Network Literacy Part Two

Howard Rheingold this is the second in a series of videos about network literacy in the first episode I spoke about why it's important to understand how networks work whether or not you know or care about the engineering or technical aspects of them and in particular I spoke about the way that the technical architecture of the internet reserves innovation for the endpoints of the internet for the users of the internet rather than any kind of centralized control the enormous creativity and productivity of the worldwide web is a direct result of that technical architecture one of the architects of what has been called the Internet's and to end principle was David Reid and I had the privilege of talking with with David in Cambridge Massachusetts where he is a fellow at the Media Lab when I was researching my book smart mobs in 2001 and I asked him about what he was calling reads law which is a way of valuing the kinds of networks we participate in the way the structure of those networks affect the value that can be derived from those networks he started off by referring to Sarnoff's law David Sarnoff of course was the founder of the Radio Corporation of America RCA one of the pioneers of television and he made the perhaps now obvious remarked that the value of the network depends on the number of receivers that is if you have a television broadcasting network it's not worth much if you only have two people who are receiving your signal if you've got millions of people receiving your your signal then there's a great deal of value in it for the broadcaster this is really a few too many broadcast network in which the value is derived primarily by the person who broadcasts to many who receive it in the 1970s at Xerox PARC a great number of of Wizards assembled to create what we now know as personal computing one of them Bob net Metcalfe invented the form of networking known as the Ethernet he later left Xerox PARC and and started the 3com company from which he made a great deal of money became a venture capitalist he also noted Metcalfe's law which is that the value of the network grows with the square of the number of nodes now that's pretty simple to understand if you think about when fax machines first came about before the internet one fax machine is worthless to fax machines are valuable for the two people who can send material to each other but of course the the value of a network Rises when you have hundreds thousands and eventually millions of machines well that value of the network is the value of each node multiplied by every node it can communicate with that means that the value of the network Rises with the square of the number of nodes so if you have two nodes the value is four if you have four nodes the value of sixteen arises pretty quickly in that regard when the value of the network increases so much more quickly than the number of nodes in the network then the mathematical consequence translates into economic leverage that means that connecting two networks creates far more value than the sum of their values as independent networks and that was one of the reasons although it wasn't stated that way and creating an internet that connected the many different networks that existed in the 1960s and 1970s when I talked to David Reed he pointed out that he had what he called his first Eureka when he thought about why eBay is so successful now Evy of course doesn't sell any merchandise itself it provides a market for customers to buy itself from each other as they Madrid put it a bay one because it facilitated the formation of social groups around specific interests social groups on eBay form around people who want to buy yourself teapots or antique radios now at that time Reed had been reading Francis Fukuyama's book about social capital owns his book was was called trust and he noted that there's a strong correlation between the prosperity of national economies and social capital which Fukuyama defined as the ease with which people in a particular culture can form new associations I have a different definition of social capital that's that someone related which is it's the ease with which people can get things done together without going through institutions Robert Putnam defined social capital in terms of networks of trust and norms of reciprocity so as Reed was explaining his Eureka he said that he realized that the millions of humans who used the millions of computers on the network that eBay was part of added another important property to the additive properties of Sarnoff's law and the exponential properties of Metcalfe's law which is the ability of the people in the network to form groups significant difference between a network of fax machines and a network that connects human beings Reed said I remembered that when it became possible to send and reply the entire groups and email it became possible to create ad hoc discussions and that's of course what virtual communities grew from we got message boards listservs budding lists auction markets Usenet all kinds of ways for people to form groups online David Reed started calling these group forming net the telephone network for example it's not exactly a group forming Network although it's it's possible F conference calls it's mostly one-to-one read some that networks that connected humans that enable them to form groups with each other around mutual interests grow even faster much faster than Metcalfe's law reads law holds that the value of the network grows proportionally not to the square of the number of users but exponentially now that means you raise the number two to the power of the number of nodes instead of multiplying the number of nodes that is squaring them by itself so the value of two nodes is four under Metcalfe's law and reads law but the value of ten nodes is 100 10 to the second power under Metcalfe's law and 1024 two to the tenth power under reads law and those differential rates of growth that climb the hockey stick curve from there that explains how social networks enabled by email and other social communications drove the growth of the network beyond the communities of engineers to include every kind of interest group I'm going to talk about the importance of multiplying social networks by technical networks a little later Reid's law is a link between computer networks and social networks Reed using his law to analyze the value of different kinds of networks believes he has discovered an important cultural and economic shift and I'm going to quote him here from our interview there are really at least three kinds of value that networks can provide the linear value of services aimed at individual users like a fax the square value from facilitating transactions and exponential value from facilitating group affiliations what's important is that the dominant value in a typical network tends to shift from one category to another as a scale of the network increases whether the growth is by incremental customer additions or by transparent interconnection scale growth tends to support new categories of killer apps and thus new competition we can still see this scale driven value shift in the history of the Internet the earliest usage of the Internet was dominated by its role as a terminal network allowing many computer terminals to selectively access a small number of costly time-sharing computer hosts mainframe computers as the internet grew much more of the usage in value of the Internet became focused on pairwise exchanges of email messages files etc following Metcalfe's law and as the internet started to take off in the early 1990s traffic started to be dominated by news groups user created mailing lists special interest websites following the exponential group forming network law although the previously dominant functions did not lose value or decline as the scale of the internet grew the value and usage of services that scaled by newly dominant scaling laws grew faster thus many kinds of transactions and collaboration that had been conducted outside the internet became absorbed into the growth of the Internet's functions and these became the new competitive playing field what's important in a network changes as the network scale shifts and a network dominated by linear connectivity value growth content is king that is in such networks there is a small number of sources publishers or broadcasters of content that every user selects from the sources compete for users based on the value of their content whether it's published stories published images standardized computer consumer goods or or television programs where Metcalfe's law dominates transactions become central the stuff that is traded in transactions via email or voicemail money securities contracted service or whatnot our King and we're the group forming Network law dominates the central role is filled by jointly constructed values such as specialized news groups joint responses to requests for proposals gossip read believes there's a direct connection between the kind of social capital that Fukuyama discusses in this book trust and the way people use the Internet as a group forming Network this connection is the reason why esoteric technical and legal arguments about the end-to-end principle and wireless regulation might have a huge effect on everybody in the world if the innovation Commons is open to many in the future as it has been in the past a cornucopia of the Commons could make it possible for many to benefit are those who have concentrated capital and existing infrastructures and corporations might manage to enclose the Commons and reserve that power of innovation by technically excluding future innovators the first battle was fought over Napster the established interests one trigger an effort by innovators to invent knowledge Commons that can't be enclosed I want to talk now about the relationship of social networks to these technical group forming networks that that Reid refers to because I think that multiplication of value as Reid pointed out is not just economic value but it's social capital the capacity to get things done without money or without institutions like like government social networks are probably as old as humans if you think about it our ability to organize collective action using symbolic communication is probably what enabled our very powerless ancestors to survive on the savanna the the primates who came down from the trees and evolved into Homo sapiens were very small they didn't have claws or wings they couldn't run very fast but they were able to communicate with each other they were able to organize collective defense and collective food gathering arguably our ability to use symbols first speech and eventually writing and then the the mechanization of writing through print telephone and the internet turning that mechanism mechanization into the speed of light these capabilities of humans to socialize and to take advantage of that socialization really is what makes us Homo sapiens social networks are something that humans have created since forever as I'll talk about later when I talk about Manuel Castells there are of course natural limits to human social networks we can only communicate with the people who can hear us if we're talking through through speech and writing greatly extends that but the number of people we can organize very quickly the geographic spread of those people the diversity of those networks those are all are rather limited until we get media like the Victorian internet The Telegraph that first wired up the world in the nineteenth century and now the internet those networks with the properties that David reading talks about multiplied our human capacity for social networking and lower the thresholds force for some of the capacities to organize with others and in some cases eliminate obstacles that prevented us from organizing with people on the other side of the world in a matter of seconds for example so when you look at networks I think you have to understand that the great power of the networks is not only in the technical aspects that Sarnoff and Metcalf pointed out but in the social aspects that Reed pointed out in my next episode in this series I'm going to talk about why networks matter I'm going to primarily focus on Manuel Castells work around the networked society but I'm also going to refer to social capital and some of Robert putnams work about social capital

4 thoughts on “Network Literacy Part Two”

  1. Same important story but with a FOURTH Network Effect Law added:

  2. Great.
    Waiting for part 3.
    Let's prepare tp prtect our commons, the internet, against hegemonic take-overs
    What about a "preventive" literacy commons campaign, before it is too late???

  3. Howard is right to focus on literacy first of all, especially since the ability to perform symbolic communication was such a critical step in human evolution… probably the most important cultural leap after the advanced mimicry capacities endowed by mirror neurons.

    But I wonder if any of the big "laws" he mentions in this video — Sarnoff, Metcalfe, and Reed — take account of common vocabulary (reference to a shared symbol set) as a limiting factor? Fukuyama's "social capital" doesn't.

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