Summary of Platform Revolution

For example, a woman who is a YouTube user receives curated video recommendations and decides from the title of the video whether or not to watch it. When she watches a video, she pays for it with a view, the currency of YouTube.

The currency used in a platform can be the most varied of the components that make up a platform’s architecture. These currencies can be mandatory, such as a view on YouTube that increases the view counter by one regardless of whether the viewer liked the video or would recommend it to a friend. The user can then choose to reward the video producer with a thumbs-up or a positive comment, which contribute to the video’s popularity. Any video receives the currency of a view if a user watches it, but good videos receive the different interaction-dependent currencies. Users can also classify a video as a “Favorite” or add it to a custom playlist.

Key Takeaway 2
The architecture of a platform relies on five elements: users, the item that users will be exchanging, currency, the filters that help the user select a producer, and the information used to make that decision.

Meanwhile, platforms have already entered many industries. But they may still revolutionize many more, such as education and health care.

Platforms are dominating production processes particularly because they reduce the costs of value creation, consumption, and quality control

Users will not sign up for a service with no producers, and producers will not agree to offer service if no users will be using their products.

Many users will join if the platform is useful and well-curated.

The architecture of a platform relies on five elements: users, the item that users will be exchanging, currency, the filters that help the user select a producer, and the information used to make that decision.

Negative network effects occur when the network is too large or when users are too overwhelmed to receive a benefit from the platform.

Many industries, including health and education, are ideal candidates for platform business expansion because they rely on information exchange, have human gatekeepers, are fragmented, and have information asymmetries

A profitable platform charges users or third parties only when doing so does not deter users from joining and participating.