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Copy of Two Sided Markets


Daniel Friedlaender

on 22 May 2013

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Transcript of Copy of Two Sided Markets

Goro Adobe and Two Sided Markets
Economic concept And Adobe then? PDF Reader. A product invented in 1993, and available license free since 2008. Yet they are building a massive business off it.

Same process for Flash, even Photoshop The new music More and more dependent on two sided markets

Services like Spotify, RDio, Deezer offer two sided market savoiur for a two sided market problem.

Spotify as a case study
Other ways two sided
markets can work All creative sectors (kindle, PS3, Netflix)
Similar developments for film sector
Credit cards

Some two sided markets require everyone to use the product, whereas others only hit critical mass at a certain level. What is a two sided market? Other examples? Music? What happened
to music? Questions please! The free dissemination of content enabled by the ad revenue generation of two sided market with services offering free music Adobe predicts income from its Acrobat/Document Services of $2.1B in 2015 from Adobe presentation to investors on 2013 Q1, from May 2013 Adobe Consumer Reader Industry hit hard by free availability of content Initially tried legal options to protect content This failed though. Marketplace had
changed. Tried to use the same principles that had almost destroyed them, investing in and developing new services - based mainly on two sided markets. These also depend on networking
effects to create the model
and sustain it, creating value
for the services and the music
companies. The more people went on to pirate sites,
the more content there was,
the faster they went,
the better they got,
the more people came. Since 2011, quarterly income from document services has quadrupled Increase in demand is due to cross-side network effects.
Companies subsidize one side to a level that propels significant demand on the other side, leading to a positive feedback cycle.
Spotify depends on the networking effect, even utilisitng social networks. THey need the most users to sahre, the largest quantity of music, and to get the most numbers of plays.

Scale is key - both for their survival and for their models to work for music.

There's a reason Spotify (still a start-up) has a chief economist
What else?

Spotify started super niche for music fans in Sweden.
Did one thing - music streaming - and did it well.
Only expanded later and focused on social element to get scale.
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