Networks, Noise and Navigation: Sustaining Metcalfe’s Law through Technological Innovation

Paul Windrum, MERIT, University of Maastricht, The Netherlands, and G.M. Peter Swann, Manchester Business School, University of Manchester

1/01/2005
(Original Publish Date: 1999)

The paper examines the relationship between network externalities and the value of the World-Wide Web. It is shown that value depends on two offsetting effects. First, as the Web grows in size, so existing users gain from the additional content provided by new users. This is the standard concept of a network externality. However, at the same time, a large and expanding network can suffer from congestion. Congestion can manifest itself in the time taken to download information from the Web. But an arguably more important problem is navigating the very large number of web pages on offer and to identify the particular page containing information that is of interest. These navigation issues have serious implications for the continued growth of the Web, as described by Metcalfe's Law.