What Is the Platform Economy (and Why You Should Care)?

“Digital matchmakers” such as Amazon, Airbnb, and Uber are transforming markets everywhere. What can you learn from this development? And what does the platform economy mean for your business?

How many times did you read in a blog that the largest taxi company in the world has no cars, and the biggest accommodation provider owns no real estate? Let me warn you: the blog you are reading now will be not the last instance that you will encounter this overused, Uber/Airbnb wisdom. The reason is simple: the platform economy is here to stay.

The platform economy is economic and social activity facilitated by platforms which are typically online matchmakers or technology frameworks. The most common type is so-called “digital matchmakers” such as Amazon, Airbnb, Uber, and Baidu.

In 2005, YouTube began as an angel-funded enterprise working from a makeshift office in a garage. The business model was simple: the revenue of YouTube came from advertising. Now, the platform gets over 30 million visitors per day, and 300 hours of video are uploaded to YouTube every minute. The annual revenue generated from YouTube is $4,000,000,000. That is 6% of Google’s ad sales’ revenue. How did the platform accomplish this enormous growth?

One of the secrets is the clear distinction between customer experiences that YouTube offers the 3 types of its platform’s users: makers, viewers, and advertisers. As I described extensively in another article, YouTube serves the needs of all 3 of these diverse groups with excellence.

With their disruptive power, platforms such as YouTube have an effect on the economy as a whole. For a business leader, it is important to study these developments and see if and how they influence his or her market.

Platform companies create value by acting as intermediaries between different players in the market. What about your market? Ask yourself the following question: Is there a need in my market for a new party that plays a facilitating role? If the answer is “yes,” you have just discovered a winning proposition!

The success of the platform model is also very instructive in a more general manner. Below I will give you some food for thought.

In the first place, platform companies can only succeed if the different users have confidence in the platform. Doing business in a honest way is now being rewarded. I think this is a general trend. Not only do consumers not want to be ripped off, but sustainable and ethical business practices are in high demand too—as Twitter proves every day. Did you consider your decency as a unique selling point (USP) before?

In the second place, in the platform economy, competition often makes way for collaboration. Do you have viable options for a partnership with another party, for example a start-up? How about other strategic alliances?

The “uberization” of the market, as René Jongen calls it, can make for strange bedfellows. Let’s take an example: your main competitor is building a platform that will have an impact on your market. What is the right thing to do? Try to collaborate, or, at the least use the ecosystem of your competitor for your own interests.

In this article, I looked at a major market disruption in a positive way. Is this a worldview you share with me? If so, I invite you to play RevelX’s DISRUPTR game with us. You will see how any market disruption will also be an invitation to try something new and awesome.