Definition of a platform

Excerpts from: T. Doligalski, Platform Canvas. Does the platform business model imply disruption and monopolisation?, In T. Doligalski, M. Goliński, & K. Kozłowski (Eds.) Disruptive platforms: markets, ecosystems, monopolists, forthcoming.

 

A platform is a business model that matches independent agents and facilitates their interactions. In this light, the customer is somehow obliged to interact with other subjects to use the platform’s potential. This definition differs from an IT approach, where a product platform is a set of parts, subsystems, interfaces, and manufacturing processes that are shared among a set of products (Meyer and Lehnerd 1997). Here, the customer can use the existing technology to create a product for themselves, without interacting with others.

In practice, the term “platform” is unfairly extended to cover other business models. Online shops are often counted as platforms. The purchaser can indeed buy the same product on a multi-sided platform and on an online shop. The difference is that on the platform, the customer buys the product not from the platform itself, but from the seller, who functions within the platform’s ecosystem. In an online shop, the customer purchases the product directly from the shop. The situation is similar in the case of traditional businesses: a grocery store and an open space market where various sellers gather. The shop offers a product and the market offers interaction with the seller, which might lead to a transaction.

The relationship between platforms and content providers is similar. Some platforms make it possible for their users to publish content, such as texts, graphics, videos, sounds. Such platforms that offer, for example, films, memes, recipes and homework with the answer key are quite popular. Content providers often offer similar content and they make content available that they either created themselves or bought. The difference between these two business models lies in where the content originates: users, who are more or less involved with the company, or the company itself.

The difference between platforms and e-services providers is less clear. E-services are understood as automatic services provided on the internet, which require self-service and do not require direct engagement of the service provider’s employees (Doligalski, 2018). These are online tools that the users use themselves. Examples of e-services include e-mails, internet banking, cloud storage, online text or graphic editors, etc. There are two types of e-services. In the case of tools that the users use mostly themselves (e.g. for editing photos) there is no problem with distinguishing them from platforms, which are used to interact with other people.

However, some e-services can be used for interactions between many people (e.g. MS Teams, Slack, e-mail). The difference between them and a platform is that platforms matchmake their own users for interaction. In the case of e-services, users use them, because they facilitate interaction in their group and thus there is no matchmaking component. In this understanding, Instagram is a platform, because it enables users to reach both friends and strangers with their posts (e.g. via tags). By comparison, a typical cloud storage as an e-service enables users to only show photos to some people that are granted access to the content.

References

Doligalski, T. (2018). Internet business models in the consumer market–a typological approach. Marketing i Rynek12, 5-13. Retrieved June 11, 2021 from https://www.doligalski.net/internet-business-models/.
Meyer, M. H., & Lehnerd, A. P. (1997). The power of product platforms. Simon and Schuster.