Platform Business

Under mounting societal pressure, prominent players in the platform industry, such as Apple, have initiated alterations to their platform policies and design strategies. One notable adjustment involves the implementation of revenue-sharing models that provide improved terms to smaller businesses. By constructing a platform economics model, we can elucidate how these new revenue-sharing arrangements enhance the overall well-being within the platform ecosystem – and how the platform itself emerges as the ultimate beneficiary.

The “creator economy” model, in which a platform organizes and distributes goods and digital content from numerous creators to millions of viewers, underlies the business model of many dominant firms today (e.g., Snap Games, Twitch, Jinri Toutiao). We have developed a theoretical model to answer questions about the functioning of such creator economies: the scale of the platform, how much supply is offered on it and how content density is distributed among creators, how the level of supply is affected by the revenue-sharing model, and what implications this has for platform design.

A new business form that is increasingly prominent, especially in platform business models, is an economic structure in which value is co-created by multiple producers and aggregated into a common bundle by a producer-consortium or independent firm. Examples include in-home video entertainment, technology goods and services, multi-sourced data platforms, and patent pools. This paper develops an economic model to study demand, production choices, revenue-sharing, and relative market power in such markets. Beyond these specific questions, it provides an architecture to rigorously answer additional questions in platform competition, market power, and effects of industrial realignment.

While platform business tactics are very visible and dominant in industries and firms that have embraced platform thinking, many businesses and firms are engaged in a platform game without realizing it, often to negative consequences. This article focuses on the electric vehicle (EV) segment. 

Jonas Boehm, Hemant K. Bhargava, and Geoffrey Parker, “The Business of Electric Vehicles: A Platform Perspective”, Foundations and Trends in Technology, Information and Operations Management (forthcoming, last revised July 2020).

This paper provides an analysis and guidelines for developing data strategy for different types of platforms, and it identifies promising research opportunities into platform data strategy to better inform future academic research, strategic decision-making, and regulatory analysis.

Decentralized auction platforms, such as eBay, have become integral components of today's global economy. In examining the inner workings of such platforms, our analysis reveals that a substantial portion of these auctions—just over one-third—result in inefficient allocations, leading to a staggering 14% loss in possible market surplus. As a remedy, we suggest partial centralization as well as point towards the significance of understanding how agents self-select into the market.

Theory suggests two sources of price dispersion: market frictions or perceived product heterogeneity. With our application of machine learning to a richer set of variables, based on our raw HTML pages of eBay posted-price listings, we can explain 26%-67% of the dispersion within each category.

Mutli-sided platforms typically thrive on the positive feedback loop of indirect network effects. However, many platforms also have to engage in active selling, through the use of sales agents to mobilize network participants. This paper is the first to examine sales force compensation design under network effects and develops a series of insights regarding how network effects alter compensation design.

Google recently announced a major move into several hardware products: Google Pixel (smartphones), Daydream View (virtual reality), Google Home (digital home) and Google Assistant (AI-based personal assistant).

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It was a lot of fun attending Apigee’s “Adapt or Die” event on September 27 in the heart of San Francisco, and speaking on the panel “Who Ubers Who: How to Survive and Thrive in a Digital World of Mash-Ups, Matchmakers, and Marketplaces.” The best part was the 10-minute thriller movie “Adapt or Die” made by Mike Slade and starring Alexandra Grossi, whom I had a chance to meet, and featuring Apigee CEO Chet Kapoor as the muffin man! A hilarious and engaging way to get the point across about APIs, what Apigee is all about. Most of all it was joyful to observe the intensely positive “Can-do,” “Yes, or Here’s how” (rather than “No”) philosophy and exuberant attitude of Apigee employees.

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Entrepreneurs dealing with platform and network goods often grapple with a tough choice: prioritize growth or profitability. This challenge intensifies when they launch just one product, constraining excellence in either direction. To balance this dilemma, one can opt for a freemium strategy—providing a free or low-cost version for widespread adoption alongside a premium, higher-priced version to generate revenue. Other considerations, including the strategic relevance of network effects and timing of product expansion, are necessary to establish a successful launching strategy.