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	Wired magazine September 1997 "The New Rules of the New Economy" by Kevin Kelly, Executive Editor (full text version available electronically at Wired online) "The only factor becoming scarce in a world of abundance is HUMAN ATTENTION." --Kevin Kelly
A review by Guy Hancock

1. The law of connection--embrace dumb power.

The network of interconnected relatively dumb chips in all kinds of appliances and products will be very powerful. "The world is populated by 200 million computers. ...Yet the number of non-computer chips now pulsating in the world is 6 billion!"

His example is the fax machine. The first ones were very expensive and did not have many others to send to or receive from. When you buy one today the price is much lower, and the network of fax machines makes your machine more useful. His point is that the value of your machine is determined by how many other machines exist. The trend is for more and more value at ever lower prices.

Kelly uses the fax again in this example as a "20 year overnight success." Two decades of marginal success are followed by an explosion of growth.

Kelly says here that one can see from the exponential growth curve "that a point exists where the momentum is so overwhelming that success became a runaway event." He goes on to say that the tipping point of the network economy is depressed further (occurs earlier). He concludes that the threshold of significance during which the movement, growth or innovation must be taken seriously, is much shorter. "Detecting events while they are beneath this threshold is essential." He uses an example of the lily leaf, which doubles in size every day. All summer long it slowly doubles in size every day. However, on the last 4 days it covers 1/8 of the surface of the pond, 1/4, 1/2 and then the entire pond. Kelly says "the Network Economy is a lily pond. The Web, as an example, is a leaf doubling in size every 6 months."

"In a self reinforcing virtuous circle, each additional member increases the network's worth, which in turn attracts more members, which in turn increases value, and so on." "While the the law of increasing returns and the economics of scale both rely on positive feedback loops, the the former is propelled by the amazing potency of net power, and the latter isn't. ...industrial economies of scale increase value linearly, while the prime law increases value exponentially - the difference between a piggy bank and compounded interest."

"The very best gets cheaper every year." Kelly believes the telecommunications industry will soon follow the microprocessor chip. "..George Gilder, a radical techno-theorist who forecasts that for the forseeable future (the next 25 years), the total bandwidth of communication systems will triple every 12 months."

The actual cost of providing many products is tiny, and the value they have is directly related to the number of other users in the network. Products are given away to sell you the ongoing service (cell phones, software, DirectTV dishes) A widely used free product or service can eventually lead to consumer demand for a commercial service or business.

Kelly says "a network is like a country, the surest way to raising one's own prosperity is raising the system's prosperity."

"..an organization that is maximally adapted to the times is situated on a peak. ...Sooner, rather than later, a product will be eclpsed at its prime. While one product is at its peak, another will move the mountain by changing the rules. ...This brings us to the second problem. Organizations, like living beings, are hard wired to optimize what they know and to not throw success away. ...The biological nature of this era means that the sudden disintegration of established domains will be as certain as the suden appearance of the new. Therefore, there can be no expertise in innovation unless there is also expertise in demolishing the ensconced."

"The dynamics of networks will continue to displace the old economic dynamics (materials) until network behavior becomes the entire economy."

The half life of Texan businesses has dropped by half since 1970. "That's change. But Austin, the city in Texas that has the shortest expected life spans for new businesses, also has the fastest growing number of jobs and the highest wages. That's churn."

"Productivity is exactly the last thing to care about. The only ones who should worry about productivity are robots." The problem with trying to measure productivity is that it measures only how well people can do the wrong jobs. ...Peter Drucker has noted that in the industrial age, the task for each worker was to discover how to do his job better; that's productivity. But in the networked economy, ....the task for each worker is not "how to do the job right" but "what is the right job to do? In the coming era, doing the exactly right thing is far more "productive" than doing the same thing better."