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date: 03 June 2020

Metcalfe’s Law 

A Dictionary of Marketing

Charles Doyle

Named after Bob Metcalfe, the inventor of the Ethernet computer-networking technology, it states that the value of a network grows in proportion to the square of the number of users. Once a network achieves a certain size, it becomes almost irresistibly attractive. Metcalfe reasoned that 1,000 people on a network could have roughly one million different conversations, so the value of a network grows in proportion to the square of the number of users. This is an important law for marketers, because as far as potential consumers are concerned, given the choice of joining a large existing network with many users or a new one with few users, they will almost always decide that the bigger one is far more valuable. The result is often explosive, accelerating growth once a network establishes dominance. This law is most demonstrably felt in the world’s two great interactive networks—the Internet and the global telephone network.... ...

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