Master Class: Platform Business Models

[@ytakara]

Professor, thank you very much for the fascinating video-I really enjoyed watching it! I am part of a small reading group that regularly discusses chapters from your book, Services Marketing. We find your insights incredibly valuable, and I wanted to ask you a question about something you mentioned in the video. In the video, you stated that “a platform like Google does not have a primary network effect.” However, I’ve always felt that Google’s search engine has grown significantly because of primary network effects. My reasoning is that, as the number of users increases, Google can collect more search data. This data is then used to train machine learning models and improve the search algorithm, which raises the quality of search results and enhances user convenience. As a result, more people choose Google as their preferred search engine-wouldn’t that be considered a primary network effect? Additionally, I believe that the primary network effect generated by Google’s core search engine directly fueled the growth of its other services-such as advertising, Google Business Profile, and KZbin-by leveraging the improvements and expanded user base from search. I would greatly appreciate your thoughts on this. Thank you for your time and expertise, and I look forward to hearing from you. Greetings from Japan!

[@ProfessorJochenWirtz]

So nice to hear from you! And you are right, Google’s ecosystem has many benefits as you correctly point out. However, a tight definition of direct network effects means that you derive more value from the service if others (like your friends, colleagues, I, etc) also use it. However, as it is, you actually don’t care whether I use Google or something else because it doesn’t matter to you. In contrast, for KZbin, it matters as otherwise, we couldn’t connect here now as we do. And if GenAI and some other platform gives you better search results than Google, you can easily switch. However, if there’s a technologically, functionally better video platform than KZbin, it still might not make you switch because your friends and other significant parties you want to be with may not be on the new platform (i.e., it lacks these direct network effects). Does this make sense?

[@ytakara]

@@ProfessorJochenWirtz Professor, thank you very much for your thoughtful response! Your explanation helped me understand why a search platform like Google cannot strictly be considered to have a primary network effect. At the same time, I do wonder if there might be a data-driven network effect at play, so I plan to look further into the topic of network effects. We were thrilled to receive your reply-and it sparked a lively conversation in our reading group. Next, we will be reading Chapter 4 of Services Marketing. If we have any further questions, we would love to reach out again. Thank you once more for your time and insights!

[@SurendraSharma-no6nx]

Absolutely perfect sharing regarding platform business models class.

[@SurendraSharma-no6nx]

Thanks dear sir for your valuable time 🙏

[@RaimundMollenhauer]

Herzlichen Dank für dieses Beispiel geladene Video!

[@ProfessorJochenWirtz]

Es freut mich, dass es Ihnen gefaellt!

[@olympia2soon]

Come across this lecture by professor. Good insights. I am starting a business using a platform model in the Health and Fitness business. Just what I need

[@ProfessorJochenWirtz]

I am glad the video helps you with your platform business! Wishing you all the success!

[@Franz_FFM_HK]

Vielen Dank Prof. Wirtz, dass Sie diese hervorragend verständliche Unterrichtung mit der interessierten Community teilen. Alles Gute und beste Grüße.

[@ProfessorJochenWirtz]

Herzlichen Dank fuer die nette Rueckmeldung! Best Gruesse, Jochen

[@herwinbackup8905]

Extremely useful and succint. thanks prof wirtz!

[@bishwajeetsharma]

THANK YOU VERY MUCH SIR FOR THIS, WELL EXPLAINED BY YOU:) LOVE FROM INDIA.

[@ProfessorJochenWirtz]

Thank you, am most happy you enjoyed the video :)

[@benjaminy.]

Hello! Thank you for making these materials available in the public domain. I wished that I've took up your module if I happened to be in NUS. Greeting from Singapore

[@ProfessorJochenWirtz]

Benjamin, hope to see you in one of my courses @ NUS then. Also, I do have an online course, too - see video - we run this course a few times a year - kzbin.info/www/bejne/goTTgHxplsSfnbc

[@benjaminy.]

@@ProfessorJochenWirtz Question: What's the different between attending your online courses and the physical lessons in MSc(Business)/MBA course conducted @ NUS? Would the course content be different? How about marketing A.I and Machine Learning Business Model?

[@ProfessorJochenWirtz]

@@benjaminy. oh, face-to-face is very dynamic and a highly interactive learning environment. Especially our EMBA and MBA students come from many different companies, functions and geographies. There is no topic in class I touch where some students don’t have first hand experience in they share in the class. I also learn a lot from these discussions. They are priceless!

[@sunilarshahil9945]

Thanku Mr. wirtz, for such a wonderful session.

[@FUNDMORE]

Platform Business Models open doors to business opportunities considered dreams of yesterdays. The possibilities in financial services and commerce are limitless.

[@ProfessorJochenWirtz]

The research underlying this video can be downloaded from: > Jochen Wirtz, Kevin Kam Fung So, Makarand Mody, Stephanie Liu, and Helen Chun (2019), “Platforms in the Peer-to-Peer Sharing Economy”, Journal of Service Management, Vol. 30, No. 4, 452-483. >>> www.researchgate.net/publication/331907029_Platforms_in_the_Peer-to-Peer_Sharing_Economy . > Makarand Mody, Jochen Wirtz, Kevin Kam Fung So, Helen Chun, and Stephanie Liu (2020), “Two-Directional Convergence of Platform and Pipeline Business Models”, Journal of Service Management, forthcoming >>>www.researchgate.net/publication/339927537_Two-Directional_Convergence_of_Platform_and_Pipeline_Business_Models

[@venugopals4219]

Excellent insights. Definitely would like more examples and comparison between Platform and non- Platform business.

[@ProfessorJochenWirtz]

Thank you - if you are interested have a look at these two article we published - www.researchgate.net/publication/339927537_Two-Directional_Convergence_of_Platform_and_Pipeline_Business_Models & www.researchgate.net/publication/348276113_Commentaries_on_the_Sharing_Economy_Advancing_New_Perspectives . I hope you like them. Jochen

[@venugopals4219]

@@ProfessorJochenWirtz Thanks a lot professor. Have you been able to publish write up on Indian Start ups and Platform businesses. Would be eager to understand just as a student

[@ProfessorJochenWirtz]

@@venugopals4219 Sorry, no...

[@jideidowu4267]

I did enjoy your insight on the Business Models that Platforms of today have adopted Professor Jochen, but I do have a question however.. How would a platform that focuses on creating a community lets say like an e-commerce community whereby Sellers and those who offer services are able to connect with Users/Customers on the platform. Now been a platform without any actual product how do you adopt a business model and what's the best form you would adopt to generate revenue as a platform. Now let us take into account that UX, Performance, Trust, Reliability and Dependability have been achieved. What business model would be best to adopt? Should you decide to use subscription based model like Netflix, or Perhaps the use of AD's like KZbin and Google. Or which other methods would be best adopted here. Although I'd love if AD's wouldn't have to be the most concrete option in play here and as such I am searching for other ideas that can be adopted. I would be so interested in hearing your view on this sir? Thank you in advance Professor Jochen Wirtz.

[@ProfessorJochenWirtz]

Jide, these are very interesting questions! ...and I don't think there are generic answers to those. Pricing is interesting - subscription vs access fees vs listing fees vs transaction fees. Each has its place and purpose. You'd have to look at the kind of transactions, community, purpose it has. Eg if it is all about exclusivity then access or subscription fees can be high as they establish what we call "monetary exclusivity"; if it is about building liquidity that provides compelling value to the community, then fees should be low. etc. Would be an interesting project for students to develop the pricing and governance model for a particular platform. Have fun!

[@TondaniR]

Very informative 👍🏾

[@truebossman957]

3 very important 2 now i am building my platform business

[@yiukins]

Professor, thank you very much for this informative and interesting presentation. I am considering starting a platform business. Could you please recommend some books or online courses for me to study further?

[@ProfessorJochenWirtz]

There are many books available - see those with many (good) reviews - www.amazon.com/s?k=platform+business&i=stripbooks-intl-ship&crid=GNTIK4TPRNZQ&sprefix=platform+business%2Cstripbooks-intl-ship%2C1975&ref=nb_sb_noss_1 -- Plus see the papers my co-authors and I published - See other related work on ResearchGate - www.researchgate.net/project/Advanced-Topics-in-Service-Research-Robotics-AI-Platforms-Corporate-Digital-Responsibility

[@qhawe4098]

Greetings Professor Thank you for the very informative presentation. As of 2019 I was given the opportunity to lead a logistics company and last year I discovered that there isn't a business model in place for the company (the company has been operating for more than 10 years). My questions are: (1) Is it possible to design a new business model for a company that already exists and if so, will we have to change how we've been operating and also will we have to change our system? (2) Is there a specific way/format to follow when designing a business model for logistics company? Thanks,

[@ProfessorJochenWirtz]

Good to hear from you! ... of course, any company can pivot its business model - it takes a hard look at your capabilities, markets/customers, competitors, plus deep thinking, workshops, time and money. Also, if the company has been in business for 10 years and is profitable, in my experience that means it has something at least some customers value. One has to work to pinpoint what exactly that is and build on it. That's an alternative to pivoting. Also, have a look at this book - you can download it for free and it helps you with the thinking through the analysis - www.researchgate.net/publication/318672547_Winning_in_Service_Markets_Series_Vol_2_Positioning_Services_in_Competitive_Markets . An updated version of that chapter is in the 9th edition , but that's not free unfortunately - www.researchgate.net/publication/354623174_Positioning_Services_in_Competitive_Markets

[@qhawe4098]

Thank you so much! I’ll go through the book and revert back How can I get in touch with you? Is LinkedIn fine?

[@ProfessorJochenWirtz]

@@qhawe4098 - [e-mail]

[@triyogaap.7389]

Thank you professor for your insight. What if, I want to evaluate our platform (reserch grant from government body (not bussiness you said in your video)) and then I want to expand the level of the platform. For example I want to accomodate how researcher connected to one and another to create minimum value they can interact and know each other. So, (in simple way) they can share their research (policy/technology) in order to be used/implemented/adopted in another place, etc. Is there any framework/tools/etc. that I can use? Or if you had any of article which are related? I would be interested in your view. Greetings, from Indonesia. :)

[@ProfessorJochenWirtz]

Good to hear from you! Interesting question - perhaps have a look at ResearchGate which offers much of the functionality you seem to have in mind - www.researchgate.net/profile/Jochen-Wirtz. Best wishes, Jochen

[@Donnyrado]

Thank you for the great content and new insights into the interesting business strategy. I do understand your view on the low switching costs for both sides of most transportation platform's which lead to multihoming. In my personal opinion the main point to consider is that most of those platforms offer homogeneous goods or service, thus the customer will choose the platform with the highest utility ( UX, price, availability). Overall this may lead to a dominant winner takes it all market or a red ocean.... On the other side you mentioned Airbnb and hotel chains: Those accommodations providers are heterogeneous services as the location or specific attributes (view on Marina Bay or Eiffel Tower) create a product which cannot be replicated as it provides a specific individual utility to the user. Therefore platform's that can create heterogeneous products, for instance real estate investment or accommodations, will (my view) not play by the same rules and can lock in users much more sufficiently I would be interested in your view? (I saw that you replied on some comments)

[@ProfessorJochenWirtz]

Absolutely, I fully agree with you. commodity type products suffer from multi-homing (eg most people don't differentiate one ride from another). Once a provider has an USP, that offer is differentiated and has pricing power! it is just hard to build such differentiators...

[@divyanshuranjan9972]

Professor, great video. I have a doubt. In the last diagram, why is Amazon in the third quadrant i.e. transfer of ownership and marketer provided resources? The ownshership aspect is understood, but why marketer provided resources? Do the sellers not sell on Amazon? Shouldn't it be peer to peer, because the sellers come on the platform to sell their products and buyers buy them?

[@ProfessorJochenWirtz]

Dear Divyanshu, thank you for your comment. You are right, if the sellers are many (eg like in Etsy) then one can consider it as peer-provided. If Amazon takes control of the inventory, then it is firm/platform provided. So, Amazon could be in both quadrants, but I guess most of their sales are from their own inventory...

[@divyanshuranjan9972]

@@ProfessorJochenWirtz Understood your point. You also mentioned how these platforms cross and enter each other's segments. Thankyou professor for your prompt reply :)

[@dr.dharmeshgadhavi5051]

Extremely useful

[@ProfessorJochenWirtz]

Glad to hear that! Thank you.

[@muskduh]

Thanks for the video

[@siri12345]

Dear Professor, nice presentation! Where can we fit in the telecom connectivity platforms? Ex. Jio platforms, Rakuten (RCP) etc?

[@ProfessorJochenWirtz]

Thank you. It always depends on the type of network effects (ie direct, indirect) and complementors in an ecosystem that determine the barriers of entry and stickiness of the platform - see our papers here www.researchgate.net/project/Advanced-Topics-in-Service-Research-Robotics-AI-Platforms-Corporate-Digital-Responsibility

[@siri12345]

@@ProfessorJochenWirtz Thank you, Sir!

[@Meetpatel-eo5wj]

Is the application of stock market broker where we do trading example of platform business?

[@ProfessorJochenWirtz]

It is a kind of digital platform - there are many types - see here for a discussion of generic digital platforms - www.researchgate.net/publication/340884713_The_Role_of_Marketing_in_Digital_Business_Platforms . The video focuses on P2P sharing platforms, and explains direct and indirect network effects which are not so relevant for a stock broker.

[@Meetpatel-eo5wj]

Thank you sir for the reply

[@ProfessorJochenWirtz]

See our latest article on Digital Business Platforms (DBP) - www.researchgate.net/publication/340884713_The_Role_of_Marketing_in_Digital_Business_Platforms. Digital Business Platforms such as eBay, Google, and Uber have seen enormous growth in recent years. What exactly are the salient characteristics of this new way of structuring a business? What is the role of marketing in helping DBPs succeed? We explore these topics in our latest article.

[@ProfessorJochenWirtz]

See information and resources related to our latest book on Intelligent Automation: Learn How to Harness Artificial Intelligence to Boost Business & Make Our World More Human -- intelligentautomationbook.com/

[@gauravmohan9271]

Perfect…

[@NinjaNuggets21]

What about Fintech platforms? Like those forex and stock market trading apps?

[@ProfessorJochenWirtz]

if it is a 2- or more-sided platform, liquidity is important; ie there are indirect network effects until matching quality is great. Direct network effects don't matter much as same-side players don't add much value (beyond them helping to build indirect network effects). As there are no physical assets involved (ie cars, rooms, etc), a lot of the issues related to those don't apply. My take is that customer journey design and convenience are key in addition to pricing. Most offer rock bottom prices compared to the legacy financial institutions but lose out on convenience; ie do I really want an app and sign up for each financial service I use? I personally rather deal with a comprehensive financial provider.

[@ProfessorJochenWirtz]

See other related work on ResearchGate - www.researchgate.net/project/Advanced-Topics-in-Service-Research-Robotics-AI-Platforms-Corporate-Digital-Responsibility

[@CristianoNogueira]

Dont you think the time Marriott needs to become highly populated platform (like Airbnb is) will take longer than Airbnb to start owning property (if they figure it interesting?)

[@ProfessorJochenWirtz]

Airbnb already owns property and Marriott already has a highly propulated platform. This conversion is in full swing. - see our mini-case studies on Marriott and Airbnb here - www.researchgate.net/publication/339927537_Two-Directional_Convergence_of_Platform_and_Pipeline_Business_Models

[@startup5292]

It's a million dollars content

[@yusufshah1685]

Hello professor, how smart do you think the choice by AirBNB and Uber is to own their assets(rooms and cars). Arent they taking on more risk , instead of in a sense externalizing it and lowering their risk? I really enjoyed this lecture, thank you for uploading this. Will be following you for more material, Danke Schön

[@ProfessorJochenWirtz]

Thank you! And of course, for Airbnb and Uber actually owning or controlling (eg via rental) increases risks. See WeWork - they have long-term commitments for their assets but rent out only short-term - their offices will empty with this crisis. However, in more 'normal' times the returns should also be higher for Airbnb and Uber as they capture more of the value for capacity for which they can expect to have high utilization.

[@ProfessorJochenWirtz]

See also the related Master Class on Service Robots & AI - kzbin.info/www/bejne/qJfEop5uf9SseZY