E-mail and the Network Effect

E-mail usage is a very good example of the network effect, which describes the effect that one user of a good or service has on the value of that product to others and is usually thought to be a positive thing (the telephone would be useless if only one or two people had such a device but the more people who own telephones, the more valuable each telephone is to its owner).

E-mail of course has benefitted from the network effect.  When e-mail was first invented, there was a limited number of users on the Arpanet and who could send and receive messages.   When MCI Mail and Compuserve’s mail system were connected to the NSFNET in the late 1980s, this first commercial use of Internet-based e-mail expanded the base of users greatly and the value of e-mail increased commensurately as well.

Just as networks become congested at some point after achieving critical mass (an excellent example was MCI’s long-distance network in the 1980s, when the company sold the service to more customers than its nascent network could handle, leading to busy signals and incomplete calls), a negative network effect can ensue.

Today, this is happening in e-mail as resources (mostly the time knowledge workers can allocate to e-mail) are becoming increasingly constrained while knowledge workers continue to pump more and more e-mail into the system, further exacerbating the problem.  Making matters even worse is that the quality of e-mail messages is frequently lacking when compared to more formal correspondence such as a memo or letter.

Next week we’ll look at other issues relating to e-mail overload.

Jonathan B. Spira is the CEO and Chief Analyst at Basex.

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