A platform business model is a plan for creating revenue by allowing registered members to create content that can be consumed by a specific user group or general audience.
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The platform business model differs from the traditional pipe, or linear business model, in which a company relies on its own resources to deliver a product or service to customers. Some common characteristics of a platform business model include:
- Allowing users to both create and consume value. YouTube is a good example of this trait, as users are able to view video content and comment on it, as well as produce video content for others to consume.
- Providing open APIs that give external developers the ability to expand the platform's functionality by allowing various application programs to interact and share data.
- Creating an ecosystem that encourages registered users and content consumers to add more value to the platform by repeatedly creating more content which will, in turn, attract additional content creators and consumers.
The platform business model's popularity has grown in recent years as connected technology such as cloud computing, social media and mobility have proliferated. These technologies have advanced the platform business model by allowing the fast, large-scale exchange of products and information between decentralized networks located anywhere in the global marketplace.