Much is made of our living in the age of algorithms, but I think that’s been true for centuries (at least since double entry bookkeeping, at least a methodology if not an algorithm). To me distinctive thing about our time is the advent of platforms, the Internet itself, and all its flavors, communication, collaboration, video, education, moving of merchandise, much of it happens on (or is indirectly supported by) a platform.
One industry that was former “platform champ”–they built it and exploited it for revenue–was the newspaper biz. So it’s particularly interesting to watch that model morph, and a Q&A on the Times site by reporter John Hermann and platform expert Andrei Hagiu takes stock of some of the changes. An excerpt. Worth reading the whole thing, and thinking about another world that is rocked by the advent of platforms, education.
NYTimes: How do pre-existing companies typically make the transition from being an independent participant in a particular category to being, basically, a platform constituent? That’s a broad question, but — is there an industry that might have useful parallels to the media industry with something like a major social platform?
HBS Prof and Economist Andrei Hagiu: I don’t think it’s true that transitioning from independence to life on a platform necessarily has to make things worse. One thing that I think a lot about — in conversations with venture capitalists and others — is the notion that platforms or marketplaces inherently commoditize. I think more likely what’s happening is the following: I think platforms, or marketplaces, make it a lot easier for, say, the content providers or app developers that are very, very good to rise to the top, and pretty much commoditize everyone else. So if you’re average, it’s definitely going to be very bad. Life is going to be worse on a platform, because you’re exposed to more competition. If you’re very good, life on a platform is a lot better.
Whole Q&A from the Times