Platforms

Platforms are everywhere in our daily life, and they have disrupted the traditional value chain of cultural industries, such as music, movies, books, video games, performing arts and others. In this chapter, we provide a definition of platforms and discuss the changes in business models prompted by their increasing role in cultural industries. We refer to a platform as either a multi-sided or a reseller platform. A multi-sided platform is an intermediary that facilitates direct interactions between distinct groups of users, and which exhibits network effects across or within those groups of users. A reseller platform is an intermediary which buys products or services from independent suppliers, resells them to consumers (possibly with some re-design), and whose products or services sold to consumers exhibit network effects. Platforms in cultural industries use various strategies to attract users and sustain their business model in a competitive environment. Strategic decisions concern the prices charged to the different sides of the platform, but also non-price strategies, such as how much to invest in innovation or how many sides to get on board. We provide a brief overview of these strategies in the cultural sector.