1 The Law of Connection

Embrace dumb power
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The Network Economy is fed by the deep resonance of two stellar bangs: the collapsing microcosm of chips and the exploding telecosm of connections. These sudden shifts are tearing the old laws of wealth apart and preparing territory for the emerging economy.

2 The Law of Plentitude

More gives more

The fax effect suggests that the more plentiful things become, the more valuable they become. But this notion directly contradicts two of the most fundamental axioms we attribute to the industrial age.

First hoary axiom: Value came from scarcity; diamonds, gold, oil, and college degrees were precious because they were scarce.

Second hoary axiom: When things were made plentiful, they became devalued; carpets no longer indicated status when they could be woven by the thousands on machines.

In the Network Economy, scarcity is overwhelmed by shrinking marginal costs. Where the expense of churning out another copy becomes trivial (and this is happening in more than software), the value of standards and the network booms.

In the Network Economy, more gives more.

3 The Law of Exponential Value

Success is nonlinear

4 The Law of Tipping Points

Significance precedes momentum

5 The Law of Increasing Returns

Make virtuous circles

First, industrial economies of scale increase value linearly, while the prime law increases value exponentially - the difference between a piggy bank and compounded interest.

Second, and more important, industrial economies of scale stem from the herculean efforts of a single organization to outpace the competition by creating value for less. The expertise (and advantage) developed by the leading company is its alone. By contrast, networked increasing returns are created and shared by the entire network. Many agents, users, and competitors together create the network's value. Although the gains of increasing returns may be reaped unequally by one organization over another, the value of the gains resides in the greater web of relationships.

6 The Law of Inverse Pricing

Anticipate the cheap

One curious aspect of the Network Economy would astound a citizen living in 1897: The very best gets cheaper each year. This rule of thumb is so ingrained

in our contemporary lifestyle that we bank on it without marveling at it. But marvel we should, because this paradox is a major engine of the new economy.

Through most of the industrial age, consumers experienced slight improvements in quality for slight increases in price. But the arrival of the microprocessor flipped the price equation. In the information age, consumers quickly came to count on drastically superior quality for less price over time. The price and quality curves diverge so dramatically that it sometimes seems as if the better something is, the cheaper it will cost.

8 The Law of the Allegiance

Feed the web first

7 The Law of Generosity

Follow the free

9 The Law of Devolution

Let go at the top

The natural question is how companies are to survive in a world of generosity. Three points will help.

First, think of "free" as a design goal for pricing. There is a drive toward the free

- the asymptotic free - that, even if not reached, makes the system behave as if

it does. A very small flat rate may have

the same effects as flat-out free.

The harsh news is that getting stuck is a certainty in the new economy. Sooner, rather than later, a product will be eclipsed at its prime. While one product is at its peak, another will move the mountain by changing the rules.

There is only one way out. The organism must devolve. In order to go from one high peak to another, it must go downhill first and cross a valley before climbing uphill again. It must reverse itself and become less adapted, less fit, less optimal.

10 The Law of Displacement

The net wins

If money and information flow through something, then it's part of the Network Economy.

In the Network Economy, the net wins. All transactions and objects will tend to obey network
logic.

11 The Law of Churn

Seek sustainable disequilibrium

Ironically, only by promoting churn can long-term stability be achieved.

This notion of constant churn is familiar to ecologists and those who manage large networks. The sustained vitality of

a complex network requires that the net keep provoking itself out of balance. If the system settles into harmony and equilibrium, it will eventually stagnate and die.

Innovation is a disruption; constant innovation is perpetual disruption. This seems to be the goal of a well-made network: to sustain a perpetual disequilibrium. As economists (such as Paul Romer and Brian Arthur) begin to study the Network Economy, they see that it, too, operates by poising itself on the edge of constant chaos. In this chaotic churn is life-giving renewal and growth.

Nonetheless, in the coming churn, the industrial age's titans will fall. In a poetic sense, the prime task of the Network Economy is to destroy - company by company, industry by industry - the industrial economy. While it undoes industry at its peak, it weaves a larger web of new, more agile, more tightly linked organizations between its spaces.

Effective churning will be an art. In any case, promoting stability, defending productivity, and protecting success can only prolong the misery. When in doubt, churn. In the Network Economy, seek sustainable disequilibrium.

12 The Law of Inefficiencies

Don't solve problems

In the end, what does this Network Economy bring us?

Economists once thought that the coming age would bring supreme productivity. But, in a paradox, increasing technology has not led to measurable increases in productivity.

This is because productivity is exactly the wrong thing to care about.

בכל שלב, עלינו לשאול את עצמנו את השאלות הבאות:

• מה משלים אותי?
• מה חסר לי כדי להיות מושלם?
• מה יש לך שיכול להשלים אותי?

Gupta says that he's currently

working on understanding and modeling complex network structures such as those of MySpace.
Here the issue that we are grappling with is the tangible and intangible value of customers. In other words, customers provide tangible value to a firm through direct purchases but they also provide intangible value through network effects or word of mouth.
> It is quite possible that some customers have low tangible but high intangible value. Traditional models would label such customers as low value and would miss a huge opportunity for a firm.

An idea that just sits there is worthless. But an idea that moves, grows, and infects everyone it touches ... that's an ideavirus.

Exactly how does an ideavirus manifest itself? Where does it live? What does it look like? It starts with an idea manifesto, a powerful, logical "essay" that assembles a bunch of existing ideas and transforms them into a new, larger idea that's unified and compelling. Sometimes a manifesto is a written essay. Just as often it's an image, a song, a cool product, or a slick process. The medium doesn't matter; the message does. As long as you can use your manifesto to change the way that people think, talk, and act, you create value.

So, is an ideavirus a form of marketing? Absolutely! But today, what else is there? You don't win with better shipping, or better manufacturing, or better accounts payable. You win with better marketing, because marketing is about spreading ideas -- and ideas are now the very basis of competition.

The future belongs to the people who unleash ideaviruses.

I self-published the book in paperback. I did this because few publishers were interested in a short book on the topic, and were dubious about the future of the web as a promotional tool.

I printed 10,000 copies of the book. I also contacted International Paper to have them print me 10,000 milk cartons.

Posted by Seth Godin on March 23, 2007

We will strive to listen in new ways -- to the voices of

quiet anguish, to voices that speak without words, the voices

of the heart, to the injured voices, and the anxious voices,

and the voices that have despaired of being heard.

Richard M. Nixon, first inaugural address, 1969

The Demonic Paradox

Imagine a world where everyone was constantly learning, a world where what you wondered was more interesting than what you knew, and curiosity counted for more than certain knowledge. Imagine a world where what you gave away was more valuable than what you held back, where joy was not a dirty word, where play was not forbidden after your eleventh birthday. Imagine a world in which the business of business was to imagine worlds people might actually want to live in someday. Imagine a world created by the people, for the people not perishing from the earth forever.

Yeah. Imagine that.