Sunday, January 29

The network effect - the power law behind the lightnet and open access media

The network effect is the reason why AOL died and why closed and inoperable networks and markets fail.

People used to mistakenly think it only applied to pure communications technologies like telephony... the value of the network was directly proportional to the number of people with phones and therefore INoperabile telephony networks failed... but it's not just an issue of people connecting to people.... It can also as is clearly the case of the internet people connecting to ALL the services and tools of the internet.

The internet has brought the issue of accessibility to the forefront because it has changed the expectation. Having to have a VCR and a DVD player was an expectation in the real world... now that people have such an increased awareness and expectation of access they won't stand for in-operability... like NOT being able to play a CD on this computer or that computer... like NOT being able to play certain videos on certain devices... but more importantly not being able to use THEIR email platform with their cellular carrier... or view certain kinds of media with their computer or hardware. In-operability is not an option.

What most people don't understand is how, much like AOL, anything connected to the web that is not network agnostic (aka. network independent) such as cell phone carriers who play favorites and block other IM, mail, video, ring-tone, or other content... or bell south / AT&T and other ISP's whom want to block things like VOIP or "prioritize" their bandwidth to discourage competitors... well it's why they will ultimately fail...

The value of these internet access providers to THEIR customers IS (or if not already, will be) directly proportional to their customers being able to use ANY service on the internet.

The network effect is the internets own innate power law... above and beyond the fact that some of these practices being proposed by ISP's, cellular carriers and other access providers are or may be illegal and anti-completive.

So... in addition to this being a fundamental power law of the fantabulous and all reaching and spreading internet... it will also explain why things like podcasting and video blogging will proliferate to ALL edges of the network from Tivo's, Akimbo's, to cell phones, PSP's and ANYTHING that's network connected.

The real issue is not that some ass-hole cellular provider has in their greed mistakenly thought brokering "exclusive" content details will increase their profit... the real issue is how fast and how important is it for hardware makers to build the hardware, such as portable network devices that support rich media (RSS, mp3's, mp4, and other media and syndication formats)... and how fast can we build the infrastructure to get ALL this media piped to these devices.

Specifically we'll need seamless transcoding and rich tools for intermediation and piping this media to these devices like,,, and future webservices that support personal RSS queues and feeds for media by which any audio or video on the web can be found and piped or aggregated to any portable network device for listening and playback.

The next step will be to reverse that flow from portable devices back to any service on the internet.

Furthermore I'm betting all my money and resources (vast as they are) that there will be a flash-over in 2006... a complete land grab by hardware manufacturers to support the RSS syndication of the widest range of audio visual media to their devices over first wifi... and secondly high-speed cellular data networks.

This gold rush is already starting with portable devices that accept RSS syndicated media like the Apple iPod, the Sony PSP and the Creative mp3 players. But it will quickly become unleashed from the sync cables and desktop as the digital hub with wifi handhelds like the Nokia 770 and other cellular devices like the Treo's and pocket PC's.

It will start first with wifi... like the Nokia 770, possibly even the fabled "networked ipod", but it will branch out to cellular too. ONE cellular network provider will snap and realize the benefit to offering complete access to the internet realizing they can make MINT on the increased bandwidth usage.... the other cellular networks will fall like dominos and the flash over will be in full effect for internet based media to finish eclipsing satellite and cable as the top media, entertainment and communications network. Just as satellite and cable eclipsed broadcast before them... Just as broadcast TV replaced radio... as radio replaced newspapers.

The important thing to realize here is that while the world will be completely changed by this democratization of media that these old mechanisms of satellite, cable, radio, and newspaper will not "go away"... some may in fact find MUCH increased economic viability as they're still the most efficient mechanism for delivering popularist media....

Satellite and Cable may in fact continue to grow tremendously... they may enter into a new golden age as the widespread access to media on the internet may at the same time it appears to be fragmenting markets actually simultaneously create more appreciation for popularist media...

This is at the heart of my argument as to why the breadth of the long tail will increase the breadth of the entire tail... GROWTH. In short while there is exponential growth into smaller and fragmented markets of one or more... there will still be TREMENDOUS growth in the head of the tail as well... Or as I like to put it we'll not see less Brittany Spears we'll see MORE and more popular popular icons... they'll be known to MORE cultures around the world as there's more access around the world to them... and those cultures will also produce their own icons just as big as their markets materialize... We can already see this in China and in India's so called Bollywood. These markets may possibly even eclipse the U.S.'s large media networks.

SO... what I'm saying is while there will be CRAZY growth in the long tail of media do to it's democratization... which will break open closed markets and networks do to the demand for access to ALLL of that long tail content... on the surface there we will actually still see tremendous growth and proliferation of so called "big media" for some time to come... that is when they pull their heads out of their asses and realize much like newspapers have with bloggers... that while they now longer 0wn and control the market for intellectual property we do not in fact THREATEN them at all but are in fact tremendously advantageous partners in their growth and the growth of this new media ecosystem and information economy.

Call it lightnet, call it the network effect... understand it's power laws... call it "the call to open networks and open markets"... call it "free market economics" because that is indeed where the economics have come from.... but it all ads up to one thing.... an increasingly human and accessible global communications and media network... and therefore very likely a much more chaotic, yet potentially much more humane planet. A planet more equitable and accessible on a HUMAN scale... not a large multi-national corporate scale.

This new economy will not be without it's problems... such as the fact that the physical real world access to this economy, the so called digital divide, will be a tough and very important battle in ensuring the equitable distribution of the benefits of this new information economy. However it will be a beautiful and world changing event and define the better part if not the entirety of this century. We need to remember this when we get excited about how fast things are moving and what's right around the bend... we need to remember much like how the printed word changed the world this change is deep and it may even take centuries... We are only at the very start of it all. We're still perhaps in the dark ages of it all... though it may appear we're of a renaissance era.

I hope you enjoyed reading this... it has been another stream of conscious rant by me, mike of :P

1 comment:

Will said...

i do have faith in this network effect- but i still am stuck with how great - rennaisance worthy- content is created. where is the economic model for the creator?