Digital and Platform-Based Business Models

Digital and platform-based business models are systems that configure the processes of creating, delivering, and capturing value through information and communication technologies. Tools such as the internet, mobile technologies, and data analytics transform how businesses interact with customers, suppliers, and other stakeholders. Platform-based models foster value creation among users, producers, and service providers by generating network effects through multi-sided marketplaces. Unlike traditional business models, these structures stand out through characteristics such as scalability, low marginal costs, and user-centricity.

Historical Development

The opening of the internet to commercial use in the 1990s laid the foundation for digital business models. Electronic commerce (e-commerce) enabled businesses to offer products and services online. In the 2000s, Web 2.0 technologies accelerated the development of interactive platforms where users contributed content. Social media networks, sharing economy platforms, and cloud computing infrastructures reshaped business models during this period. For example, Airbnb, established in 2008, created a platform allowing individuals to offer accommodation services, while Uber, launched in 2009, introduced an innovative approach to the transportation sector.

Key Characteristics

Network effects, data-driven orientation, and scalability are the foundational pillars of these models. Network effects occur when each new user joining the platform increases its value. For instance, on an e-commerce platform, more sellers expand options for buyers and enhance the platform’s appeal. Data-driven orientation enables personalized services by analyzing data collected from user behavior. Scalability allows digital infrastructures to reach large audiences at low cost; for example, a software platform can serve millions of users without requiring physical infrastructure investment.

Types

E-Commerce Models

E-commerce refers to the online sale of products and services. It includes business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C) models. Amazon operates under the B2C model by selling products directly to consumers, while Alibaba provides a B2B-focused marketplace. Online marketplaces facilitate C2C transactions by bringing together multiple sellers.

Sharing Economy

The sharing economy enables individuals to share their assets or services through platforms. Airbnb allows homeowners to rent out unused space, while Uber enables drivers to offer their vehicles as a service. These platforms rely on rating and feedback systems to build trust.

Subscription-Based Models

Subscription models allow users to access products or services through regular payments. Netflix provides content streaming services, while Adobe Creative Cloud makes its software available via subscription. This model ensures a continuous revenue stream and enhances customer loyalty.

Freemium Models

The freemium model offers basic services for free while charging for additional features. LinkedIn provides a free social network but requires a subscription fee for premium features. This model aims to build a broad user base and convert a portion of users to paid services.

Cloud-Based Services

Cloud computing encompasses software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS). Microsoft Azure provides scalable computing resources to businesses. This model enables companies to meet their technological needs without investing in physical infrastructure.

Technological Infrastructure

Digital platforms rely on technologies such as cloud computing, big data analytics, artificial intelligence, and machine learning. Artificial intelligence analyzes user preferences to deliver personalized recommendations. Blockchain enhances trust and transparency, particularly in finance and logistics; for example, it ensures traceability of transactions within supply chains.

Economic and Social Impacts

Digital and platform-based business models accelerate economic growth and create new employment opportunities. Small businesses and individuals can access global markets through these platforms. For instance, Etsy provides international customers to artisans selling handmade products. However, the gig economy, while offering flexible work opportunities, has sparked debates over job security and social rights. Data privacy and platform monopolies are under scrutiny by regulatory authorities.

Examples

• Amazon: A multifaceted platform offering e-commerce, cloud computing (AWS), and subscription services (Prime).
• Uber: A sharing economy platform that connects riders with drivers for transportation services.
• Airbnb: A marketplace that links individual property owners with guests seeking accommodation.
• Spotify: A subscription-based music streaming platform.
• Salesforce: Provides cloud-based customer relationship management (CRM) services.