module 4 - Multi-Sided Platforms Flashcards
What is a multi-sided platform?
A multi-sided platform connects two or more distinct groups, enabling interactions between them.
What is an example of a multi-sided platform?
Examples include Uber, Apple’s App Store, and gaming consoles like PlayStation and Xbox.
What is the key difference between platform businesses and pipeline businesses?
Pipeline businesses follow a linear value chain, while platform businesses facilitate interactions between multiple groups.
What are network effects?
Network effects occur when the value of a platform increases with the number of users.
What is the difference between direct and indirect network effects?
Direct network effects benefit users directly from an increased user base, while indirect effects occur when an increase in users attracts more third-party services.
What is a critical mass in the context of multi-sided platforms?
Critical mass refers to having enough users on each side of the platform to generate sustainable network effects.
What is an example of direct network effects?
An example of direct network effects is seen in telephone networks, where more users create more communication possibilities.
What is an example of indirect network effects?
An example is the App Store, where more iPhone users attract more app developers, and vice versa.
What challenge do multi-sided platforms face with pricing?
Platforms often subsidize one side of the market to attract users while charging the other side to generate revenue.
What was OpenTable’s strategy to overcome market fragmentation?
OpenTable focused on creating critical mass in key cities like San Francisco and New York, leading to a self-reinforcing loop of restaurants and customers.
