The Platform Business Model describes the specific business logic of platforms that facilitate value exchange between two or more user groups. Unlike pipeline models that move value linearly from producer to consumer, platforms create the infrastructure for participants to generate and exchange value themselves. This shift of value creation to the participants is why platforms can scale so capital-efficiently.
Monetization occurs in various ways: transaction fees (Airbnb takes a commission per booking), access fees (LinkedIn Premium for extended features), advertising (Google shows paid ads alongside organic results), or a combination of these approaches. Pricing is often asymmetric: one side is subsidized to monetize the other. Google offers searchers free access and charges advertisers. This cross-subsidization is a core element of the platform model.
The concept is primarily based on the work of Parker, Van Alstyne, and Choudary. For established companies, the question increasingly arises whether parts of their business can or should be converted from linear to platform models.
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