Book – Matchmakers: The New Economics of Multisided Platforms

matchmakers.pngYes, it is completely correct, I do not remember anything related to multi-sided platforms in business school curriculum several years ago. The book gives an excellent explanation of business principles behind the phenomenon.

Though the discussion of platform externalities and negative network effects are common, and the Book – Platform Revolution has an Glossary.pngexcellent description, Matchmakers emphasizes the economic reality of the multi-sided platforms.  Book site includes a convenient glossary of industry terms.

Interesting: a platform relaying on advertisement has three sides (producers, consumers, and advertisers).  Microsoft Windows is a platform that connects computer manufacturers, app creators, and app users, where Microsoft Office is the most popular apps.  However, when Microsoft tried to find producers for X-box console, the search was unsuccessful as game console is the subsidy side of the platform.

subsidy.png

opentable.PNGOpen Table initially tried to attract “eye balls” in general, and the strategy was unsuccessful.  The company signed up many restaurants, but not enough in one market to become attractive for the consumer.  The company changed its approach, and concentrated on specific markets to generate enough restaurants to be attractive for the potential diners.

BrightCove was conceived as a platform, but the approach was unsuccessful, and company changed its strategy.

Multi-sided platforms need to be designed to encourage participation from different sides.  For example, money-sending platform would charge more for sending money to a person who was not signed up than to a person who was signed up.

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