Reed's Law is a refinement of Metcalf's Law that exponentially expands the power of networks once group formation is factored in.
David P. Reed has written:
There are really at least three kinds of value that networks can provide: the linear value of services that are aimed at individual users, the 'square' value from fascilitating transactions, and the exponential value for facilitating group affiliations. What's important is that the dominant value in a tuypical network tends to shift from one category to another as the scale of the network increases.Thus, in linear networks, content is the dominant value; in 'square' networks, transactions are the dominant value; and in exponential networks, group interactions are the dominant value.
Read more at http://www.reed.com/dpr/locus/gfn/reedslaw.html.
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