers to physical networks (and iirc, referred initially to phone systems, not computer systems per se). At layer 1, the network effect is still very much valid and caused by the capabilities of the physical hardware. This is forgotten because today everyone is plugged into the same network. This was not always the case.
Because Metcalfe's Law exists, people have misunderstood it to apply to cyberspace and incorrectly believed it's simply the way things have to be. This is not so.
The compatibility concern at the core of real network effects, where the hardware buy will be dictated by what the most neighbors have, are not relevant once you have a physical hookup.
In cyberspace, layers 2 and up, there is no physical limitation on compatibility. There are only digits (hence the term "digital") upon which computations are made (hence "computers"). If the correct computations can be performed (i.e., if you possess hardware that can convert the electrical pulses to the expected digits and software (drivers, browsers, etc.) that can decode the digits to match expectations), the desired data can be presented.
Since network effects refer exclusively to physical compatibility, we only see this in the digital realm because it's artificially imposed. The law says that anyone who tries to extricate data from, e.g., Facebook will be severely punished, despite the fact that Facebook does not have a copyright interest in the data, and that as long as such extrication is done responsibly, it would have 0 impact on Facebook's ability to conduct its operations.
That's an artificial barrier that we've concocted, and it's the only mechanism by which network effects can work in cyberspace. Without the legal risk, people would read the data out from Facebook and recast, repopulate, etc. in alternate hypermedia. People would also make writable interfaces available. Facebook would then have to compete on its ability to provide a superior user experience, like most other businesses, not the availability of the data that they've misappropriated from users.
Social networks like Facebook have forced themselves between the open network and the data that used to be exposed to it, insisting that all traffic must be subject to their conditions. There's no reason to allow that!
Once the online marketplace is subject to the same types of competition that exist in the physical marketplace, i.e., once everyone is allowed to compete over the same core of knowledge, things are going to drastically improve.