Monday, July 30, 2007

Buzz buzz

I have metaphorically taken advantage of bees and beehives in two previous posts, and I’ve desired an inspiration to talk about buzz. Buzz in a bonfire-esque, pseudo Tipping Point, semi-Metcalfe’s law, real-life sense. The buzz that builds when a company or a product gains popularity and capitalizes on the self-referencing psychographic and networked value of like (or wannabe) participants.

First, Metcalfe’s much debated law. It contends the value of a network (the Ethernet in his initial example) equals the square of the number of users of the system (n2). Take fax machines (with thanks to Wikipedia for this example): A single fax machine is useless, but the value of every fax machine increases with the total number of fax machines in the network, because the total number of people with whom each user may send and receive documents increases.

Email is a great example. SMS/cell phones too. And, social networking sites. In each case, the communications infrastructure/backbone provides the ubiquitous, network-effect-enabling catalyst for companies and products to create their own network effect.

Malcom Gladwell’s premise in The Tipping Point boasts a dash of buzz and a pinch of the network effect:

… the best way to understand the emergence of fashion trends, the ebb and flow of crime waves, or, for that matter, the transformation of unknown books into bestsellers, or the rise of teenage smoking, or the phenomena of word of mouth, or any number of the other mysterious changes that mark everyday life is to think of them as epidemics. Ideas and products and messages and behaviors spread just like viruses do.
A few months ago, prior to picking on bees, I engaged bonfires. Here’s a synopsis:
The bonfire effect: With each endorsement (sale, partnership, testimonial, news article), the bonfire grows. So too does the collection of perceptions, awareness, and connectivity of your participants. As more people participate in the bonfire, the brighter you shine and the more likely people are to see you (a bonfire that’s happening) and get involved.
Bees and bonfires and networks and tipping points … where are we going? One of my favorite thinkers and get-shit-doners, Mark Cuban, chimes in with a recent post about Metcalfe’s Law and Video. It’s all of the above, with a little Long Tail tossed in. His main points:
1. The more people that see content when it is originally "broadcast", regardless of the distribution medium, the more valuable the content.

2. The greater the number of people that watch content simultaneously, the greater the emotional attachment of the viewer.

3. The longer the period required for content to saturate viewer demand, the cheaper the cost of delivery.

4. The shorter the period required to saturate demand, the more expensive the cost.

5. The greater the number of content alternatives at any given point in time, the more expensive it is for any given piece of content to acquire an incremental viewer.
When I met Mark a few years ago (click here for my recap), he flirted with a few of these points in building his case for HDNet, and it’s rewarding to see his oration encapsulated in a string of thoughtful hypotheses. Thanks for the inspiration.

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Post-script (8/6/07): Freakonomics posted a superfreako user-generated Q&A with Mark Cuban. Check out his take about the stock market:
As far as information symmetries, I don’t know that there are any. Unfortunately, most people forget that whenever they buy or sell a stock, there is someone, usually a professional investment firm, on the other side of the trade. I’m pretty sure the other side isn’t there with the intent of losing money.

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