A traditional business challenge is to reach customers. Matchmaker businesses do something else: they bring different groups of customers together, providing value through their network or their platform.
It’s not a new concept—think magazines or shopping malls—but it is one that has exploded in value, significance and frequency in the digital age. Today, many of our most valuable businesses are digital matchmakers: Facebook, Alibaba, Visa, Google and so on.
Such growing primacy is the reality that underlies the writing of Matchmakers: The New Economics of Multisided Platforms, by David Evans and Richard Schmalensee. Whether you want to create the next big one, already depend on one (or more) for your business or career, or you want to protect yourself from getting steamrolled by the trend, it’s essential to know the underlying economics that make these “multisided platforms” tick.
The book is structured into three parts: 1) overview of new economics/models; 2) six key concepts that underlie matchmaker businesses; 3) emerging examples that test the model. Anyone who has studied network effects will be familiar with some of this material, but newer research on multisided platforms is challenging a lot of old assumptions. Pricing is an especially tricky area. Another related key concept is friction of customer interaction and platform value.
The book’s middle section holds its richest material, as Evans and Schmalensee, a former dean of the MIT Sloan School of Management, work through the six critical issues that multisided platforms must addresses by illustrating how they are manifest in companies and product platforms most of us think we understand. From there, they also speculate on the way existing foundational platform businesses are likely to foster an ecology of new platforms in the future. Might yours be one of them? —Listed Staff
Matchmakers: The New Economics of Multisided Platforms
By David S. Evans and Richard Schmalensee Harvard University Business Press