Why hits are worth less in a networked world David Cushman FasterFuture.blogspot.com
Three laws describe how value grows and is distributed in networks David Cushman FasterFuture.blogspot.com
Sarnoff’s Law – the  red line <ul><li>The value of a broadcast network is proportional to the number of viewers/listeners:...
Metcalfe’s Law: the  yellow line <ul><li>The value of a  network  is proportional to the square of the number of users of ...
Reed’s Law: the  green line <ul><li>The value of large  networks , particularly  social networks , grows exponentially wit...
How does this reveal  the value of hits in the networked world? David Cushman FasterFuture.blogspot.com
Flip the graphs to find the demand curve … and we discover why the long tail succeeds in the group forming ( Reed’s Law ) ...
Hits take more of the available value in a broadcast world David Cushman FasterFuture.blogspot.com
Hits worth more in broadcast world <ul><li>Shaded area shows hits account for a greater proportion of the available demand...
Hits are still worth having… but <ul><li>They have less proportional value compared to the overall economics of the networ...
Let me point you at? <ul><li>My Blog:  http://fasterfuture.blogspot.com   </li></ul><ul><li>Reed’s Law on Wikipedia  http:...
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Why Hits Have Less Value in A Networked World

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Understanding why 'hits' - from music to best-selling books, magazines and anything else have less value in the emerging networked world - and where that value has shifted to.

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  • Hi SRINI, I appreciate you taking the time to view the slides and to comment.
    You are right to identify it is not about the numbers - because it's not about audiences.
    But it is also not about quality. Relevance beats quality every single time. Give me both and I'm more satisfied, but give me relevance first. Relevance is what drives groups to form - why scale happens. I regularly discuss this on my blog and when I speak (fasterfuture.blogspot.com)
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  • Good one.
    here are my thoughts triggered by the presentation.
    The value of network seems to me to be over glamorised in recent times. Ultimately real satisfaction comes from quality production - be it music, video or book. These experience producers or creative individuals are a pre requisite for value creation that can be broadcast, transmitted or exchanged through networks. Social networks success comes NOT from the numbers but teh diverse and rich content that is produced by the members od such network.
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Why Hits Have Less Value in A Networked World

  1. 1. Why hits are worth less in a networked world David Cushman FasterFuture.blogspot.com
  2. 2. Three laws describe how value grows and is distributed in networks David Cushman FasterFuture.blogspot.com
  3. 3. Sarnoff’s Law – the red line <ul><li>The value of a broadcast network is proportional to the number of viewers/listeners: Eg TV, Radio, Cinema </li></ul>David Cushman FasterFuture.blogspot.com
  4. 4. Metcalfe’s Law: the yellow line <ul><li>The value of a network is proportional to the square of the number of users of the system ( n² growth): Fax machines, telephones, one-to-one communications. </li></ul>David Cushman FasterFuture.blogspot.com
  5. 5. Reed’s Law: the green line <ul><li>The value of large networks , particularly social networks , grows exponentially with the size of the network.(2n) </li></ul><ul><li>Because: The number of possible sub-groups of network participants grows much more rapidly than either the number of participants, ‘ N’ (Sarnoff’s Law) , or the number of possible pair connections ( Metcalfe's law ) (N squared) </li></ul>David Cushman FasterFuture.blogspot.com
  6. 6. How does this reveal the value of hits in the networked world? David Cushman FasterFuture.blogspot.com
  7. 7. Flip the graphs to find the demand curve … and we discover why the long tail succeeds in the group forming ( Reed’s Law ) world of social networks that IS the internet. David Cushman FasterFuture.blogspot.com
  8. 8. Hits take more of the available value in a broadcast world David Cushman FasterFuture.blogspot.com
  9. 9. Hits worth more in broadcast world <ul><li>Shaded area shows hits account for a greater proportion of the available demand and total value in Sarnoff’s broadcast world and in Metcalfe’s world of one-to-one communications. </li></ul>David Cushman FasterFuture.blogspot.com
  10. 10. Hits are still worth having… but <ul><li>They have less proportional value compared to the overall economics of the networked world. </li></ul><ul><li>In a broadcast world the hit was where MOST of the value resided </li></ul><ul><li>The opposite is true in a networked world. </li></ul><ul><li>Seeking ways to create value in the long tail therefore offers the bigger opportunity </li></ul>David Cushman FasterFuture.blogspot.com
  11. 11. Let me point you at? <ul><li>My Blog: http://fasterfuture.blogspot.com </li></ul><ul><li>Reed’s Law on Wikipedia http://en.wikipedia.org/wiki/Reed%27s_law </li></ul><ul><li>White Paper: Reed’s Law and How Multiple Digital Identities Make the Long Tail a Little Longer . http://fasterfuture.blogspot.com/2007/08/reeds-law-and-how-multiple-identities.html </li></ul><ul><li>My poorly executed graphs were derived from those originally used by David Reed at: http://www.reed.com/gfn/docs/reedslaw.html </li></ul><ul><li>Inspired by David Reed, Alan Moore, Clay Shirky and anyone who ever joins the conversation </li></ul>David Cushman FasterFuture.blogspot.com

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