Network Value Growth Models

Nugget of the week

Sarnoff’s law: In broadcasting networks (radio, TV), communication is limited to one direction (broadcaster to listeners / viewers). Sarnoff’s law defines the value of the network as being proportional to the number of users (linear growth).

Metcalfe’s law: Interactions in marketplace networks are bidirectional. According to Metcalfe’s law, the network value is proportional to the square of the number of users (quadratic growth).

Logarithmic: In many actual networks, the growth rate falls somewhere between linear and quadratic. It has been proposed that the network value is proportional to the product of the number of users and the logarithm of that number.