http://blogs.business2.com/business2blog/2005/11/prices_law_and_.html

The network effects that explain the huge growth of peer-to-peer production and organizations should not be overestimated. Metcalfe’s Law and Reed’s Law both give overly optimistic formulas for calculating the net value of a network. Metcalfe’s Law dictates that a network’s value is equal to square of the number of nodes connected within the network. Calculating by Reed’s Law gives an even higher value, stating that a group’s value is equal to the number of subgroups by connecting any subset of nodes within the network. With the recent popularity of online networks like Facebook, MySpace, and Flickr, the drawbacks of network effects should not be overlooked. A lesser known law, called Price’s Law, counters the overestimation of Metcalfe’s Law and Reed’s Law by stating that half of a group’s output will be produced by only the square-root of the group, while the other half will be provided by the rest of the group. “As a field expands, value doesn’t necessarily grow exponentially, instead a greater percentage of the whole is simply less productive.”

Therefore, as a network increases in size, an increasingly larger amount of people will be able to benefit from the efforts of a few. The article gives the photo-community site of Flickr as an example, in which a small group of photographers get an in-proportionally large amount of exposure based on number of links to their photos. Thus, not everyone must be equally productive and not every addition to a network increases its value substantially. However, as networks’ members reach into the millions, all of their marginal contributions add up, and in the case of digital networks, the cost of adding is negligible. These are all important concepts to consider when addressing the issue of networks based on member-generated content.