The power of the Internet as carrier of messages and potential marketing channel can be illustrated by metcalfs law and Reeds law. These laws puts the so called network effects in the focus and explains the natural potential of the internet and why it is so important for companies to use their current and own internet based social networks in their business.
For many companies, mainly active on the net, the network effect is the foundation of their business model. MySpace, Facebook and Lunarstorm are a couple of good examples where the network is both the foundation of the business model and the value for the user. Every new visitor or registered user increases the value for both the individual user and the company.
According to these laws the increased value is not linear, but the so called critical mass needs to be reached before the company can retrieve any value from their investment. The size of this critical mass varies from case to case, but for companies based on the internet, the growth of users is the most important factor in the business model.