Slashdot Mirror
New Fundamental Law of Network Economics
intersys writes "A new fundamental law of economics has been formulated by Rod Beckstrom, former Director of the National Cyber Security Center. In Words: The value of a network equals the net value added to each user's transactions (PDF) conducted through that network, valued from the perspective of each user, and summed for all. It answers the decades-old question of 'how valuable is a network.' It is granular and transactions-based, and can be used to value any network: social, electronic, support groups, and even the Internet as a whole. This new model or law values the network by looking from the edge of the network at all of the transactions conducted and the value added to each. One way to contemplate the value the network adds to each transaction is to imagine the network being shut off and what the additional transactions' costs or loss would be. Beckstrom's Law replaces Metcalfe's law, Reed's law, and other concepts which proposed that the value of a network was based purely on the size of the network (and in the case of Metcalfe's law, one other variable)."
As whiskers abound,
The network is found,
Infinitely sound,
Until Slashdot-ground.
Burma Shave
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
1(4)+1(2)=6
I am completely unimpressed by this common sense "discovery." They pay people to come up with this?
This is my sig.
a new law that will, when the current crisis will end, contribute to create the next crisis?
He's with the National Cyber Security Center, and for security purposes there's always this dramatic "the hacker caused damages of X dollars" where X is very large. They want X to be huge so that equally large sums can be spent on bringing offenders to justice, so that the press has this huge amount of loss to report for dramatic purposes, so that huge civil suits can be brought, etc. Additionally, this Beckstrom fellow devises "Beckstrom's Law" and now he can be called in for expert testimony, he being the expert because "Beckstrom's Law" is named after him (by himself of course, but that's just a minor point).
Run and catch, run and catch, the lamb is caught in the blackberry patch.
Also known as the Law of 24:
Networks are easy, simply "open a socket". (And have a gun. And Jack needs to yell at the network a lot)
Jack: "WHY ARE YOU NOT ROUTING THESE PACKETS! "JUST TELL ME WHERE THE BIT-BUCKET IS!" "WHO ORDERED THE 3COM HUB?"
What? It makes as much sense as the article.
Sent from your iPad.
I think this definition is pretty damn useless -- how is one supposed to calculate this value for anything but trivial example cases? You would have to determine the value of each transaction, and then the 'value-add' of the network for that transaction, as determined by the user. I make 'transactions' (financial and otherwise) on the Internet all the time, and I couldn't begin to guess at useful values for these. And I'm just one of millions of such users.
Finally, how would one even begin to define 'value' for the transactions in a social network? How much (or little!) is being poked worth?!?
...at least, not in the academic sense. Though there are some research papers that contribute just as little. At its base, this is how Value-Added-Tax is calculated. Wheel, reinvented, wow...
Enjoy life! This is not a dress rehearsal.
Except this could be used as an argument FOR net neutrality too.
Adding a fee is a zero sum game, the person paying gets less value, the person being payed gets more.
so, in the no transaction payment model:
perceived value - (overhead/large number) + (advertising revenue + marketing value) - (overhead/larger number + transactional cost) = transaction value added.
taking a fee out of the perceived value, and adding it to the revenue does not improve the transaction's value at all. And will decrease the number of transactions overall, since people will be less likely to get value out of any given transaction. Using this model it should be the goal to increase usage so that there are more value adding transactions, not decrease it so that some people make more money.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
For any consumer- or end-user-level network, Ohm's law is the one you need to most worry about.
I want to delete my account but Slashdot doesn't allow it.
But surely there are replacement wives available. So is the value of my wife in the positive things that I get from her currently, or is it only relative to the potential value of other wives, or of the freedom of having no wife at all?
Clearly, sir, you need a Redundant Array of Inexpensive Wives (RAIW). Twins (RAIW-1) are OK but RAIW-5 with lots of hot spares works better. Most admins agree that products with large rack mounts are better. A lot of hot air is generated resulting in increased cooling requirements. Also an astounding amount of noise, OSHA requires earplugs in that environment. This solution is popular in certain datacenters in Utah. Some folks claim a competing product exists, the Redundant Array of Inexpensive Girlfriends (RAIG) but everyone I've met agrees it usually ends up pretty expensive, the opposite of the original acronym, and there are often serious interoperability and EM compatibility issues. Finally w/ regards to financing there is considerable debate about rent vs purchase, short term lease vs long term lease, mileage reimbursement, etc. Rent to own agreements usually don't work out. Maintenance costs are somewhat beyond the realm of this email, but can be extraordinarily high. Anyway good luck with your network, Sir.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
And surely Beckstrom must've realised this, since its trivial to get to Metcalfe's law from his equations.
Beckstrom:
Vj = Sum(i=1..n, V[i,j]) = Sum(i=1..n, Sum(k=1..n, B(i,k)) - Sum(l=1..n, C(i, l)))
= Sum(i=1..n,Sum(k=1..n, B(i, k) - C(i, k))).
= Sum(i=1..n,Sum(k=1..n, Sum(z=1..n, B(i, k) - C(i, k))/n ))
Let A(i) = Sum(z=1..n, B(i, k) - C(i, k))/n , the average benefit to user i of the network. Then:
Vj = Sum(i=1..n, Sum(z=1..n, Ai))
= Sum(i=1..n, n*Ai)
= n* Sum(i=1..n, Ai)
I'm sure you can see where I'm going with this now...
Let A = Sum(i=1..n, A(i))/n , the average benefit to any user of the network.
Vj = n^2 * A. Oh wait - that's Metcalfe's law. All Beckstrom's done here is give an expansion of the average benefit per user.
A rule for assigning a value to something--when you come right down to it, an arbitrary rule, even if it turns out to be useful--is not a law. Sheesh!
The "firmer proof" is only required if you want the scientific community to call it a law.
The standard for getting your fifteen minutes of fame is considerably lower.
The value of your wife is the summation of the change in transaction costs if you replaced her with a null wife (as opposed to a dull wife, which you may already have).
If you replace her with a more efficient wife, then the old wife's value is less than the new wife's, but it would be almost always non-zero.
Says you. I disagree... I think it's a good estimation of the value of a network. The key is to properly assign the transactional costs/benefits of the network; if they are overstated, then the value of the network could be multiplied greatly. Summation of transactional gains/losses for all users, from the perspective of each user? That's a whole lot of transactions. Even a small network of say, five nodes, with twenty transactions between each pair of nodes. There are ten node pairs, so 200 transactions... double the size of the netork and there are now 900 transactions. In a large network, a bad estimate of transactional value could skew the network value way off.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
This paper has not seen any reasonable peer review. There are indices simply missing. The letter l (ell) is clearly not a good index. He uses n for number of transactions, users and networks. He even uses n for networks and users in the same formula, which must mean that number of users and networks are identical. In the summation of the users he leaves the denominators simply away. Usually scientiest don't name laws after themselves.
This doesn't mean that the basic idea might be wrong, but the work itself doesn't support the argument.
Value is an ill-defined term, and different observers will value the same transaction differently. This isn't only because it's ill-defined, but also because valuation is observer centric.
Because of this the law is both too vague to be useful, and silly. Many observers will only value some of the transactions. Others will value some of the transactions negatively. Etc.
E.g., what is the value of the advertisement that may appear at the top of this page? To slashdot it's valued as a source of income. To the advertiser it's valued as a way of attracting business. To most readers it's ignored. To some readers it's a nuisance. Each means of valuing the ad gives it a different valuation...and each valuation is clearly observer-centric.
I think we've pushed this "anyone can grow up to be president" thing too far.