Matchmakers the new economics of multisided platforms
A fascinating topic!
"Matchmakers: The New Economics of Multisided Platforms" is a book written by Raffaella Sadun, Richard Nunes, and Michael Luca, published in 2020. The book explores the concept of multisided platforms (MSPs), which are platforms that connect multiple groups of users, such as buyers and sellers, riders and drivers, or advertisers and publishers.
The authors argue that MSPs are a new form of economic organization that has emerged in the digital age, and that they require a new set of economic principles to understand. They propose the concept of "matchmaking" as a way to describe the process of connecting these different groups of users.
Here are some key takeaways from the book:
- Multisided platforms are a new form of economic organization: MSPs are different from traditional businesses because they connect multiple groups of users, creating a network effect that increases in value as more users join.
- Matchmaking is the key to success: MSPs succeed by creating a platform that matches users with complementary needs, such as buyers and sellers, or riders and drivers. This matchmaking process is critical to the platform's success.
- Network effects are crucial: The value of an MSP increases as more users join, creating a self-reinforcing cycle that drives growth and adoption.
- Competition is different: In traditional industries, competition is often about price or quality. In MSPs, competition is about the quality of the matchmaking process and the value created for each side of the platform.
- Regulation is challenging: MSPs often operate in a regulatory gray area, and governments are still figuring out how to regulate these new platforms.
- Data is a key asset: MSPs generate vast amounts of data, which can be used to improve the matchmaking process, personalize experiences, and create new revenue streams.
- Economies of scale are important: MSPs often benefit from economies of scale, as they can spread fixed costs over a larger user base, reducing costs per user.
- Strategic partnerships are crucial: MSPs often form partnerships with other companies to expand their reach, improve their services, or access new markets.
- User engagement is key: MSPs need to create engaging experiences for their users to keep them coming back and to encourage them to invite others to join the platform.
- The future of work is platform-based: The authors argue that the future of work will be shaped by MSPs, which will connect workers with opportunities and create new forms of employment.
The book provides many examples of successful MSPs, such as Airbnb, Uber, and LinkedIn, as well as some that have struggled, like Google+ and Yahoo!. It also explores the challenges and opportunities that MSPs present for businesses, policymakers, and individuals.
Overall, "Matchmakers" is a thought-provoking book that provides a comprehensive understanding of the economics of multisided platforms and their potential to shape the future of business and society.