Platform-Based Business Models

Wei Wei, Wuxiang Zhu and Guiping Lin ()
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Wei Wei: Peking University
Wuxiang Zhu: Tsinghua University
Guiping Lin: Peking University

Chapter Chapter 11 in Approaching Business Models from an Economic Perspective, 2013, pp 125-134 from Springer

Abstract: Abstract High-profile companies such as Facebook tend to invest heavily in promoting their business operations. However, given that Facebook was in deficit in 2007, why did Bill Gates and Li Ka-shing invest so heavily in the website? In fact, the sizable investments of both reflected their astute awareness of the site’s potential valuation, despite its early uncertainties. Twitter is yet to have made a profit, but is valued at $3.7 billion; equally, Groupon, which was established in 2008, recently rejected a $6 billion takeover bid from Google. Why do these companies have such high valuations? The answer lies in platform-based business models that engender positive chains of reaction among users and sellers. The stakeholders, except for the central company, are interdependent and complementary. Once implemented, such business models are unrivaled.

Keywords: Business Model; Real Network; Demand Elasticity; Content Provider; Business Model Innovation (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/978-3-642-31023-2_11

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