Where the expense of churning out another copy becomes trivial, the value of standards and the network booms. Instead, what is valuable may be the scattered relationships – sparked by the copies – that become tangled up in the network itself. And the relationships rocket upward in value as the parts increase in number even slightly. Windows NT, fax machines, TCP/IP, GIF images, RealAudio – all born deep in the Network Economy – adhere to this logic. But so do metric wrenches, triple-A batteries, and other devices that rely on universal standards; the more common they are, the more it pays you to stick to that standard. The logic of the network flips these industrial lessons upside down.
The archetypical illustration of a success explosion in a System Economy is the Internet itself. As any old-time nethead will be quick to lecture you, the Internet was a lonely (but thrilling! ) cultural backwater for two decades before it hit the media radar. A graph of the number of Internet hosts worldwide, starting in the 1960s, hardly creeps above the bottom line. Then, around 1991, the global tally of hosts suddenly mushrooms, exponentially arcing up to take over the world. In the Network Economy, scarcity is overwhelmed by shrinking marginal costs.
The same forces that feed on each other to amplify network presences into powerful overnight standards can also work in reverse to unravel them in a blink. Small beginnings can lead to large results, while large disturbances have only small effects. The subtle point from these examples, however, is that this explosion did not ignite until approximately the late 1980s.
One day, along the beach, tiny red algae blooms into a vast red tide. Then, a few weeks later, just when the red mat seems indelible, it vanishes. The same biological forces that amplify populations can mute them.
That something was the dual big bangs of jelly bean chips and collapsing telco charges. It became feasible – that is, dirt cheap – to exchange data almost anywhere, anytime.
In a Network Economy, value is derived from plentitude, just as a fax machine’s value increases in ubiquity. When you go to Office Depot to buy a fax machine, you are not just buying an US$200 box. You are purchasing for $200 the entire network of all other fax machines and the connections between them – a value far greater than the cost of all the separate machines.