Market entry strategy for a digital platform provider

Abstract

Purpose How can a digital platform provider successfully secure users in its early stage to build an ecosystem? The purpose of this paper is to explore this issue through a case study on the deployment of the digital platform service RecordFarm and identifies the reasons behind its successful market access, overcoming the chronic chicken-egg problem in a two-sided market. Design/methodology/approach The study empirically analyses the core user groups’ diffusion and usage rates by using a susceptible-infectious-recovery model of an epidemic based on a user survey and extensive archival data from the RecordFarm database. Findings The study identifies two important early stage characteristics for a business platform to be successful: the core users’ activities on the platform are a critical element for the network’s expansion and usage, and user relationships are more important than user contents on the digital platform. Originality/value This study confirms that organic interactions through active behaviours, such as visit frequency, uploading contents, and comment activities, are core elements for a successful digital platform to settle in the market early in the face of the difficulties of a two-sided market.

Value Co-Creation Through Social Media: A Case Study of a Start-Up Company

“…Today, each of these Facebook pages has at least 450,000 followers, and the influx of users from its Facebook pages began to create value for the RecordFarm platform. This strategy exemplifies the "chicken and the egg" problem (Rochet & Tirole, 2003;Kim, 2018), an endemic problem that start-up companies' platforms often face. As more social media users joined the service, RecordFarm established the platform's demand side, which initiated a cross-marketing process to bring content providers onboard as the supply side.…”

Platform Growth Model: The Four Stages of Growth Model

“…Based on this two-sided market theory, the platform has the tendency of open innovation [44][45][46][47]. Open innovation is the creation of new products or services by procuring the technology and ideas the company needs from outside while sharing internal resources with the outside [48][49][50].…”

Technological adaptation to a platform and dependence: value co-creation through partnerships

“…In particular, the resource complementarity of platforms is constantly increasing, which positively contributes to firm performance (Zhu, 2004). Furthermore, in a technological partnership, mutually understood technological platforms can significantly improve technological collaboration among partners because of pre-defined technological protocols between engaging firms (Bresnahan and Greenstein, 1999, Gawer and Cusumano, 2008, Kim, 2018. Thus, a mutually understood platform can help firms to access partners' resources and knowledge.…”