On October 19 Lyft announced in a blog that it received a $1 billion investment from Alphabet inc., Google’s parent company. In January 2014 it very much looked like Uber was going to be the single, dominant platform, as it was sitting at a 91% market share in the US compared to the 8% market share of Lyft.(marketrealist.com). As of August 2017 however, Uber’s US market share seems to have declined to 74.3%, while Lyft’s market share increased to 23.4%. (marketrealist.com) It looks like the momentum lies with Lyft for now, but will the emerging competitor ever be able to take the lead?
First of all, let us look at the market for transportation apps and determine whether or not the conditions for a winner takes all market as defined by Eisenmann et al. apply.
Strong positive cross-side network effects are definitely present. More available drivers will mean that consumers are able to more quickly find a ride, while more available customers will mean that drivers endure less idle time.
It is unlikely that differentiated platforms will emerge, as differentiation opportunities are virtually nonexistent. Passengers want speed and quality and the only thing drivers care about is making as much money as possible. Currently Lyft and Uber are very similar applications, and I do not see this changing in the future.
The only argument against a winner takes all market is the fact that multi-homing costs are not high in this market. It is easy to drive for both Lyft and Uber, and maintaining two mobile applications instead of one does not take much effort. Personally I am of the opinion that this fact is not too relevant, as great monopolies have arisen in the past despite of low multi-homing costs e.g. EBay.
I personally think Lyft is more than capable of completely taking over the market, mainly because of how strong network effects are in this market. Lyft definitely has the momentum right now, mainly because of the managerial scandals that are plaguing Uber. Lyft can learn from the mistakes Uber made by professionalizing at an earlier stage, and is doing so. Alongside the investment, David Lawee will be joining Lyft’s board of directors, a man with a lot of corporate experience from working at google. (blog.lyft.com)
References and sources:
Eisenmann, T., Parker, G. and Van Alstyne, M. (2006). Strategies for Two- Sided Markets. Harvard Business Review, October, pp.8-9.
Alphabet’s CapitalG Leads $1 Billion Round in Lyft. (2017). [Blog] Lyft Blog. Available at: https://blog.lyft.com/posts/alphabet-capitalg-leads-1-billion-round-in-lyft [Accessed 22 Oct. 2017].
marketrealist.com. (2017). Why Uber’s Market Share Has Tanked. [online] Available at: http://marketrealist.com/2017/09/why-ubers-market-share-has-tanked/ [Accessed 22 Oct. 2017].
4.5/5 (8) 50k views and counting, how to get MASSIVE views!!!
9
October
2017
Hello fellow BIM students,
Some of you might have noticed that certain posts are getting massive amounts of views.
The first thing that pops into your mind might be that these guys are actively sharing their content on social media. This is unlikely though because getting this many unique views on one post in one day (see images below) is really really hard to accomplish through that method.
The next possibility you might think about is that they are hiring a group of people through some view boosting website like the one below.
However, we are all students, meaning that we have low budgets and would rather spend our money on partying, Netflix/Spotify subscriptions and other more rewarding activities. So I don’t consider this option viable in our situation.
So how do the top posts get their crazy amount of views? Did they press F5 non-stop for a couple of weeks in order to reach the top?
There must be some sort of secret method to their success. In this post, I would like to share my easy method with you guys to help boost YOUR view count up to 5k, 10k or even 50k! Let’s go!
Step 1: Decide the post that you want to boost!
This is obviously a very basic step, in order to get views on a post, you need to have posted at least some content. In this example, I use a very basic article I wrote about IBM’s supercomputer Watson (check it out: http://bit.ly/2y71SxK).
Step 2: Download the Opera browser and open the blog post in multiple tabs!
Step 3: This is where the magic comes in, download the Super Auto Refresh extension for Opera!
Step 4: Start the Extension and make it run on all tabs at a speed of 30 seconds!
Why do I give you guys the advice to run it on 5/6 tabs max at a speed of 30 seconds? Because I encountered many many errors on the first days using this method running it at faster speeds. These error messages, see below, cause not only me but every other user trying to access the website to experience problems.
So if you don’t want a group of angry students chasing you because they couldn’t upload their blog posts please take this advice.
Step 5: Get some spare laptops, plug them into their chargers and don’t touch them for a couple of days/weeks!
This will help you feel like a real hacker and boosts the feeling that you can join Anonymous because you know your computer stuff.
Step 6: Watch your article reach some magic milestones! You are finally reaching the top of the list!
WAIT FOR IT…. 50k VIEWS WOAH!
Step 7: Sit back and relax, you did some really awesome hacking and can now enjoy your success for the rest of your life! You will always be remembered as that BIM student that knew how to reach the top!
As much as I enjoyed abusing the view count system behind https://digitalstrategy.rsm.nl// I would like to give some quick advice to the website admin. As soon as I realized that F5 views were counted as unique views although they came from the same IP-Address I started to look for ways to maximize my view count. I think that this in no way reflects the quality of my blog post and can actually destroy the intention of this web page. So to prevent things like this happening in the future please try to cap the number of views per IP-address or find some other way to achieve this.
Thanks for reading guys and enjoy your road to success!
Marktplaats and eBay, brace yourselves!
4
October
2016
5/5 (2)
Most of you have probably seen the ‘For sale’ pages on Facebook, where people offer and buy second hand items. Believe it or not, these pages are being visited 450 million times each month, so Facebook decided to respond to this demand. ‘Facebook Marketplace’ is a marketplace inside the Facebook app that launched yesterday in the United States, United Kingdom, Australia and New Zealand on mobile devices. In these countries, the ‘Messenger’ icon in the Facebook app will be replaced by the ‘Marketplace’ icon. If it proves to be a success, Facebook will continue to expand their marketplace to other countries and also to the web platform. Should eBay, Marktplaats and other large players brace itself?
Nowadays when people want to sell a second hand item, they do not just place it only on eBay or Marktplaats, they also share it on Facebook. Does Facebook offer more advantages than the existing platforms? There are several advantages to Facebook Marketplace that could make users choose for Facebook Marketplace instead of for example Marktplaats or eBay:
Buyers and sellers can easily communicate through the already existing Facebook Messenger.
Posting items for sale is free, which is not the case on other platforms for some product categories.
Fraud can be reduced, as buyers can check the profiles of the sellers to see whether they are ‘real’ people.
Facebook can show their users second hand items based on their interests because Facebook knows these.
While on eBay or Marktplaats people search for specific items, Facebook users might go through Marketplace simply because they’re bored and could find something they like (spontaneous shopping). This could increase the range of potential buyers.
Besides aforementioned advantages, Facebook has the advantage of a strong brand name and the large amount of users. It’s hard to place any predictions about Facebooks new feature, but I believe that Facebook Marketplace has strong advantages and will therefore be a big threat for platforms such as eBay and Marktplaats. However, we will see what future will bring us.
The SAP Business Network Group – An entirely new kind of platform
29
September
2016
3.67/5 (3)
For the average consumer, products and services like e-commerce, smartphones, omnipresent internet connections and integrated platforms have long become fix standards. Our world has changed profoundly and so have our expectations.
Firms and businesses on the other hand have also changed but not quite at the same pace – paperless transactions, one click purchasing and most digital agility are yet to be fully implemented in most companies.
More than 80% of spending still takes place offline, most travel booking is done outside of company solutions and companys often struggle to have the right workforce on time.
Many have shifted their IT strategy to pave the way but still struggle with implementation and complexity:
“In the past, organizations focused on a single-instance strategy (or instance reduction) that made the IT management task easier, but fit badly with business needs. The focus has now moved to partial suites, domain suites and multiple point solutions that support business agility, yet still need to be integrated.”
~Gartner Agenda Overview for ERP and Enterprise Suites, Finance and Procurement, 2015
SAP, the 44 year old global leader in business software, has long pondered upon a solution to this complexity and lack of integration. The company has finally come up with the concept of the so-called Business Network Group (BNG) and acquired three companies that kick-started the project from an idea to an actual (platform) product. Ariba, Concur & Fieldglass were acquired over the last four years for a total of about 14.5 billion USD and have since formed the basis of the Business Network Group:
Ariba aims to simplify business commerce for buyers and sellers. They connect them to the world’s largest business network and could be considered the Amazon of the business world. However the total volume of the Ariba Network is more than that of Amazon, EBay and Alibaba combined. And every minute one new company joins the network.
Fieldglass provides platform services in procurement and management of contingent labor, offering the largest network in the industry.
Concur offers business travel booking and travel expense management. The now SAP company has over 20 million users and processes over 50 billion USD a year. It has integrations with Uber, Starbucks and hundreds of services for most efficient and convenient travel management.
The three are already great stand-alone companies but together and with the network and technology of SAP they are a big start to a cloud and platform based network that could fundamentally change b2b-world.
Imagine an Air France’s plane onboard systems detect a problem with a component two hours before landing in London. Sensors send this information AirFrance’s control center which can then check their parts inventory. They discover that no technician in The area has necessary the skills and the part is missing too. Now the CC needs to only connects to the BNG, find and request a technician through Fieldglass, book a car & hotel through Concur and order the part on Ariba. This is a fully integrated workflow, a one stop-shop solution and comes with full cost estimates & compete post-billing.
The future of the platform builds on SAP’s HANA Cloud Platform (HCP) and will attract many more companies, be it through acquisitions or partnerships for ever more platform-based integrations. The BNG is here to stay and grow.
Things have changed, will businesses pick up their pace?
Snapchat: A Platform Mediated Network success story
29
September
2016
4/5 (1)
Snapchat was launched in September 2011. It is a mobile app you can download to your iPhone or Android smartphone, which you can then use to “chat” with friends through photos, videos and captions (so called “snaps”). An unique feature of Snapchat is that these photos or videos are “self-destructing”. After a few seconds after it’s been opened by the recipient, it gets deleted instantly (Moreau, 2016).
Another social media application is Facebook. Launched in 2004 by Mark Zuckerberg, more than ten years later it reported a revenue of 17.93 billion US dollars and an accumulated net income of 3.69 billion US dollars over 2015 (source: Statista). Like Facebook Snapchat is charging no costs to users. But a big difference lies in the fact that Snapchat didn’t had a clear business model. Years after the launch, people had no clue were Snapchat was planning to make money with. Therefore it was a big surprise that it had turned down a 3 billion US dollars offer from Facebook (Fiegerman, 2014), because Snapchat didn’t earned a dollar yet. At Snapchat they could only dream of revenues like Facebook had.
So why did Evan Spiegel, founder of Snapchat, refused this offer? The answer lies in the power of the network. Nowadays almost everybody has a smartphone and carries it everywhere at all time. Users are able to download Snapchat for free, making it very accessible. This resulted in a large user base of 200 million users. Compare that with other big social media platforms as Instagram (300 million), Twitter (302 million), LinkedIn (364 million) and Facebook’s (1.4 billion), and everybody will agree that Snapchat created an interesting and promising network (source: Investopia). The users of snapchat use the app a lot. Snapchat reported 100 million daily active users worldwide in May 2015 (source: Statista). The network is an essential part of the success of Snapchat and provide us with a good example of the network effect. The network effect is a phenomenon whereby a service becomes more valuable when more people use it (source: Investopedia).
After acquire such a large user base, Snapchat improved their app and service in such a way that money could be made. In an effort to move beyond just messaging, Snapchat introduced a new featured in early 2015 called “Discover”. After this update, the platform of Snapchat provides two services. First, there is the possibility for people to send each other snaps. Here users rapidly switch between the role of sender and receiver. Secondly, snapchat makes it possible for media publishers to send content to their large user base, using Discover. Here the role of sender and receiver are changeless. Discover allows media publishers to have daily content featured on the app. In this way Snapchat can make money, using the user base they built up.
Only a short time after Snapchat has launched Discover, it has been asking some top brands to pay $750,000 a day for placement (Adweek, 2014). In May 2015, only months after launching Discover, Snapchat was valued at 16 billion US dollars (Kosoff, 2016). Snapchat only provides the network, which illustrates the power of their network and Platform Mediated Networks in general.
Fitting to this week’s subject of platform mediated networks, I’d like to share some experiences I’ve made building my own platform together with a friend back in Maastricht.
Background story
During our Bachelor time in Maastricht, a good friend of mine, Oskar, and I early realised that both of us were fascinated by the idea of starting our own project. So we spent some time brainstorming and went on the hunt to spot some good opportunities. It didn’t take us long until we found a problem that was not only bothering us two, but also many of our other friends:
Since almost every course at university requires you to buy a book and new books are super expensive, the second-hand book market is booming (I guess that’s the case in almost every student city). Almost all of the second-hand books are sold on Facebook, where buyers and sellers connect and communicate via dedicated Facebook groups (e.g. “Second-hand Book Market Maastricht”). The biggest problem with these groups is, however, that the posts appear chronologically, similar to how your personal timeline works. This means that with an increasing amount of listings being created, things quickly become quite messy. Without a search function, you find yourself scrolling through endless posts until you finally find the book you were looking for. And from a seller perspective, you need to ensure that your post stays on top of the list to be found by other students. At this point it was clear to us that we wanted to change something about this annoying and inefficient part of buying used books via Facebook. Determined to make a change, we soon had to make the frustrating realisation that without any programming knowledge whatsoever, it is hard to impossible to build something on your own.
It would take almost until the end of our studies that this situation changed. Coming back from our exchange semesters abroad, we both figured out that there was more than one month left until university would start again. So we decided to move back to Maastricht earlier and learn some programming. After 3 weeks of intense online courses we felt that we were finally able to build the application we envisioned almost 2 years earlier – BookStash was born.
Why am I telling you this story and how does it relate to our course content you might ask? According to Eisenmann, Parker & van Alstyne (2006) “[p]roducts and services that bring together groups of users in two-sided networks are [referred to as] platforms”. The web application we’ve built, BookStash, is a good example of such a platform. On the one side there are the sellers of used books and on the other side students who are looking to buy used books. BookStash serves as the intermediary platform that facilitates the transactions of both sides of the equation. Fitting to this week’s subject of platform mediated networks, I’d like to share some thoughts on this topic and discuss two key points taken from the literature.
1. Pricing the platform
Two-sided networks typically have a “money” and a “subsidy” group of users (Eisenmann, Parker & van Alstyne, 2006) – remember the bar example from the lecture. Ideally, you as the platform provider know which side of your network belongs to which group. Attracting many users on the subsidy side will bring more money-side users to the platform. An increased presence of money-side users, in turn, will drive more subsidy-side users to the platform. Especially for platforms that just launched, this “penguin” problem is particularly challenging though. Why should subsidy-side users sign up when there are few to none money-side users? And why would money-side users pay money when there are almost no customers for them?
Let’s have a look at BookStash. Both sides, sellers and buyers, are students, so their willingness to pay for a service is low anyways (i.e. they are both highly price sensitive). Besides the fact that we built BookStash more as a “fun-but-relevant” learning project and not to make money, it was clear that our main goal in the beginning should be to drive users on both sides to the platform. We decided that this is only possible if the service is free for everyone. Maybe when a critical mass of users is reached, we might think about charging a small fee for the sellers of books (the rationale here is that sellers would potentially just sit on their books if they cannot sell them so they are happy to make any money instead of none).
Taking BookStash as an example, it might make sense for new platforms to delay monetisation on either side until a certain user base is reached. Only then providers can start thinking about the “money” vs. “subsidy” pricing decisions.
Directory of books on sale
2. Website registration: Value vs. Privacy
Most of today’s websites require users to register to access the key functionalities or content on their site (and so does BookStash). Providing personal information such as an email or home address is a very common part of the sign-up process. Disclosing such information is likely to cause some privacy concerns on the user’s side and might even scare people away from registering at all. This is why we don’t ask users to link their Facebook profile in the registration process but leave is as an optional point in your personal settings once registered. In contrast to the privacy concerns, people also know that without registering, they will not be able to take full advantage of the privileges and benefits of the website in question. Thus, there is a personal conflict between privacy concerns and access to value (Li and Pavlou, 2016).
While I certainly agree with everything that is stated in the literature, I’d like to bring up another point regarding the registration discussion. In my opinion you can argue for cases where a mandatory registration on a website actually increases trust and is a sign of quality. Since people have to go through the registration procedure and are willing to provide personal information, they show commitment and an honest intent towards the network they would like to enter. Sure, this argument is somehow weakened by the possibility of creating fake profiles, but I still would prefer to engage with somebody on a marketplace where users have to register with personal information instead of one without this requirement. This is also why sellers of books have to register on the BookStash platform. Interesting side note: Even though you could register on BookStash only indicating your first name, most people use their full name.
BookStash User Registration
It would be great to hear your thoughts on some of the things I discussed in my post! Also if you have any question about the programming or web app project in general, just shoot me a message or leave a comment. Oh, and don’t forget to check out BookStash 😉
PS: The website wasn’t used for quite a while, so don’t be surprised.
References
Eisenmann, T., Parker, G., and Van Alstyne, M.W. 2006. Strategies for Two-Sided Markets. Harvard Business Review 84(10) 92-101.
Li, T., and Pavlou, P. 2016. What Drives Users’ Website Registration? The Network Externalities versus Information Privacy Dilemma. (Working Paper).
The rise of the Platform Economy
27
September
2016
5/5 (1)
Technological enterprises and companies that started in the digital age, such as Google, Alibaba, and Amazon have understood the power of digital technologies. However, most of these companies’ disruptive innovations are not services or products, they are in fact the platforms that form the foundation for these products and service. This is called a platform-based business model and it changes the way how companies can do business. It results in a system that does much of the work to grow the company (quickly) by itself.
The three main reasons for the success of these platform-based business models are:
Network effects: This exists when two user groups (in most cases, consumer, and producer) generate network value for each other, resulting in joint benefits that increase demand-side economies of scale. The network effects of these platforms, with increasing connected transactions and users, push value creation.
Distribution power law: Platform business models enable a much larger scale. This is done by allowing third parties to sell products in the long tail, avoiding diminishing returns usually associated with these products. E.g. Amazon is able to offer books very specifically tailored for a niche market that would never be sold in regular book shops.
Asymmetric growth: This is the principle of driving demand for their core market through complementary markets, by subsidizing these, or even offering them for free, to users. An example of this is Adobe offering their PDF readers for free to its users. Because of the resulting increased use of Adobe’s pdf reader, producers are willing to pay more to be able to distribute PDF files.
Accenture’s Technology Vision 2016 names platform economy as one of the key trends to watch. It mentions that every company will, eventually, need a platform strategy. They will need such a strategy not only for the growth of their business, but also to be able to fight off the platform-based competition.
Sources:
Technology Trends 2016 – Accenture Technology Vision. Retrieved September 26, 2016, from https://www.accenture.com/us-en/insight-technology-trends-2016
Beware of fading mutual attraction
7
October
2013
No ratings yet.
In my homework assignment article I explore two online music platforms: Apple’s iTunes Music Store and Spotify. They both face problems with one side of their user group. My purpose is to show that two-sided platforms rely on mutual attraction. If one user group doesn’t like the service provided and leaves, the platform could face a walk out of the other group as well.
Problem with listeners
Apple-users don’t like the look & feel of the iTunes Music Store anymore. It looks like a spreadsheet instead of giving the thrill of buying something. Apple also missed out on the trend of streaming music. The company clung too long to its concept of download-to-own. In my view Apple can simply not afford to let slip the user group of listeners, since there is a close tie between the service of Apple’s online music platform and the sales of its devices (iPod, iPad and iPhone). If music lovers definitely turn their back on the iTunes Music Store this step will automatically lead to the decline in sales of Apple devices.
Problem with musicians
Spotify was confronted with the first band, Atoms for Peace, to pull their music from the platform, because in their opinion the returns are too poor. It is not clear how many artist have followed this example, but it is clear Spotify cannot ignore this sign. Music lovers seeing their favorite bands leave a platform, might decide to follow, causing the total collapse of the platform. “The value of a platform depends on the value on the number of users on the other side,” according to the article in Harvard Business Review I used for reference and theoretical background.
New competitor
In 2014 both platforms might have to deal with a new competitor as Pono will be launched by legendary artist Neil Young. Pono is an online music platform that ‘will save the sound of music’ according to Young. That will make both musicians and fervent music lovers happy, who might decide to switch to this new platform. Being a late mover Young can avoid all the mistakes early movers made.
Conclusion:
Two-sided platforms are based on the mutual attraction of user group. They do however not run themselves. Managing a platform means having a keen eye for the various needs of both user groups. If one group is not happy with the provided service and decides to leave, the platform becomes unattractive for the group on the other side. This group could also decide to move elsewhere, leaving the two-sided platform a no-sided platform.
Find out more about Pono:
http://www.rollingstone.com/music/news/neil-young-expands-pono-digital-to-analog-music-service-20120927?print=true
Interview Neil Young at David Letterman: http://www.youtube.com/watch?v=qL1ffo8TwGM
