Multi-sided Platforms Research Articles

Strategy at the Interface: Multi-Sided Platforms

Multi-sided platforms have received increased research attention in recent years, as they have significant implications for firm strategy in industries as varied as credit cards, health care, and smartphones. However, many questions remain about the development and persistence of platforms. This panel symposium addresses brings together leading scholars at the intersection of industrial organization economics, strategy, and technology management to (1) identify and clarify the key constructs in this domain (2) offer their perspectives on the current state of various aspects of platform research, emphasizing both strengths and limitations, and (3) outline critical next steps for the growing stream of research on the management of multi-sided platforms.

Repositioning and Cost-Cutting: The Impact of Competition on Platform Strategies

Organizational structures are increasingly complex. In particular, more firms today operate as multisided platforms. In this paper, we study how platform firms use repositioning and cost-cutting in response to competition, elucidate external and internal factors that constrain or enable these responses, and examine how the firms’ responses affect their performance. Our empirical context is the U.S. newspaper industry, which has experienced increased competition following the entry of Craigslist, an online provider of classified ads. We find that when Craigslist enters a newspaper’s market, the newspaper repositions itself away from other newspapers by changing its content. This results in greater differentiation between newspapers in a market, but occurs primarily in markets in which reader preferences are heterogeneous. When reader preferences are homogeneous, newspapers are more likely to engage in cost-cutting. Both responses are more pronounced for newspaper firms whose sister firms have already experienced Craigslist’s entry. We also find that failure to design the right response harms competitive viability. These findings offer important implications for many platform firms operating in today’s digital economy. The online appendix is available at https://doi.org/10.1287/stsc.2017.0027 .

The digital entrepreneurial ecosystem

A significant gap exists in the conceptualization of entrepreneurship in the digital age. This paper introduces a conceptual framework for studying entrepreneurship in the digital age by integrating two well-established concepts: the digital ecosystem and the entrepreneurial ecosystem. The integration of these two ecosystems helps us better understand the interactions of agents and users that incorporate insights of consumers’ individual and social behavior. The Digital Entrepreneurial Ecosystem framework consists of four concepts: digital infrastructure governance, digital user citizenship, digital entrepreneurship, and digital marketplace. The paper develops propositions for each of the four concepts and provides a theoretical framework of multisided platforms to better understand the digital entrepreneurial ecosystem. Finally, it outlines a new research agenda to fill the gap in our understanding of entrepreneurship in the digital age.

Users’ dynamics on digital platforms

We discuss novel methods for predicting and influencing dynamics of the volume of users on two-sided platforms. We study the strategies that make platforms more efficient. The new approach is based on dynamical systems techniques, and allows to model platforms with multiple types of users, i.e., allows natural generalization to multi-sided platforms. Study of the qualitative properties and asymptotics of dynamical system’s trajectories helps to make conclusions about tendency of the platform. This is essential for our definition of payoff function, which reflects long term future benefits. Utilizing this definition of payoff, we introduce Nash basin of attraction. Inside of Nash basins of attraction the number of all types of users is growing and tends to the (‘locally’) highest payoff. These regions are beneficial for platform owners. They are also attractive for platform users, because their number is increasing. We demonstrate the theory with examples and provide simulations showing how these ideas can be used for practical tasks.

Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University, on the Japan Fair Trade Commissionns Draft Guidelines Concerning Distribution Systems and Business Practices Under the Antimonopoly Act

This comment is submitted by The Global Antitrust Institute (GAI) at Scalia Law School at George Mason University in response to the Japan Fair Trade Commission’s consultation on its Draft Guidelines Concerning Distribution Systems and Business Practices Under the Antimonopoly Act. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy, including how to analyze antitrust matters involving multi-sided platforms and vertical restraints.

Redesigning the business model: from one-sided to multi-sided

PurposeThis study aims to examine the way to develop a multi-sided logic for existing business models. More precisely, the objective is to find rules for designing a multi-sided business model from a one-sided business model.Design/methodology/approachGiven that business model (BM) literature and multi-sided literature do not address the complex issue of multi-sided business model design, the authors propose here a set of six redesign operations. These operations are built from a comprehension of the development and evolution of multi-sided platforms and their consequences for business model architecture. Several empirical cases illustrate each operation.FindingsA process of business model redesign is proposed with three phases: setting-up a technological digital platform to support the multi-sided architecture, identifying and engaging several customer groups on the platform and linking the customer groups and structuring the revenue model. This process details the chronological order in which the redesign operations can be implemented to build a multi-sided BM.Practical implicationsThe importance of the stage of semi-finished development of the platform, the openness of digital content, reaching the critical threshold and the combination of a dual economic model (free/paid) is highlighted. For managers, this provides better practices to successfully manage the business model redesign process.Originality/valueThis paper helps managers in companies, especially small and medium-sized enterprises, to profit from a multi-sided business model by proposing a way to achieve it.

The Emerging High-Court Jurisprudence on the Antitrust Analysis of Multisided Platforms

Between September 2014 and September 2016 high courts in multiple jurisdictions released five decisions that address applying competition law to matchmakers that operate virtual or physical platforms for connecting multiple groups of customers. The decisions rely, directly or indirectly, on the economic literature on multisided platforms that commenced around 2000. The high courts all recognize that it is necessary to consider the several distinct groups of customers and their interactions in evaluating whether business practices are anticompetitive.

Competition in the multi-sided platform market channel

We model the decisions in two simple, structurally different, fixed price online channel settings comprised of marketplaces (retailers) where two sellers of substitutable products transact with buyers (consumers) of those products. The first setting is a common retailer setting (CRS) with one marketplace, while the other is an exclusive retailer setting (ERS) where each seller is selling in an exclusive marketplace. We study how price competition and cost sharing in those settings influence the key factors that attract the seller and buyer to a marketplace, i.e. the seller's revenue share and price respectively. We formulate analytic and optimization models of the retailer revenue sharing decision and the suppliers pricing decision under CRS and ERS. Applying these models to market environments with different consumer demand patterns, cost structures, and levels of competition yielded a fairly consistent behavior in supplier price and retailer revenue share for each channel setting. The CRS retailer is better off (i.e. higher profits) than the ERS retailers, whereas the ERS suppliers are better off than the CRS suppliers. Finally, the buyer in ERS is better off because the seller in ERS charges a lower price.

Business model strategies: Flexibility trade in emerging low voltage distribution networks

Empowered by information and communication technologies (ICT) analytics and smart technologies, the energy model landscape is changing with flexibility at the core of a new energy market design. In particular, multi-sided platforms (MSPs) has gained prominent attention as a business model that creates value by enabling direct interactions between several distinct groups of actors who need each other in order to deliver products to their customers. However, as MSPs are less familiar within the energy market, there has been little investigation in modelling this emerging and dynamic ecosystem. Utilising the business modelling methodology of value network analysis and the key informant technique, value flows were modelled within the context of a MSP to understand the creation, delivery and capture of value in a network of interdependent relationship, its networked position and the stakeholder interactions required for delivery of local flexibility. Supported by this analysis, this paper focuses on the LV area of the smart grid, and presents the Local Flexibility Market (LFM) as a Multi-Sided Plarform. In comparison to the traditional utility model, the complexity of this recharacterization of the industry ecosystem is significant. While it presents new opportunities for incumbent energy providers to collaborate and develop new products, the proposed LFM market design will also dramatically reshape the value model of the industry.

Repositioning and Cost-Cutting: The Impact of Competition on Platform Strategies

Organizational structures are increasingly complex. In particular, more firms today operate as multi-sided platforms. In this paper, we study how platform firms use repositioning and cost-cutting in response to competition, elucidate external and internal factors that constrain or enable these responses, and examine how the firms’ responses affect their performance. Our empirical context is the US newspaper industry, which has experienced increased competition following the entry of Craigslist, an online provider of classified ads. We find that when Craigslist enters a newspaper’s market, the newspaper repositions itself away from other newspapers by changing its content. This results in greater differentiation between newspapers in a market, but occurs primarily in markets in which reader preferences are heterogeneous. When reader preferences are homogeneous, newspapers are more likely to engage in cost-cutting. Both responses are more pronounced for newspaper firms whose sister firms have already experienced Craigslist’s entry. We also find that failure to design the right response harms competitive viability. These findings offer important implications for many platform firms operating in today’s digital economy.

Multisided Platforms, Dynamic Competition, and the Assessment of Market Power for Internet-Based Firms

Market power on each side of a multisided platform, whether in the form of increasing prices or decreasing quality, is constrained by the risk of losing sales on the other sides. That tends to weaken market power on each side and encourages platforms to keep prices lower and quality higher than they would absent these feedback effects. In some cases the nature of the business model, and competition, result in the platform allowing one type of customers to participate in the platform for free or even to subsidize their participation. Non-price methods of attracting customers are especially important in this case, particularly when the business model adopted by the industry makes it difficult for platforms to move from free participation. To provide a reliable assessment of competitive constraints, market power analysis must consider the interdependencies in demand by the participants on the platform as well as have heightened focus on non-price competition when the participation for one group is free. Market shares should be used cautiously in assessing market power for multi-sided platforms, especially when they reflect only one side of the platform, and therefore do not account for the interdependent customer groups, or concern a free platform side where there is no monetary measure of value. Finally, dynamic competition makes the analysis of market power complex because it results in feature competition, and potentially drastic innovation, on one side of a platform that has feedback effects on the other side of the platform. The courts and authorities have recognized these points in Qihoo 360 v. Tencent, Cartes Bancaires v. European Commission, the Facebook/WhatsApp merger, and the Microsoft/Skype merger. These principals should become part of the standard analysis of multi-sided platforms by courts and competition authorities globally. These concerns are illustrated in the context of multi-sided platforms that offer online services where free services and dynamic competition are especially important.

The Digital Entrepreneurial Ecosystem

A significant gap exists in the conceptualization of entrepreneurship in the digital age. This paper introduces a conceptual framework for studying entrepreneurship in the digital age by integrating two well established concepts: the digital ecosystem and the entrepreneurial ecosystem. The integration of these two ecosystems helps us better understand the interactions of agents and users that incorporate insights of consumers’ individual and social behavior. The Digital Entrepreneurial Ecosystem framework consists of four concepts: digital infrastructure governance, digital user citizenship, digital entrepreneurship, and digital marketplace. The paper develops propositions for each of the four concepts and provides a theoretical framework of multisided platforms to better understanding the digital entrepreneurial ecosystem. Finally, it outlines a new research agenda to fill the gap in our understanding of entrepreneurship in the digital age.

When technological superiority is not enough: The struggle to impose the SIM card as the NFC Secure Element for mobile payment platforms

Mobile network operators have long played an essential role in the Near Field Communication (NFC) mobile payment ecosystem. In most implementations, the SIM card has been the main technical component to secure payments. Currently, mobile payment providers are increasingly planning to place the Secure Element (SE) for authentication in the handset or cloud, rather than on the SIM card. This paper unveils factors that influence stakeholder preferences for the SE location. To structure the analysis, we use a multi-level framework based on concepts borrowed from multi-sided platform theory. Using interviews with stakeholders, we elicit themes and preferences for each level of the framework (provider, technology, and user). Our findings explain why mobile network operators, despite their superior technology, will likely lose the battle for control in the mobile payment ecosystem.

Многосторонние платформы в эволюции бизнес-моделей микропредприятий

Многосторонние платформы в эволюции бизнес-моделей микропредприятий

Многосторонняя платформа как сеть создания стоимости

Многосторонняя платформа как сеть создания стоимости

Assessing special economic zones in China with the multi-sided platform model

Although many special economic zones (hereinafter SEZs) currently identified themselves as a “platform (often as physical constrictions for zone enterprises),” the academic support is inadequate. This paper offers an introduction to the burgeoning literature on two-sided (or multi-sided) markets and illustrates a feasible analysis on how to adopt this model in designing a well-operated system focusing on the land rentals within a apecial economic zone (SEZ), and provides some theoretical support in this research area. In many industries, platforms match relevant parties, e.g. customers to retailers, advertisers to readers, and facilitate interactions between them. Based on this, the paper tries to design a structure for analysing SEZs, which is considered as an efficient method for economic growth. Key characteristics of these markets, regarding network externalities, fee charging strategies and the relation between platform users are discussed first. Afterwards, the possibility of introducing this model into SEZs land use fee charging policies is examined. Finally, the paper provides some key economic insights on SEZs development under the suggested platform model.

Where Do My First Users Come from? Network Mobilization Strategies for Multi-Sided Platforms

Where Do My First Users Come from? Network Mobilization Strategies for Multi-Sided Platforms

Adoption of Mobile Payment Platforms: Managing Reach and Range

Numerous mobile payment solutions, which rely on new disruptive technologies, have been launched on the payment market in recent years. But despite the growing number of mobile payment apps, very few solutions have turned to be successful as the majority of them fail to gain a critical mass of users. In this paper, we investigate successful platform adoption strategies by using the Reach and Range Framework for Multi-Sided Platforms as a strategic tool to which mobile payment providers can adhere in order to tackle some of the main challenges they face throughout the evolution of their platforms. The analysis indicates that successful mobile payment solutions tend to be launched as one-sided platforms and then gradually be expanded into being two-sided. Our study showcases that the success of mobile payment platforms lies with the ability of the platform to balance the reach (number of participants) and the range (features and functionalities) of the platform.

Multisided markets and the challenge of incorporating multisided considerations into competition law analysis

Since the seminal paper of Rochet and the Nobel Prize laureate Tirole in 2003, the theory of multisided markets has garnered considerable academic attention. The practical application of the theory remains, however, challenging. This article seeks to bring together the key features of multisided market economics and identify the key principles, which can affect practical enforcement. Following a consideration of the economic and legal challenges involved in the analysis of multisided platforms, the article reviews two case studies — the European Court of Justice’s recent MasterCard decision concerning multilateral interchange fees and the Dutch Competition Authority’s review of the European Directories — Truvo Nederland merger — and showcases the associated enforcement challenges.

Multi Sided Platforms (MSPs) Value Captation and Monetization Strategies: A Strategic Management Perspective

<p class="zhengwen"><span lang="EN-US">The fundamental basis of all multisided business platforms is the value proposition offered to consumers, on one hand, and to business buyers, on the other hand, and so our starting point must be with the fundamentals concerning the management of value propositions. The competitive strategies of monetization and value creation include: Envelopment, overlapping, freemium, advertising and asymmetry information methods. In this paper, we allude that multisided platforms to play the role of resource integrators, involving consumers and business partners in a process of co-creation of value—an integrated, a networked business model. This is primarily due to a shift in the relative influence of different business stakeholders in the context of the business modeling of two-sided multisided platforms.</span></p>