Which Of The Following Companies Uses The Service Provider Business Model?

Multi-sided platforms, known by economists as multi sided markets, are an important business phenomenon. They take existed for a long fourth dimension, merely proliferated with the rise of information technology. The Visa credit bill of fare, the Microsoft Windows operating arrangement, the FinancialTimes, Google, the Wii game panel, and Facebook are only a few examples of successful multi-sided platforms. We address them here because they represent an increasingly important business model pattern.

What exactly are multi-sided platforms? They are platforms that bring together two or more than distinct but interdependent groups of customers. They create value as intermediaries by connecting these groups. Credit cards, for case, link merchants with cardholders; estimator operating systems link hardware manufacturers, application developers, and users; newspapers link readers and advertisers; video gaming consoles link game developers with players.

The cardinal is that the platform must attract and serve all groups simultaneously in order to create value. The platform's value for a particular user group depends substantially on the number of users on the platform's "other sides." A video game panel will simply concenter buyers if enough games are bachelor for the platform. On the other hand, game developers will develop games for a new video console only if a substantial number of gamers already use it. Hence multi-sided platforms often face a "chicken and egg" dilemma.

I way multi-sided platforms solve this problem is past subsidizing a Customer Segment. Though a platform operator incurs costs by serving all customer groups, it frequently decides to lure ane segment to the platform with an inexpensive or free Value Proffer in club to subsequently attract users of the platform'southward "other side." One difficulty multi-sided platform operators face is understanding which side to subsidize and how to price correctly to concenter customers.

Multi-sided platforms bring together 2 or more than singled-out but interdependent groups of customers. Such platforms are of value to i grouping of customers only if the other groups of customers are also present. The platform creates value by facilitating interactions between the different groups. A multi-sided platform grows in value to the extent that it attracts more users, a phenomenon known equally the network effects.

Allow's take a look into Google's multi-sided business model.

Google Business Model

As a multi-sided platform Google has a very singled-out acquirement model. Information technology makes money from 1 Customer Segment, advertisers, while subsidizing gratuitous offers to two other segments: Web surfers and content owners. This is logical because the more ads it displays to Web surfers, the more it earns from advertisers. Increased advertizement earnings, in turn, motivates even more than content owners to become AdSense partners. Advertisers don't direct buy advertizement space from Google. They bid on ad-related keywords associated with either search terms or content on third party Spider web sites. The bidding occurs through an AdWords auction service: the more than pop a keyword, the more than an advertiser has to pay for it. The substantial revenue that Google earns from AdWords allows information technology to continuously improve its free offers to search engine and AdSense users.

Google's Key Resource is its search platform, which powers three unlike services: Web search (Google.com), ad (AdWords), and 3rd-political party content monetization (AdSense). These services are based on highly circuitous proprietary search and match making algorithms supported past an extensive IT infrastructure.

Google'southward three Key Activities can be defined as follows:

ane. Edifice and maintaining the search infrastructure.

2. Managing the 3 main services.

iii. Promoting the platform to new users, content owners, and advertisers.

More platform business model examples: Visa, Google, eBay, Microsoft Windows, Fiscal Times