L3: Platforms and network effects

Question 1

What is a digital platform?

Answer 1

as a set of digital resources, be those services or content, which facilitate interactions between its participants –> different types

Question 2

What does socio-technical phenomenon require?

Answer 2

requires careful consideration of how they function in a social context.

Question 2

3 basic characteristics:

Answer 2

(1) technologically mediated,
(2) enable interaction between user groups and
(3) allow those user groups to carry out defined tasks.

Question 3

What is the main purpose of the digital innovation platform (technical view)?

Answer 3

Enables the creation of application and services by third party developers based on combining and recombining modules on the platform.

Question 4

Basis of value creation? (TECHNICAL VIEW)

Answer 4

• Technical architecture contains modules, or building blocks (functionality & data) assessed through APIs
• Modules can then be accessed and combined by apps developers (complementors) to build apps and services (known as platform complements/digital offerings).

Question 5

Value capture? (TECHNICAL VIEW)

Answer 5

1. Charging either the third-party developers for access to platform resources or to consumers by directly selling or renting a service.
2. Advertising is also used as a monetisation strategy when the platform is free (e.g., Google Android).

Example Apple IOS & Android

Question 6

What is digital offerings? (TECHNICAL VIEW)

Answer 6

a round-trip, station-based car share service offering

Question 7

What is cloud services? (TECHNICAL VIEW)

Answer 7

starting point of platform, collected data on location of cars, which customers use what service (PIU data of cars) Components for capture, store, process and share these data

Question 8

What is business components? (TECHNICAL VIEW)

Answer 8

mobile app for reservations, the Smart Key Box, vehicle tracking and payment services

Question 9

What is infrastructure components? (TECHNICAL VIEW)

Answer 9

allowed vehicles to connect to the cloud, authenticate customers, link payment providers Value of platform grows as the portfolio of mobility offerings expands (e.g., digital offering that tracks buses travelling between two cities)

Question 10

What is the main purpose of digital transaction platforms? (SOCIOTECHNICAL VIEW)

Answer 10

Facilitating transactions (exchange of services and information) between multiple sides of a market (e.g., different organizations, entities and individuals) using internet-based applications and benefitting from networks effects.

Question 11

Basis of value creation: two aspects (SOCIOTECHNICAL VIEW)

Answer 11

· Matchmaking, which is the enablement of searching and finding an appropriate opposite to transact with

· Reduction of frictions in the resulting interaction and transaction

Social Media: opportunities for value co-creation as they enable users to create content in addition to exchanging it.

Question 12

What does value capture? (SOCIOTECHNICAL VIEW)

Answer 12

· charging parties’ access to the platform services through membership charges or per use access (e.g., Spotify)

· claiming a commission as a percentage of the value of charged by the party providing service (e.g., Airbnb)

Monetizing data captured from the profiles and behavior of their users, analyzing it, and sourcing it for targeted advertisement (e.g., Instagram)

Question 13

Digital platform a technology model (SOCIOTECHNICAL VIEW)

Answer 13

1. Attract a critical mass: features and processes by which a platform attracts and retains active consumers and producers.
2. Match: introduce both sides before they can interact, quality of matchmaking is critical for success (timely, relevant and filtered information).
3. Connect: participants need to exchange information before moving on to the transaction stage, increases trust and reduces information asymmetry.
4. Transact: transaction stage is at the heat of the platform value proposition. Interaction that creates the most value for participants and facilitates exchange (e.g., physical product, rental contract, ride, a photo)
5. Optimise digital offerings continuously: Enables rapid innovation and experimentation due to easy access to data

Question 14

Characteristics of social media platforms?

Answer 14

Digital profile: The platform provides a unique user profile that is constructed by the user, by members of their network, and by the platform.

Search and privacy: Users can access digital content through and protect it from various search mechanisms provided by the platform.

Rationel Ties: The platform provides mechanisms for users to articulate a list of other users with whom they share a connection

Network Transparency: Users can view and traverse their connections and those made by others on the platform.

Question 15

Actors on social media

Answer 15

Example of actors on Social Media
· Users or Individuals
· Brands and Organizations
· Influencers and Content Creators
· Developers and Platform Operators
· Moderators and Administrators
· Advertisers
· Government and Regulatory Bodies
· Researchers and Academics
Media and Journalists

Question 16

Network effects: What is direct network effects?

Answer 16

utility of the network (or platform) increasing to each member as more users join for the same essential use.

Question 17

Network effects: What is Indirect network effects?

Answer 17

Refer to the benefits derived by increasing the size of groups that are complementary to each other. Here, the decision to join a platform from the perspective of one side (e.g., demand side) is influenced by the number of users in a complementary group (e.g., supply side) and vice versa.

Question 18

Model for network effects

Answer 18

Positive/negative x Same-side/direct or cross-side/indirect

Question 19

What is platform affordances?

Answer 19

front end and backend structures, platform cultures, and commercial interests

Question 20

What is platform vernacular?

Answer 20

the different narrative patterns that shape content and information flows across platforms

Question 21

Facebook: What are the 4 step algorithm?

Answer 21

· Inventory (e.g., total set of posts, FB connections)
· Signals, (e.g., engagement level, content type),
· Predictions (how likely that relevant for you)
· Relevance (top of feed)

 Meaningful interaction

Question 22

Pros for Facebook?

Answer 22

1. Ultraspecific targeting, powerful and analytic insights  great for advertisement
2. Share any type of content
3. Connect and build relationships: stories, groups, live è great for managing communities and groups with special interests
4. Building brand image, brand awareness, and brand loyalty
5. Strong network effects
   Lead, conversions, sales

Question 23

Cons for Facebook?

Answer 23

· low organic reach
· Satured by brands, difficult to stand out
Hard to reach younger women (e.g., only 7.3% of women aged 16-24 listed FB as they favorite)

Question 24

Facebook demographics?

Answer 24

65% 35+ years old

Question 25

Instagram demographics?

Answer 25

Age: 18-34, 55% female

Question 26

Instagram algorithm?

Answer 26

Algorithm: relationship matter, interest rules, relevance is key, popularity pops (frequent changes and updates)
· Each part of app (feed, explore, reels) has own algorithm
· People you follow
· Signals: Information about the post (content, popularity), Information about the person who posted (engagement with person), your activity, your history of interacting with someone
Predictions: based on how likely you will interact with the post

Question 27

Pro for Instagram?

Answer 27

· Branding/Portfolio aesthetic platform
· Building relationships/Behind the scence
· Good organic growth, strong network effects
· Hashtags, geotagging, Stories/Livestreams, Shoppable Post etc.
Great for enhancing user-generated content and interacting with users

Question 28

Cons for Instagram?

Answer 28

· Mainly used for sharing stories, images/videos
· Hard to stand out
Difficult to share certain types of content

Question 29

LinkedIn demographics?

Answer 29

36-55 years, 43% women

Question 30

Linkedin Algorithm?

Answer 30

Algorithm: Post quality, early engagement, LinkedIn connections

Question 31

Pros for LinkedIn

Answer 31

· Professional networking
· B2B marketing
· Social recruiting
· Focus on content easy to go „viral“
· Improves your SEO
· Professional Environment, niche expertise
Great for employee branding, attracting talent

Question 32

Cons for LinkedIn

Answer 32

· Specific audience
· Costs
More professional, less personal

Question 33

X (former Twitter) demographics?

Answer 33

34% female, Main age group: men 25-34 years

Question 34

Twitter algorithm

Answer 34

Algorithm: User interaction, recency, location, current popularity

Question 35

Pros for Twitter/X

Answer 35

· Simple and practical communication
· Reach a wide audience: Strong network effects: tweet and retweet
· News Articles, Conversations
· Great for delivering customer service: allows a direct two-way communication
Communicating your brand identity and get direct feedback from customers

Question 36

Cons for Twitter/X?

Answer 36

· Spam and insults are common
· Very time consuming
Be careful how you communicate in the restricted limit

Question 37

TikTik demographics

Answer 37

Most popular in younger generations (10-19 y 25%, 60% 10-29 y), 57% female, most users based in China

Question 38

TikTok Algorithm?

Answer 38

· Highly addictive ForYou page
· User interaction (followed accounts, comments, like, share, content you create etc.)
· Video information: (captions, sounds, hashtags, effects, trending topic etc.)
Device and account settings (language, country, device)

Question 39

TikTok Pros

Answer 39

· 1 billion monthly users, audience is young
· Trending topics, hashtag challenges, dynamic editing tools
· Competition is relatively low, good organic growth  not so much content saturation
· Short attention-grabbing content, high engagement rates
Great for entertainment and reaching young customer groups

Question 40

TikTok Cons

Answer 40

· Audience is young
Not so many features (e.g., analytic dashboard)

Question 41

What is Network effect?

Answer 41

is about the overall benefit of having a lot of users in a network (e.g., on a social media platform). When many people use a product or service in a network, it becomes more valuable for everyone.

Example social media: More people (e.g., friends, content creators) on a social media platform make it more fun and valuable for everyone (e.g., more interactions, more connection, increase in specific content)

Question 42

What is Marginal Network Effect?

Answer 42

looks at the extra benefit from adding just one more user to the network

Example social media: If you have 100 friends on a social media platform, adding one more friend might not make a big difference in your experience. If you are only five people, one additional person brings a lot of value to the network.