Platform Business Models and Why They’re Dominant | Applico

What is a Platform Business?:

Platforms are business models that allow consumers and producers to connect with each other to exchange goods, services, content, money, information, and more. Platforms don’t own the means of production. They create the means of connection.

Prior to the platform business model’s widespread popularity, linear businesses had dominated in various forms since the Industrial Revolution. In a linear business, value only flows one direction. Linear companies create value in the form of goods or services and then sell them to someone downstream in the supply chain.

The platform business model enables companies to expand at a pace unprecedented in human history. When a platform adds a new user, that person doesn’t add just a single relationship but rather a potential new relationship with every other user on the platform. As more new users join the network, the value of the platform increases for each individual user. As a result, platform business models are far more cost-effective and higher scale than the old, linear models they‘re replacing.

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