Analysis of weblogsinc deal with Metcalfe's law

Tristan Louis recently wrote a much blogged analysis of the weblogs inc/aol deal. His analysis used incoming links as a measure of influence, and presumed that value (in dollars) scaled linearly with influence eg kN = V, where k=link value, N=number of links, and V is the value of the network. This fails to take into account metcalfe's law, which suggests value scales with the square of the number of users. A better formula for value would be kN²=V, where k is now the value per link squared.

Running the numbers we find k=0.012752733, thus to find the value of your blog, multiply this number by the square of the number of sites linking to you according to technorati.
Some example valuations :
BoingBoing: $3.5 million
Engadget (part of weblogs inc.): $2.3 million
Scobeleizer: $175,000
ongoing: $23, 000

I think these numbers look a lot more convincing than valuations based directly on Tristan's analysis. It's also important to note that when using this technique on a network of sites like Jason' weblogs inc. the summation of the values of each of the individual properties falls far short of the value of the whole network.

[UPDATE: A few more links on the topic.
Inside Google has a list of valuations using Tristan's metric.
Business Bits is skeptical and points out the sum is worth more than the whole.
Jermey Zawodny is selling his blog.]