Reed’s law is the assertion of David P. Reed that the utility of large networks, particularly social networks, can scale exponentially with the size of the network.

The reason for this is that the number of possible sub-groups of network participants is , where N is the number of participants. This grows much more rapidly than either

• the number of participants, N, or
• the number of possible pair connections, (which follows Metcalfe’s law)

so that even if the utility of groups available to be joined is very small on a per-group basis, eventually the network effect of potential group membership can dominate the overall economics of the system.

Facebook has seen this effect happen more rapidly then any other site on the internet. MySpace has also been able to tap into this equation and reap the benefits of it. It’s almost as if all they needed was a handful of people to join the site and the numbers game was going to do the marketing for itself (people know people). So long as these sites keep the users happy and constantly update with new features, the marketing is going to get done on its own because people are going to want to have their friends and family join in on their great “network” experience. Yes you will lose people on the network for many different reasons, but if Reeds Law holds true, the number of people joining are going to far succeed the number of people dropping out.