Question

What does it mean Connect Customers when an organization is becomes a Multi-sided Platform? Please provide an example.

Answer 1

Multisided platforms (MSPs) are technologies, products or services that create value primarily by enabling direct interactions between two or more customer or participant groups. Prominent examples of MSPs and the participants they connect include Alibaba.com, eBay, Taobao and Rakuten (buyers and sellers); Airbnb (dwelling owners and renters); the Uber app (professional drivers and passengers); Facebook (users, advertisers, third-party game or content developers and affiliated third-party sites); Apple’s iOS (application developers and users); Google’s Android operating system (handset manufacturers, application developers and users).

MSPs can encompass a tremendous variety of functionalities and features that reduce search costs (Airbnb and Match.com provide search functionality based on desirable characteristics), transaction costs (eBay offers buyers and sellers the ability to settle transactions using PayPal) or product development costs (Sony provides application programming interfaces and development kits that facilitate game development for the PlayStation 3). For most of these features, the decision whether to include them is amenable to a straightforward cost-benefit analysis: If the cost of building and implementing is less than the value created for the multiple sides served

If there is no priced transaction between the sides, then charge more to the side that stands to benefit more from the presence of the other side or sides. The logic behind this principle is specific to MSPs, but also straightforward. For example, business conference organizers typically charge attendees but not invited speakers.

Example-

Match.com and eHarmony are two of the leading online dating services in the United States. Match.com place minimal restrictions on who can sign up and how its members interact; eHarmony has some of the tightest governance rules among online matchmaking services, for both access and interactions. It screens applicants by requiring them to complete a questionnaire of approximately 250 questions and then refusing membership to some applicants, even if they are willing to pay the membership fee.25 Once granted admission, eHarmony’s MSP members are not allowed to view profiles and communicate freely. Instead, the company uses a matching algorithm to generate potential matches for every member, and each member can communicate only with her or his potential matches. Furthermore, communication is initially guided by eHarmony’s questions unless both members agree to “fast track” to open communication.