The Techniques for Monetizing a Platform

I just received a book from Amazon two weeks ago. The title of that book is "Platform Revolution - How Networked Markets are Transforming The Economy and How to Make Them Work for You" written by Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary.

Based on that book, the platform is a new business model that uses technology to connect people, organizations, and resources in an interactive ecosystem in which amazing amounts of value can be created and exchanged.

The platform model underlies the success of many of today's biggest, fastest-growing, and most powerfully disruptive companies, from Google, Amazon, and Microsoft to Uber, Airbnb, and eBay.

A well-managed platform can create excess value in four ways: access to value creation, access to the market, access to tools, and curation. Monetization is about capturing a portion of the excess value created.

Techniques for monetizing a platform include charging a transaction fee, charging users for enhanced access, charging third-party producers for access to a community, and charging a subscription fee for enhanced curation.

One of the most crucial monetization choices is deciding whom to change, since the difference in roles played by various platform users means that charging them can have widely differing network effects.

Given the complexity of the monetization challenge, platform managers should take potential monetization strategies into account in every decision they make regarding platform design.