Self Study 2- Managing Digital Platforms and Ecosystems

What is a digital platform?

• a digital infrastructure

• that enables interactions between different actors or groups

What is a digital ecosystem?

• a network of different actors

• that interact and create value around a platform

What is the main purpose of a digital platform?

• to facilitate interactions between different groups of users

• and/or providers

What is a multi-sided platform?

A platform that connects two or more different groups of users or participants

What is a platform owner?

• actor or company that operates and controls the platform

What is a user?

• person or organization

• that uses the services or functionality provided by a platform

What is a provider?

An actor that offers products, services, content, or other offerings through a platform.

What is a complementor?

• An actor that provides complementary products or services

• that increase the value of a platform

What is the difference between a platform and an ecosystem?

platform: provides the infrastructure for interaction

ecosystem: includes the broader network of actors interacting around it

What is a network effect?

• occurs when the value or attractiveness of a platform changes as the number of users increases

What is a direct network effect?

• occurs when the number of users makes a platform more attractive for users of that same kind

What is an indirect network effect?

• occurs when the number of users on one side of a platform makes the platform more attractive for another group

What is the key difference between direct and indirect network effects?

Direct network effects: affect users of the same kind

indirect network effects: affect another group

What is an example of a direct network effect?

• communication platform becomes more valuable to users when more users of the same type join the platform

What is an example of an indirect network effect?

More users attract more providers, which increases the value of the platform for users.

Why are network effects important for digital platforms?

• can create a self-reinforcing cycle

• in which more users increase platform value

• and attract even more users

What is the chicken-and-egg problem?

• the difficulty of attracting different sides of a platform

• because each side becomes more valuable when the other side is already present

How can platforms address the chicken-and-egg problem?

→ incentivize or subsidize one side to attract users and then attract the other side.

What is platform governance?

• refers to the rules and mechanisms used to control and coordinate activities on a platform

Why is platform governance necessary?

• helps determine how participants behave,

• what they are allowed to do,

• how the platform is controlled

What are formal means of platform governance?

Formal means include explicit rules and mechanisms such as removing content or banning accounts.

What are informal means of platform governance?

Informal means include shared values, norms, expectations, and internet culture.

What are decision rights?

Decision rights determine who is allowed to make specific decisions on a platform.

How does YouTube use formal governance?

YouTube uses formal means of control such as removing videos or banning accounts.

How does YouTube use informal governance?

YouTube also relies on informal means of control through common values and internet culture.

What is platform openness?

Platform openness refers to the extent to which external actors are allowed to access, use, or contribute to a platform.

Why can openness be important for platforms?

Openness can help attract external participants and complementary products or services.

What is value creation in a platform ecosystem?

Value creation results from enabling interactions and combining contributions from different actors.

What is the relationship between complementors and platform value?

Complementors can increase platform value by providing complementary products, services, or content.

What happens when a platform gains more users?

Network effects can make the platform more attractive and potentially attract even more users.