Platform Economy

What is the platform economy?

The platform economy is based on digital business models that serve as infrastructure for exchange between different user groups. A platform does not produce goods itself but enables interactions—between buyers and sellers, providers and seekers, creators and consumers.

The unique aspect: Platforms create value through mediation, not through their own production. They do not own hotels (Airbnb), taxis (Uber), or inventory (Amazon Marketplace). Instead, they orchestrate an ecosystem in which others create value—and profit through transaction fees, subscriptions, or data monetization.

Network effects as a growth engine

Network effects are the central competitive advantage of platforms:

• Direct network effects: Every additional user increases the value for all existing users (e.g., social networks).
• Indirect network effects: More users on one side attract more users on the other side (e.g., more sellers → more buyers → more sellers).
• Data network effects: More users generate more data → better algorithms → better experience → more users.

Network effects create a “moat” that makes the platform increasingly difficult to challenge. They are the reason why platform markets often tend toward “winner-takes-most” dynamics—a central topic when scaling business models.

Types of platform business models

• Marketplaces: Connect buyers and sellers—transaction fees as a revenue model (Amazon, eBay, Etsy).
• Social platforms: Connect users with each other—advertising revenue through attention (LinkedIn, Instagram).
• SaaS platforms: Software as infrastructure for an ecosystem of developers and users (Salesforce, Shopify).
• Aggregator platforms: Bundle offerings under one brand with consistent quality (Uber, Deliveroo).
• Data platforms: Collect and refine data as a basis for data-driven business models.
• B2B platforms: Industry-specific marketplaces for companies—a growing area with great potential.

Building a platform: Strategies

The “chicken-and-egg problem” is the central challenge: How do you win over the first side without the other? Proven strategies:

1. Single-player mode: First create value for one side—even without the other (e.g., OpenTable as a reservation system for restaurants).
2. Seeding: Build or subsidize the supply side yourself to attract demand.
3. Niche first: Start in a small, specific market and expand from there—similar to Blue Ocean Strategy.
4. Piggyback: Build on an existing platform or community.
5. Exclusivity: Limit access to create desirability (LinkedIn, Clubhouse).

Use the Business Model Canvas with a focus on multi-sided value creation and the Lean Startup principle for rapid validation. For platforms, product-market fit means: product-market fit on both sides.

Platform economy for SMEs and the Mittelstand

Platform thinking is not only relevant for tech giants. Medium-sized companies can benefit in several ways:

• Industry platforms: Secure market position as the initiator of an industry-specific B2B platform.
• Ecosystem strategy: Expand your own product into a platform—integrate partners and third-party providers.
• Platform participation: Use existing platforms as a sales channel—Amazon, LinkedIn, industry-specific marketplaces.
• Data platform: Offer industry knowledge and data as a service—with a subscription model.

The combination of industry expertise and platform thinking can be a strong differentiator for SMEs—a true USP.

Risks and challenges

• Winner-takes-most: Platform markets tend toward oligopolies—starting as the second player is extremely difficult.
• Dependency: Participants on platforms are dependent on their rules and algorithms.
• Regulation: The EU Digital Markets Act and Digital Services Act are increasingly regulating large platforms.
• Quality control: When others provide the service, quality assurance is an ongoing task.
• Disintermediation: Users could bypass the platform and transact directly.