How to spot platform opportunities in your industry
Will everything become a platform? Is a platform even the right model in all cases? History shows that platform-based and pipe-based business models will probably co-exist. Business models based on linearity are still going to be very important, but there will be opportunities for platforms to create greater scale than the traditional approach.
Over the last decade, the media industry has been repeatedly reinvented. Traditionally, the media value chain has been extended across the following parts:
The media value chain is a classic pipe spewing content to the consumers. Some companies like YouTube choose to take the entire pipe and convert it into a platform. YouTube enables all four functions above to be performed on one single platform. Anyone can create videos; the community performs the editorial function and videos are distributed to interested viewers and consumer right on YouTube.
More often, we see platforms attacking different parts of the value chain instead of owning it end-to-end. While a slightly less dramatic reinvention of the end-to-end value chain, I believe that that is the kind of impact that platforms will increasingly have across industries. Most platforms will co-exist with pipes while attacking different parts of the value chain.
How do platforms reinvent content creation in media while working with the rest of the linear value chain? The following are three examples.
HARO (Help A Reporter Out) is a platform approach to sourcing new stories. The platform connects journalists with people they may want to interview. HARO has decreased the barriers needed to write a story, by sourcing industry experts who want to be interviewed. Conversely, industry experts use Haro to gain more personal exposure. Many journalists use Twitter in a similar way to change the way they source content.
Viki is an open platform working with a closed content supply chain. The company acquires soap operas and movies through the traditional pipe model. But it uses a platform model to create subtitles leveraged through the community, similar to Wikipedia. Users create subtitles for these videos and a community of moderators constantly accepts and rejects user submissions. Once ready, the subtitled content is licensed to TV networks and delivered the traditional way. Viki uses the platform model in one section of the pipe and benefits from superior economics.
Huffington Post is an online news aggregator and blog. The company started out as a pipe with in-house journalists but then opened out the contributor ecosystem to create a distributed, global army of journalists. Forbes, and more recently Wired, have also tried a similar model.
All the companies above are trying to apply platform thinking in various ways to change one function in the value chain.
How does content editorial get reconfigured in a platform world?
Medium is probably the best example. As a publishing platform, the company started with an in-house editing team selecting the content to be featured. During this time, content creation was limited to a few users. Over time, the platform allowed users to build collections of articles and allowed other users to follow these collections. When the platform eventually opened itself to more content creators, it phased out the editorial function from in-house editors to these collection owners. Medium today benefits from a distributed ecosystem of user-editors who control market access of new articles by accepting or rejecting them.
Quora started out with employees policing and upvoting/downvoting answers. Over time, the community took over. Employee admins only look at special cases now. The transition from professional editorial to social curation is a natural transition with most platform communities.
Reddit is a classic case of the ecosystem serving as the editor. Traditionally, on a portal like Yahoo, an editor would decide the top news of the day. On Reddit, an ecosystem upvotes/downvotes/discusses a news item to popularity and exposure.
Let’s look at the third layer of the value chain. Platforms are fundamentally changing how news is distributed. This is most obvious in the rise of a new breed of media businesses that create content almost exclusively for platform-enabled distribution.
Demand Media is a media company that optimizes content entirely around leveraging Google’s algorithms for distribution. This eventually proved to be its undoing as it fell prey to Google’s shifting algorithm updates. But Buzzfeed seems to be following a similar playbook. It leverages distribution by optimizing content towards Facebook-enabled distribution.
Spotify and other music streaming services are trying to create new forms of distribution where listeners power distribution. Spotify listeners can create playlists and develop large followings. New users discover music by following playlists of interest. These playlist creators are the new influencers and distributors.
Finally, new consumption models are emerging in a world of platforms. Flipboard’s tablet-first consumption experience created an alternate destination for existing content. Over time, Flipboard has opened itself as a platform where users create magazines (collections) leveraging existing content.
The media industry demonstrates that the future isn’t one where platforms completely remove pipes. Instead, it is one where platforms peacefully and credibly co-exist with pipes by ensuring that they add value to specific portions of the traditional value chain and re-imagine specific functions. Airbnb may be a threat to the hotel industry, but platforms like LiquidSpace are actually helping hotels get more efficient. Likewise, platforms like Cohealo don’t try to replace hospitals but co-exist with the traditional pipe structure of hospitals and make them more efficient.
In any industry, new platform opportunities will emerge every time a function in the value chain can be better performed by an ecosystem of external users.
Thanks to Griffin Anderson for writing early drafts of this article.
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