Value Flows from Abundance

Plentitude, not scarcity, governs the network economy. Duplication, replication, and copies run in excess. Whatever can be made, can be made in abundance. This plentitude:

  • drives value
  • works to open up closed systems
  • spins off immense numbers of opportunities

Consider the first modern fax machine that rolled off the conveyor belt around 1965. Despite millions of dollars spent on its R&D, it was worth nothing. Zero. The second fax machine to be made immediately made the first one worth something. There was someone to fax to. Because fax machines are linked into a network, each additional fax machine that is shipped increases the value of all the fax machines operating before it.

This is called the fax effect. The fax effect dictates that plentitude generates value.

So strong is this power of plentitude that anyone purchasing a fax machine becomes an evangelist for the fax network. “Do you have a fax?” fax owners ask you. “You should get one.” Why? Because your purchase increases the worth of their machine. And once you join the network, you’ll begin to ask others, “Do you have a fax (or email, or Acrobat software, etc.)?” Each additional account you can persuade to join the network substantially increases the value of your account.

When you buy a fax machine, you are not merely buying a $200 box. Your $200 purchases the entire network of all other fax machines in the world and the connections among them–a value far greater than the cost of all the separate machines. Indeed, the first fax machines cost several thousands of dollars and connected to only a few other machines, and thus were not worth much. Today $200 will buy you a fax network worth $3 billion.

The low price of a fax machine today buys you an entire network, consisting of eighteen million machines. Each additional unit sold increases the value of your machine.



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