What is a Platform Business Model

What is a Platform Business Model
What is a Platform Business Model

Business platforms and their impacts

The daily coexistence with business platforms make us forget, often, to understand how they have actually emerged. In a decade of strong technological expansion, and agile business, platforms appear as a way to facilitate interpersonal relationships in an increasingly busy routine, and show a traditional business ecosystem how to create innovative businesses.

In addition, it may even seem that in any type of business ideas can be applied agile manifesto, because our routine has been totally transformed by technology, for example, instead of wasting time calling a taxi company to order a car, We can access Uber directly from our mobile phone and have a driver available in a few minutes, even facilitating emergency runs. In our spare time we want ease to access a movie or a series of our preference, making streaming more advantage than physical media material, of course this is no longer news, but it is important to understand that the platform model, technology as a transformative means of human behavior, which forces digital and cultural transformation for companies of all sectors and sizes.

However, what are the goals and how can these business platforms be viewed and ranked?

Those who have already started their change, adapted agile processes and methods, from small companies to the big players in the market, need to pay attention to these transformations that the platform brings us. Although they have existed for a considerable time, the business model of the platform still generates great doubts and contestations. Learn how they position themselves and why they can be considered a success.

What is a platform business model

The platform’s business model aims to offer value services by facilitating access between two or more independent groups, usually classified as producers (or service providers) and customers.

This means that the service is offered to the end customer through a simple and integrated mechanical system, where the consumer can have his need met in a simplified and sometimes cheaper and agile way. Because of this definition, platforms can no longer be classified as linear, since they are not owners of the means of production, but of connection.

The model is also very profitable by reducing costs and relying on technological innovations as direct partners for its success and maintenance in the market.

The business platform is not just technology

Although the platform’s business model has already been present in society for some time, many people still think of it as just one technology, reducing them in applications. However, it is wrong to defend the idea that it is only a system resource, there is a whole market logic designed to benefit your end consumer in different ways, where the engine of the platform is basically the need of its participants.

Another important point in the dynamics of this business model is to compare it to platforms that are thought and implemented to automate work processes within a company. Although the name is correct, they differ as to the objectives: a system of people management, differs from the system adopted by Uber or iFood.

Differences between linear and nonlinear business models

Differences between linear and nonlinear business models
Differences between linear and nonlinear business models

Another very pertinent question for those who begin to know the business model of platforms, is to understand how it can differentiate from a linear system and what this, in practice, means.

A non-linear business model is a model that still needs a production line, for example, pay TV. When hiring this service, the customer still needs to schedule the visit of the technician of the operator so that the installation of the desired TV point is done, this way, the company in this sense does not only sell the product, but the means of production by which this service must pass to be accessed.

In the case of platforms, this model is discarded, since when subscribing to a streaming service, the customer has access to its content at the same time. This practicality has proven profitable and much more accessible to the target audience of the business, making the traditional mode of television being replaced by streaming.

Impact on the economy

Due to the ease of access to the services provided, platforms are already much more profitable than linear business models. Part of this success is due to the ease of insertion into the hectic daily life of thousands of people and the saving of time spent during research, sharing and access to more interactive content.

The three most profitable platforms in this business today are Google, Apple and Facebook. With their own different goals, they can interact simultaneously, since access to the smartphone allows the consumer to also consult their Facebook account and do quick searches on Google.

While an undisputed phenomenon, the streaming platforms of Netflix and Amazon have been fighting fiercely to equal themselves as today’s leading entertainment services. During the social isolation caused by the Covid-19 pandemic, Netflix saw its market numbers grow sporadically, becoming an affordable option amid the closure of cinemas around the world.

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