Vanessa Marin

Platforms create large networks of users and resources that can be accessed whenever. This allows entrepreneurs or even just everyday people to interact and contact with each other in a professional online environment. Network effects facilitate exchange and create distribution value among players because it allows people to interact online. “Platforms don’t own the means of production, instead, they create the means of connection”.

A platform associated with a given company is Alibaba. Network effects facilitate exchange and create distribution value among players through the interaction and transaction between consumers and producers. Consumers and producers are more easily to connect to each other with the network effects. Platform can be mobile app, website, content platform, payments platform and communication platform. Network effects increases in usage by one set of users increases the value of a product for other users.

A company with a platform business model is Airbnb. The more users this platform has, the more valuable and useful it is. This also increases other users’ willingness to pay. In one of our articles, it says that “what a company owns matters less than what it can connect”. This is why network effects play an important role in connecting consumers and producers to each other as well as connecting users to other users.

One of the companies that has a platform business model is Uber which relies on networks, network effects facilitate exchange and create distribution value among players because it allows people to interact online. People can do business or get service through an app and the whole system is running based on credits. Uber is an successful example of sharing economy and its value is still potential with the popularity of itself.

One common company that uses a platform is Facebook. The specialty with Facebook is that it uses a technology/social media platform. Within this technological platform, many users can connect and network with people through various factors on the site, such as liking and commenting on statuses, joining groups and pages, etc. No matter how old Facebook is getting by the years, it will always be a form of a social media platform that will flourish because of its network effects and distribution value that allow individuals to interact with other users via mobile devices.