Machine, Platform, Crowd: Harnessing Our Digital Future

by Andrew McAfee

What are the characteristics of the winners in the platform battles we’ve observed, and those that will be waged in the future? While they are not all identical, we’ve already seen that winning platforms—those that grow quickly and deliver value to both their participants and their owners—tend to share a few characteristics. 1. They’re early to the space. They don’t have to be the first (Android certainly wasn’t), but they had better not be so late that many potential participants have already chosen a platform and network effects have taken hold. 2. They take advantage of the economics of complementary goods whenever possible, realizing that low prices for one complement lead to increased demand for others. 3. They open up their platforms to a broad range of contributors and contributions. This variety increases total consumer surplus, especially if some of the contributions are offered to users for free, and it pushes the demand curve outward in a series of nudges. 4. While they maintain a broad rule of openness, they also curate their platforms to deliver a consistent and positive experience to participants, and to minimize unpleasant surprises.