Comments for The multisidedness of crowdfunding platforms

Charles Harmel
After having read this article, I decided to interest myself in the differences between CFPs and real estate platforms. As a surprise, I discovered that those platforms are quite similar and don’t have a lot of differences. First of all, Real estate platforms are traditional multi-sided platforms bringing distinct groups of customers together. On one side, we have the home buyer that are…
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After having read this article, I decided to interest myself in the differences between CFPs and real estate platforms.
As a surprise, I discovered that those platforms are quite similar and don’t have a lot of differences.

First of all, Real estate platforms are traditional multi-sided platforms bringing distinct groups of customers together.
On one side, we have the home buyer that are interested in buying a property(house, apartment,…) and on the other side we have the home seller that are interested in selling a property.
Those platforms coordinate the demand of distinct groups of customers (home buyer and home seller), who need each other.

Second, if we look at the externalities for the consumers in the real estate platforms, we also are in presence of cross-side effect and within side effect.
Regarding the cross-side effect, Home buyer are likely to prefer platforms with a large number of home seller as they will benefit a wider set of choices and increase the possibility that they will find the property they are looking for.
The same applies as well for the home seller, as the more home buyer there are, the more opportunities they have to sell their properties and it can increase competition for some goods as well, which could higher the prices.
We can see that the cross side effects for the real estate platforms are clearly positive unlike for CFPs.
Regarding the within side effect, we observe the same kind of effects than for the CFPs.
In the case of real estate platforms, we also are in presence of effect likely to be negative.
For home buyer, the fact that we are in presence of individual goods makes the competition tougher as the platforms have a lot of home buyer and it can rise the price of some specific goods.
The same applies to the seller because the more they are on the platform; the more competition there is for selling a good.
But there is also a positive impact of the number of sellers on a platform, because the bigger the numbers of goods, the more clients are attracted on the platform.

Finally, we are in presence of high transaction costs.
Even if the two groups could meet without a specific platform, real estate platforms clearly offer higher prospects of success and lower costs.

To conclude, I would like to raise a last comment about the apparition of crowdfunding real estate platforms such as Fundrise.
The first opening for the emergence of such platforms has come with new rules linked to the JOBS Act of 2012.
The new rules allow mostly affluent investors to gain direct access to the real estate market through crowdfunding, giving them direct access to a selection of private real estate offerings where they can browse, research and make well-informed investment decisions online.
I think that we are going to see more and more of such platforms and it emphasizes the fact that real estate platforms are closer than we might think to crowdfunding platforms.

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Rion Simon
Although crowdfunding is still considered as an emerging practice to finance a starting entrepreneurial project, the above article has shown different characteristics, coming from the multi-sided platforms theory, that support the idea that it could be fitted to today’s business environment. Indeed, mostly based on internet platforms, crowdfunding business models “extract value by enabling direct interactions between project initiators and…
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Although crowdfunding is still considered as an emerging practice to finance a starting entrepreneurial project, the above article has shown different characteristics, coming from the multi-sided platforms theory, that support the idea that it could be fitted to today’s business environment. Indeed, mostly based on internet platforms, crowdfunding business models “extract value by enabling direct interactions between project initiators and money providers” (Giudici, Nava, Rossi Lamastra & Verecondo, 2012: 2). Furthermore, here is a table, from Giudici, Nava, Rossi Lamastra and Verecondo, which compare crowdfunding to other “traditional” ways of raising funds for projects:

Crowdfunding
Venture capital and
private equity funds
Business angels
Stock exchanges and
trading platforms
Bank loans
Leasing finance /
trade credit

Enabler organization Yes No No Yes No Yes (w.e.)
Direct interaction Yes Yes Yes No Yes (w.e.) No (w.e.)
Affiliation of investor / investee Yes No No (w.e.) Yes No No
(w.e.) = with exceptions.

Now that the similarities with the conditions to be considered as a multi-sided platform have been recalled, let’s try to identify few differences with basic structures of multi-sided platforms.
A first example could be that consumers (here, more the crowd funders) are able to use aggregating information provided by crowdfunding platforms to mitigate the risk of uncertainty when investing in a new project. Indeed, “crowd funders believe in the power and wisdom of the crowd (Surowiecki, 2004). They assume that the efficiency of crowds in selecting promising entrepreneurial projects increases with the heterogeneity of the public” (Giudici, Nava, Rossi Lamastra & Verecondo, 2012: 11). In multi-sided platforms such as dating websites or video games platforms, the benefit earned by the consumers is more related only to the direct or indirect effect coming from the number of people in the other group of consumers rather than of the interpretation of the data’s given by the mass of users (for investment purposes for instance).

Another difference that could be highlighted is the two opposite direct effects that arise in the crowdfunding model. The fact that one group (here, the entrepreneurs) can have a positive effect (when providing a broader range of possibilities of investments) and a negative effect (when all these possibilities compete each other and can make the others fail) on the other group (here, the investors), is not so remarkable in a dating website, a real-estate platform or a video games consoles.

Bibliography:
– Giudici, G., Nava, R., Rossi Lamastra, C., & Verecondo, C. (2012). Crowdfunding: The New Frontier for Financing Entrepreneurship? Available at SSRN: http://ssrn.com/abstract=2157429.
– Salomon, V. (2014). EMERGENT MODELS OF FINANCIAL INTERMEDIATION FOR INNOVATIVE COMPANIES: FROM VENTURE CAPITAL TO CROWDINVESTING PLATFORMS.

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Ignace de Bruyn
In my opinion, CFPs differ sorely from well-known multisided platforms such as videogame consoles, dating sites or real-estate platforms. The difference isn’t in the products proposal, neither in the business model (way to charge a fee), nor even in the intensity of the within-side external effect. It lies in the number of distinct groups of customers and in the influence…
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In my opinion, CFPs differ sorely from well-known multisided platforms such as videogame consoles, dating sites or real-estate platforms. The difference isn’t in the products proposal, neither in the business model (way to charge a fee), nor even in the intensity of the within-side external effect. It lies in the number of distinct groups of customers and in the influence of the network effect.

On the one hand, in dating sites, so as “Meetic” or “Ashley Madison”, it seems obvious that we have only two different groups who want to get in contact with each other. As for the real-estate platforms we have an owner who is trying to sell a property to a buyer. The same is relevant for the videogame consoles where gamers and developers are able to meet one another. In short, we have two distinct groups of customers and one intermediary platform.

On the other hand, the article focuses only on the entrepreneurs and the contributors when we they are talking about CFPs. Therefore, I believe that we could add a third-party: the final customers of the project. Indeed, it is not enough to have an idea and to fund it. In the end everything is about making it successful.

To sum, I think that the benefits of CFPs depends on the reaction of a last third party (final customer) regarding the project of both contributors and entrepreneurs.

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Jia-Zhun Chen
Multi-sided Platform brings together two or more distinct but interdependent groups of customers. Such platforms are of value to one group of customers only if the other groups of customers are also present. The platform creates value by facilitating the interactions between the groups. Here is a few examples of crowdfunding sites that have different models and focuses. Kickstarter, Indiegogo,…
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Multi-sided Platform brings together two or more distinct but interdependent groups of customers. Such platforms are of value to one group of customers only if the other groups of customers are also present. The platform creates value by facilitating the interactions between the groups.
Here is a few examples of crowdfunding sites that have different models and focuses. Kickstarter, Indiegogo, Crowdfunder, RocketHub, Crowdrise,… But how CFPs differ from videogame consoles?
1. Distinct group of consumer:
First there are the gamers then the game developpers. Like for the CFPs, the game developpers may bring an additional side on board. For instance, they can have a partnership with a good movie or some stars. The objective here is to take the participation of gamers that love these movies or stars.
2. Presence of externalities:
There are 4 kinds of externalities:
– The cross-side effects: developers on gamers. There is a positive external effect as more there are developers more there will be games. Plus, if there are a lot of developers on the same game, working together, there will be a big amount of gamers that will think that the game will be awesome. The interest given to the games will be then increasing.
– The cross-side effects: gamers on developers. There is a positive external effect as more there are gamers playing on the same platform (playstation, X-box,…) More there will be developers for this platform.
An example for these effects are the more video games developers create for the Microsoft X-Box platform, the more gamers snap up the latest X-Box. Meanwhile, the more gamers who use X-Box, the more developers willing to pay Microsoft a licensing fee to produce new games.
– Within-side effects: gamers on gamers. There is a positive external effect as more there will be gamers for a platform, more there will be gamers. Because they might think that as there are a lot of gamers, they will think that the platform is really good. Plus, for the developers, users will pay more for access to a bigger network, so margins improve as user bases grow.
– Within-side effects: developers on developers. There is a positive external effect as there will be a lot of competition. And the developers might want to demark themselves with a good quality of games.
3. High transaction costs
The gamers and developers can meet but without the platform it would be worthless . Because if there are no platforms there will be no games at all.

To conclude, we can say that the only difference there are between these muti-sided platforms are some externalities.

http://www.forbes.com/sites/chancebarnett/2015/03/26/infographic-sec-democratizes-equity-crowdfunding-with-jobs-act-title-iv/
http://wiki.aalto.fi/download/attachments/38374131/van+alstyne+hbr+two-sided+markets.pdf
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2157429
http://divergence.academy/business-models/what-is-a-multi-sided-platform/

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Ariane Martens
In this comment, I would like to investigate two aspects of crowdfunding platforms (CFPs). On the one hand, I tried to identify the different intermediation roles exerted by CFPs. On the other hand, my analysis examined the specifics of CFPs by comparing them with other multisided platforms such as videogame consoles. Firstly, to determine the different roles CFPs need to assume,…
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In this comment, I would like to investigate two aspects of crowdfunding platforms (CFPs). On the one hand, I tried to identify the different intermediation roles exerted by CFPs. On the other hand, my analysis examined the specifics of CFPs by comparing them with other multisided platforms such as videogame consoles.

Firstly, to determine the different roles CFPs need to assume, I tried to put myself in the situation of a fundraiser looking for the best-fit CFP. As a matter of fact, the most popular CFPs are GoFundMe, Kickstarter and Indiegogo. Therefore, we can expect that these platforms deliver the finest services in terms of exposure and marketing. Nevertheless, considering that crowdfunding becomes more and more popular, you can now find CFPs for everything for arts, sport, social enterprises, games… In my opinion, as fundraisers want to reach as many funders as possible, they should really identify the most tailored CFP to their project.

Now, let’s try to get into the head of CFP providers. The platform has to promote the most feasible projects because the majority of these platforms still need to establish themselves. In many cases, CFPs get their margin only if the fundraising reachs the set goals. As a result, they really have to be good marketers and communicators. This is why appealing to superstars could be also a strategic move.

In this part, I firstly would like to explain my understanding of the differences between CFPs and other multi-sided platforms as videogame consoles. CFPs differ from other multi-sided platforms for several reasons. Firstly, people can decide how much they want to spend on a CFP while there are fixed prices on multi-sided platforms. For some projects (mostly, artistic ones), the fundraiser/artist offers a copy of its product if the contribution exceeds a certain amount. Consequently, depending on how much you want to contribute to a project, you can be offered compensation.

This was the case, when the former developer of Mega Man, Keiji Inafune, proposed its project “Mighty No. 9” in 2013 on Kickstarter. The initial $900,000 goal has been significantly exceeded with nearly $4 million in total funding. The creator offers a copy of the game for $20 contribution and for $10000 you can even have dinner with him. Why did he prefer crowdfunding to the conventional system? If you work for a videogame platform as for instance Steam (a very famous platform among gamers that offers unbeatable prices during sales) you will have strict deadlines and maybe need to hold back creativity.

This last crowdfunding model could be linked to the investment crowdfunding, in which funders become shareholders of the project and might expect a return on their investment. As a result, to get increased attention and exposure, fundraisers distance themselves more and more of the initial crowdfunding model.

http://www.forbes.com/sites/chancebarnett/2013/05/08/top-10-crowdfunding-sites-for-fundraising/
http://arstechnica.com/gaming/2013/08/31/mega-man-designer-crowdfunding-a-new-pc-based-side-scrolling-shooter/
http://www.lesoir.be/869455/article/economie/entrepreneuriat/2015-05-05/oksigencrowd-une-nouvelle-plateforme-crowdfunding-dediee-aux-entreprises-soci
http://www.theverge.com/2014/7/6/5875115/spiritual-successor-to-mega-man-gets-new-crowdfunding-goals-plans-for

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Beili Zhang
While CFPs unequivocally belong to the class of multisided platforms, we have to make a distinction between them and the “traditional” multisided platforms. Indeed, while in the real-estate platforms, dating websites etc. the consensus is that the people on one side would ideally want to have the least persons on their side in order to not have too much competition and…
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While CFPs unequivocally belong to the class of multisided platforms, we have to make a distinction between them and the “traditional” multisided platforms.

Indeed, while in the real-estate platforms, dating websites etc. the consensus is that the people on one side would ideally want to have the least persons on their side in order to not have too much competition and the most on the other so that they can have more choices and vice-versa (1) (even if they know that an equilibrium also have to be found or else there will be not enough incentive to attract people from the other side), in the case of the CFPs, the “buyers” side benefit directly more from “positive within group effects”. Thus, an addition of customers for the same project will stimulate and encourage more people to contribute to this project and doesn’t, in contrary of other multisided platforms, have “negative within group effects”. By contrast, in the real-estate platforms, an addition of a potential buyer for the same estate would raise its price higher (2).

Also, real-estate crowdfunding have a different connotation than the classic version. For example, IFunding give the opportunity for multiple contributors to invest in the same estate so that they can have an access to the market with a small amount of money and can even chose different projects to spend on so that they can reduce the risks cost (3). However, they do not “own” real estate, “rather, you become a member of Limited Liability Company that in turn holds title to real property” (Athwal, 2014) (4).

Moreover, while classical multisided platforms such a dating website don’t need “big name” in order to back them up, in CFPs, if renown entrepreneurs or institutions invest in a particular project, the change are high that it will attract a lot more customers as they will be reassured by the facts that “they are supposed to know what they are doing and in principle, have a much more higher probability to succeed”. For example, FundAnything, which as his name suggests, is a CFP which aim to fund a broad array of projects such as “tech inventions, new uniforms for a school sports team, helping out someone with a medical emergency, etc” (Primack, 2013) has been backed up by Donald Trump, a well-known American billionaire magnate (5) who invested in several projects each week (6).

In conclusion, the “investors” in CFPs benefit from positive within group effects and in contrary to traditional platforms and in most cases, don’t have “negative within group effects”. Real-estate CFPs give the opportunity for the contributors to invest in real estate without having a large budget unlike classic real-estate platforms and CFPs benefit more from the backup of significant entrepreneurs on certain projects than conventional multisided platforms.

Sources:

(1) http://www.justice.gov/atr/public/hearings/single_firm/comments/219673_a.htm
(2) http://www.realtor.ca/index.aspx?
(3) http://www.investopedia.com/articles/investing/072514/real-estate-and-crowdfunding-new-path-investors.asp
(4) http://www.forbes.com/sites/groupthink/2014/08/19/the-investors-guide-to-real-estate-crowdfunding/
(5) http://fortune.com/2013/05/07/donald-trump-gets-into-crowdfunding/
(6) http://www.prnewswire.com/news-releases/donald-trump-offers-1-million-for-one-great-idea-228003051.html

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Jean-Baptiste Dekegel
Let’s compare two well-known websites from really different sectors: kickstarter.com (a crowdfunding website) and elitedating.com (a dating website). I am going to compare them in regard of the three criteria discussed in the article. The first criterion is related to the fact that a multisided platform must join different group of customers. If we take the first website, Kickstarter, one group…
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Let’s compare two well-known websites from really different sectors: kickstarter.com (a crowdfunding website) and elitedating.com (a dating website). I am going to compare them in regard of the three criteria discussed in the article.

The first criterion is related to the fact that a multisided platform must join different group of customers. If we take the first website, Kickstarter, one group is composed by the fundraisers. Fundraisers are entrepreneurs coming from everywhere in the world wanting to launch a new product or service but who needs funds to start. The other group is composed by people who put money in projects because they found it promising or because they like it, the funders. They can be professionals or individuals.

As far as Elite Dating is concerned the two groups concerned are the two genders. It exists four categories depending on the gender and on the sexual preferences, for example: man seeking man and woman seeking man.

It is pretty obvious that regarding this criterion, the two websites works in the same way. There are two different groups useful for each other. These websites cannot work if one of the group is missing.

The second criterion is the (in)direct network effect that comes with every multisided platform. This effect means that the different groups can take benefits from the amount of person in the other group. If we take the Kickstarter example, entrepreneurs will be more attracted to platforms with lots of funders on the website. The large number of funders give a large probability to be fully funded. On the other side, investors will seek projects on big platforms to find the project which give them the most probability of success or the project which is the most adapted to their affinities.

The article treat also the question of the within-side external effect. This effect is actually illustrated here by the fact that large number of entrepreneurs is not a good news for entrepreneurs themselves because it raises considerably the competition. The good news is that the effect is positive among contributors: a project with very good chances to reach the threshold will attract even more funder.

If we take the example of Elite Dating, the first effect is also of application. Individuals who are searching for love will choose a website with a large amount of people signed in in order to raise the chances to find the one. Heterosexual women will seek a website with many heterosexual men for example. On the other side the effect is exactly the same because the two groups are very similar (if not identic). The within-side is here missing.

The last criterion is the fact that an intermediary facilitate the interactions between the different groups. It is quite obvious with the two examples. With Kickstarter, what can be the chances for a Belgian to support an American project without this website? The probability is very low… For Elite Dating, individuals can always meet people everywhere and start a relationship but it is way easier to communicate and make contact behind a keyboard for shy people. Moreover, the website sorts profiles out to find the perfect ones for your personality and ensure that all profiles have been verified.

Sources:
http://www.elitedating.be/fr
https://www.kickstarter.com/?ref=nav

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Laurence Balis
Crowdfunding platforms plays a big intermediary role between investors and entrepreneurs. They are indirectly responsible of what happens on their platform. They “support” the projects on their platforms which makes a good publicity if the project is a success but it can turn the other way and affect the reputation of the crowdfunding platform if the project is a failure. Some…
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Crowdfunding platforms plays a big intermediary role between investors and entrepreneurs. They are indirectly responsible of what happens on their platform. They “support” the projects on their platforms which makes a good publicity if the project is a success but it can turn the other way and affect the reputation of the crowdfunding platform if the project is a failure.

Some crowdfunding platforms are specialized in one field, for example, hardware project. The company Dragon Innovation, for example, decided to launch such a platform with an exclusivity for hardware programs. The role of the platform is higher than for usual crowdfunding platform because they offer expertise to entrepreneurs in exchange of a fee. Their offer an additional service for entrepreneurs and in that way, the investors have a guarantee that the project has been checked by an expert and that they will only find hardware projects on the platform. Still in the same topic (hardware platforms) some of them such as “Crowdtilt” offer entrepreneurs to host themselves a platform on their website which allow them to raise funds while starting a relationship with potential customers.

When we think about crowdfunding platforms, we first think at platforms such as “MyMicroInvest” where there are a project of a start-up in which people can invest but there are many more types of such platforms, for example, there are donating sites, reward sites, pre-purchase sites.

Crowdfunding platforms can also create cluster in order to match capital with opportunities.

Following an article “Understanding the Role of Community in Crowdfunding Work” (2014), a crowdfunding platform has much more work than only being the intermediary. They prepare the campaign material, they test this campaign material, they publicize the project, they follow through with project goals and finally, they reciprocate resources.

After having discussed the potential roles of a crowdfunding platform, let’s compare it with another well-known multisided platform: the dating platform.

First, the payment these platforms receive is different. In most of the cases, CFP’s will only receive money if the project is successful, otherwise the entrepreneurs don’t have to pay the fee if it ends to a failure. But on a dating site, people pay the fee however the relationship they start thanks to the platform end. They don’t get their payment back if they don’t find their future husband or wife.

Secondly, except than from people you know such as friends and family, the principle of crowdfunding is not feasible. It is perfectly impossible to reach unknown people willing to invest in your project. Whereas meeting people with whom you can have a relationship is clearly feasible even without such a dating platform.

Thirdly, crowdfunding platforms offer much more about the “project” their offer than dating sites. Of course on these sites, you can have information about the person such as a picture, his/her age, his/her hometown etc. One first remark is that this information can be completely false, whereas for crowdfunding platforms the projects are checked before being online. And another point is that, yes you have this information but you don’t know how many successful dates this person had or how many people are interested by this person,… while you can have information about the amount already collected, the number of investors etc.

And finally, if we compare it now to the video games platform, people choosing a console for example, are sure that they will have it and so receive what they want and are purely satisfied. Whereas for crowdfunding platforms, people invest in projects but they don’t know anything precise about the final outcome: maybe it will end in a successful project and they will get something in return, but maybe it will end in a failure and won’t get anything.

So to conclude, I would first say that crowdfunding platforms can have a much more complex role than just being a platform proposing projects for investors. Secondly, it is obvious that CFP’s are a type a multi-sided platforms but they differ in certain points and in general go a bit further than usual platforms such as dating sites or video games platforms.

Sources:

http://www.forbes.com/sites/rakeshsharma/2013/09/04/the-changing-role-of-crowdfunding-platforms-in-the-hardware-ecosystem/

https://www.indiegogo.com/

https://www.mymicroinvest.com/

Hui J., Greenberg M., Gerber E. (2014) Understanding the Role of Community in Crowdfunding Work. CSCW’14 Proceedings of the 17th ACM conference on Computer supported cooperative work and social computing. Pages 62-74 http://egerber.mech.northwestern.edu/wp-content/uploads/2012/11/Gerber_UnderstandingtheRoleofCommunityinCrowdfundingWork.pdf

Mitra D. (2012). The Role of Crowdfunding in Entrepreneurial Finance. Delhi Business Review, 13 (2). http://www.delhibusinessreview.org/v_13n2/v13n2g.pdf

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Laurie Lima-Rivera
The first thing that comes in mind when you talk about crowdfunding is often this image of a young group of people starting a start-up. This gives off a feeling of a very risky project. Fortunately, crowdfunding has its own ways to protect the investors. If the minimum amount is not reached, the totality of the money will be redistributed…
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The first thing that comes in mind when you talk about crowdfunding is often this image of a young group of people starting a start-up. This gives off a feeling of a very risky project. Fortunately, crowdfunding has its own ways to protect the investors. If the minimum amount is not reached, the totality of the money will be redistributed to them.

When I hear about crowdfunding platforms, the two than I can « tell » are KissKissBankBank and Ulule.
They’re both European platforms. I couldn’t explain why these two, I just think they are the ones I’ve come across the most, even if I’ve never been invited to « participate » in a crowdfunding project.

One of the other roles of crowdfunding platform is to act like a marketing panel. I’ve often seen interesting project on these, but didn’t want to invest in them. But sometimes, I found the product really interesting and was actually ready to buy them once the project was officially on board! But most of the time, I just didn’t remember the name and was unable to find it. So I think these platforms should work a little bit more on that aspect and try to « convert » prospects that want to follow the project without participate in it by keeping in touch with them.

The platforms also give a feeling of “good idea”: if the site is serious, people will tend to think: “They would never put a project here that absolutely won’t work”.

We also have to differentiate different types of crowdfunding platforms. We can, among other things, name :
Donation-Based Crowdfunding, where people give money but don’t ask for anything in return.
Rewards-based crowdfunding, where people receive a gift in exchange of their participation. The price of the gift is lower than the price paid by the investors but sometimes, the sentimental value outweigh the price.
Equity crowdfunding is when « Investors give money to a business and receive ownership of a small piece of that business ».
In Presales based crowdfunding, businesses sell their products before producing them. This is also great for publicity. I’ve seen this type of platforms a lot when it comes to books.

These all come with their advantages and disadvantages, which allow every project and every business to fin the perfect platform for his desires.

I think crowdfunding is different from other platforms as money is the key to them.
It’s pretty safe for the owners of the platforms: if the project reaches its goal, they will collect a commission on the funs raised (for KissKissBankBank, it’s 5%+ 3% for the bank transactions). If the project didn’t, they will refund the investors, which will take them a little time and money, but it’s not a great loss.

Another big difference is the importance of the platform for the two sides. Usually, in platforms as dating sites, real-estate platforms, etc. the people paying themselves are the owner of the websites, while in crowfunding platforms, business really count on them too.

Sources :
http://datanews.levif.be/ict/les-raisons-de-l-echec-provisoire-du-crowdfunding-en-belgique/article-opinion-354165.html

http://en.wikipedia.org/wiki/Equity_crowdfunding

Michaël Riga (2014). Le Crowdfunding: bilan et perspectives (Master Thesis)
Date accessed: http://www.ipdigit.eu/wp-content/uploads/2014/09/M%C3%A9moire-Crowdfunding.pdf

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Florent Dauvister
Multi-sided platform just like crowdfunding platforms bring together two or more distinct but interdependent groups of customers. Both platforms are of value to one group of customers, in the case of crowdfunding, the one who back the project only if the other groups of customers are also present, in the case of crowdfunding, a group of larger costumers who didn’t…
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Multi-sided platform just like crowdfunding platforms bring together two or more distinct but interdependent groups of customers. Both platforms are of value to one group of customers, in the case of crowdfunding, the one who back the project only if the other groups of customers are also present, in the case of crowdfunding, a group of larger costumers who didn’t back the project but can enjoy the final product once the development is done. The platform creates value by facilitating investments. A multi-sided platform grows in value to the extent that it attracts more users; a crowdfunding platform grows in value to the extent that it creates easier ways to invest.

When looking at the multi-sided gaming console example, it is clear that the platform’s value for a particular user group depends substantially on the number of users on the platform’s “other sides”. A video game console will only attract buyers if enough games are available for the platform. On the other hand, game developers will develop games for a new video console only if a substantial number of gamers are present on the market.

As for the crowdfunding platforms, it is clear that the consumers participating in the crowdfunding itself allow a larger amount of non-participating consumers to access the product. To a certain extent crowdfunding eliminates the risk of a business venture. While a multi-sided platform can be a vicious circle due to the fact that one group cannot do without the other and are closing intertwined. On the other hand, a crowdfunding platform can create a virtuous circle as one small group creates the opportunity to see the product reach a global market with a much larger group of consumers, almost risk-free for the company.

The reasons crowdfunding is facing such a huge success besides the fact that it is the flavour of the year are many.

– Crowdfunding platforms that are reward-based can allow companies to raise funds from the consumers in exchange for simply giving their products or other relative gifts

– It organically creates a marketing platform as many crowdfunding platforms incorporate social media mechanisms, making it easy to get traffic to your website and products

– By having a crowdfunding campaign, the company has the ability to interact with the consumers and receive feedback, and ideas

– Launching a crowdfunding campaign gives a company the ability to pre-sell a product that they put on the market yet

Crowdfunding has mostly taken all the perks of a multi-sided platform and incorporated new features that make it so both the company and the consumers see value in investing and interacting through crowdfunding platforms.

Sources:
http://ec.europa.eu/internal_market/consultations/2013/crowdfunding/index_en.htm
http://ec.europa.eu/finance/general-policy/docs/crowdfunding/140925-austrian-chamber-of-labour-crowdfunding-from-perspective-of-consumers_en.pdf

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Pauline Mauclet
Since most of the previous comments have addressed the different comparisons with other multi-sided platforms, I thought I would focus on an example of intermediation role that a crowdfunding platform can exert. The European Crowdfunding Network published in 2013 a “Review of Crowdfunding for Development initiatives”. The article refers to a paper from that same year by Oliver Gajda and…
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Since most of the previous comments have addressed the different comparisons with other multi-sided platforms, I thought I would focus on an example of intermediation role that a crowdfunding platform can exert.

The European Crowdfunding Network published in 2013 a “Review of Crowdfunding for Development initiatives”. The article refers to a paper from that same year by Oliver Gajda and James Walton.

Like most crowdfunding platforms, development focused crowdfunding platforms rely on different crowdfunding models: donation-based, reward-based, social lending, lending and equity. For each type of model, the authors describe the types of projects supported, frequency, rate of success and other parameters.

I would like to focus on the donation-based model.
The different groups are:
1) potential donors, who want to donate money to developing countries. The authors observe that with donation-based crowdfunding, higher amounts of money are raised per donor, “because funders know that their money will be used on a specific project” (O. Gajda & J. Walton, 2013).
2) NGO’s. They put the project on the crowdfunding platform and use the funding amount for specific projects.
3) Local entrepreneurs in the developing countries. The specific projects might be to support and help a local entrepreneur to build his business.
4) The crowdfunding platforms operate as an intermediary. It is important to note that the average fee is between 2 and 5%. The authors mention that “some platforms have more complex fee structures, plus payment fees via third party operators, some are free of charge”.

The platforms give people (donors) the possibility to donate some money, but also to know exactly where and how their money will be spent. They don’t donate to “an organisation” anymore, they donate to a specific project and don’t have to fear that their money is being spent without actually helping the people in need. In other words, development crowdfunding platforms offer donors a “security” that they don’t have, unless they donate to NGO’s with a strong reputation. In this sense, we could look at it from the perspective of the NGO’s: crowdfunding platforms might allow smaller NGOs to raise amounts of money they wouldn’t have raised because of their lack of reputation.
Unlike most projects on crowdfunding platforms, funders won’t necessarily enjoy the benefits of a successful project; they won’t be able to watch the crowdfunded movie or buy the crowdfunded book or washing machine. The projects will mainly benefit the local economies. Donors’ main motivation for the funding is social return, as mentioned by the authors of the paper.

Some examples of such donation-based crowdfunding platforms are: http://www.justgiving.com/, http://www.startme.co.za/ and http://changa.co.ke.

Additionally, it is also interesting to note that a lot of micro-businesses and microfinance institutions (offering micro-credits) in developing countries are using social lending crowdfunding to raise funds. Social lending means interest free loans. The average funding amount per project is $420 and the rate of success is 90%.

Finally, it is important to note that currently only a few development focused crowdfunding platforms exist, although they seem to show very good results and could greatly contribute to the development of local economies of developing countries.

Sources:
http://www.eurocrowd.org/wp-content/blogs.dir/12/files/2013/10/EoD_HD061_Jul2013_Review_CrowdFunding.pdf
http://www.eurocrowd.org/2013/10/review-of-crowdfunding-for-development-initiatives/

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Méderic Bellouti
As explained in the text, CFPs belongs to multisided platforms as they fulfilled the three conditions enunciated by Evans (2011). I will now try to notice a difference between CFP and another classic MSP as dating-sites for example. First of all, the first condition explained by Evans which defines a multisided platform is the existence of distinct groups of customers.…
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As explained in the text, CFPs belongs to multisided platforms as they fulfilled the three conditions enunciated by Evans (2011). I will now try to notice a difference between CFP and another classic MSP as dating-sites for example.
First of all, the first condition explained by Evans which defines a multisided platform is the existence of distinct groups of customers. The only difference I can notice between these two platforms (CFPs and dating-sites) comes from the additional side. In the case of dating sites, an additional side is impossible.

Secondly, the next condition concerns the presence of externalities, there exist four types: the two cross-side effects and the two within-side effects. Having regard to the case of dating-sites, the cross-side effects are clearly positive. The more there are men or women, the more the other side is happy. However, in the case of CFPs, there may exist a negative cross-side effect coming from the entrepreneurs to the contributors.

After that let’s compare the third condition related to transaction costs. Personally, I don’t observe any difference between the two platforms since both allow different groups having more chances to find what they are looking for via the platform.

To conclude, the first difference being insignificant according to me, the major difference existing between the dating-sites and the CFPs relates to the cross-side effects as explained above.

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Vandendriessche Elise
Crowdfunding platforms are in a rapid evolution in the last couple of years. Like the article said it is quite evident that the two types of platforms are linked together. However there are still some differences. The first one I would like to highlight is the fact that, for me, those crowdfunding platforms reduce more costs than the traditional multisided platforms.…
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Crowdfunding platforms are in a rapid evolution in the last couple of years. Like the article said it is quite evident that the two types of platforms are linked together. However there are still some differences.

The first one I would like to highlight is the fact that, for me, those crowdfunding platforms reduce more costs than the traditional multisided platforms. Indeed with those kind of platforms there is the legal side of the transaction that is eased. You are able to avoid the administrative paperwork and the overall costs of a bank loan (the interests). Moreover this kind of transaction, in the sense that it is a money transaction, can be very complicated without those platforms. But with those crowdfunding platforms there are extremely easy to put in place.

The second one I thought about is the fact that it is not as straight forward as for other multisided platforms like video games platforms, dating sites that there are positive cross-side network effects. For crowdfunding platforms, it is not as clear as that. Indeed we cannot say for sure that the effect of the number of entrepreneurs will affect in a positive way the contributors. It is a bit ambiguous since there are several contradicting forces at play. Moreover there are negative within-side effects between entrepreneurs. When there are too much of them, it will increase the overall competition.

The third one, with the crowdfunding platforms, there is a more durable relationship between the different groups of the platform. Indeed the contributors invest in a crowdfunding project because they hoped to get a return. This return depends on the type of crowdfunding platform. It can be a monetary one or not. Those returns are not given immediately after the transaction since the contributors need to wait that crowdfunding project is truly launched. This involves a long term link between the different groups.

The last one I would like to point out is that instead of being in front of a one-to-one transaction, we are now in front of a transaction where multiple persons take part in the transaction. This implies that the transaction becomes more complex.

As a conclusion, I would like to say that I see crowdfunding platforms as a more sophisticated multisided-platform. There are more complex issues in play in those platforms.

Sources :
– Belleflamme, P., Omrani, N. & Peitz, M. (2015). The economics of Crowdfunding Platforms. http://icampus.uclouvain.be/claroline/backends/download.php?url=L1JlcXVpcmVkX3JlYWRpbmdzL0xlY3R1cmVfMTIvY29yZWRwMjAxNV8xNXdlYi5wZGY%3D&cidReset=true&cidReq=LLSMS2374
http://en.wikipedia.org/wiki/Crowdfunding#Role_of_the_crowd
– Castrataro, D. (2012). Crowdfunding Platforms: to each their own. http://socialmediaweek.org/blog/2012/01/crowdfunding-platforms-to-each-their-own/

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Pamela M
Crowdfunding platform, dating sites, real-estate platform and video-games platform are all multisided media, as a matter of fact you have they all present the following characteristics: distinct groups of consumers, an intermediary, externalities and high transaction costs in the absence of the platform. If you think at one of the most successful dating site as Meeting, you can clearly see all…
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Crowdfunding platform, dating sites, real-estate platform and video-games platform are all multisided media, as a matter of fact you have they all present the following characteristics: distinct groups of consumers, an intermediary, externalities and high transaction costs in the absence of the platform.
If you think at one of the most successful dating site as Meeting, you can clearly see all these features. We have different kinds of users’ group: men looking for women, women looking for men, men looking for men and women looking for women. For real-estate platform as immoweb.be you can see on one side seller (private owners, estate agents, construction companies) and on the other side buyers.
Although these services offered are quite different, they are founded on the same principles. So in both cases we can see a negative same-side network effect. Indeed if the amount of men looking for women increases this will bring a more fierce competition (the same for the other groups). Similarly in the real-estate platform, if the number of suppliers increases, this will lead a situation in which the competition increases and prices fall down. But also if the number of customers increases, we can see a negative externality due to an increase in the demand giving rise to higher prices.
For what concerns the cross-side effects, from the standpoint of each of the groups previously illustrated it is clear that an expansion of the other side of the platform means that they will be better off.
In contrast crowdfunding platform is based on a win-win strategy. Accordingly both cross-sided effects and within effects lead to positive externalities. In this case an increase in the number of entrepreneurs will consist in a more attractive platform for investors. Furthermore if we look the other way around the more funders the more entrepreneurs would like to enter in that “club”. For what concerns within-side effects we can observe that funders will have a positive effect on other supporters: we observe a profit-sharing platform as AngelList or Early Share , if others invest in a project (high funding propensity), then individuals are more likely to invest if the funding goal is closer.
References:
Crowdfunding: some empirical findings and microeconomics underpinnings, P.Belleflamme, T. Lambert

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Sluyters William
Crowdfunding is quite a new way of financing projects. As explained in a work paper of P. Belleflamme and T. Lambert ‘instead of raising funds from a small group of sophisticated investors, entrepreneurs try to obtain them through the Internet from a large audience (the so-called “crowd”), where each individual provides a small amount’ (1). According to them there are…
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Crowdfunding is quite a new way of financing projects. As explained in a work paper of P. Belleflamme and T. Lambert ‘instead of raising funds from a small group of sophisticated investors, entrepreneurs try to obtain them through the Internet from a large audience (the so-called “crowd”), where each individual provides a small amount’ (1). According to them there are 4 types of crowdfunding models: ‘donations model’ where the funder is not promised a return; ‘reward-based model’ where there is a non-financial return that is promised ; ‘lending-based model’ where entrepreneurs are borrowers while contributors are lenders ; and the ‘profit-sharing model’ where contributors receive a share in the profit of the business.

In my comment I would like to highlight concrete examples of the different intermediation roles that crowdfunding exerts in the world of ‘video-games streaming’. Nowadays crowdfunding is mainly mediated by Internet platforms. As explained in the article, the main role of such platforms is to enhance the interaction between entrepreneurs and contributors. In order to do so, ‘they assist entrepreneurs in publishing campaigns and collecting funds’ (1) and enable contributors to find a wide range of projects to invest in.

The crowdfunding platform I want to speak about is a new project launched by Millenium (2). Basically, Millenium is a streaming platform. It allows video-gamers who play in live stream (streamers) to be broadcasted on ‘TV’. Actually, Millenium is a multi-sided platform that facilitate interactions between streamers (first side) and viewers (second side). Indeed, the streamers reach a larger audience while the viewers are ensured of the quality and presence of streamers.

Few days ago, Millenium has decided to launch a new formula of its platform based on crowdfunding. Even if the streamers are still allowed to stream on Millenium’s TVs , they are now able to ask funds to viewers in order to offer more ambitious contents. Then the streamers can propose projects such as video-games’ tournaments, video-game streaming with famous people, et cetera, and viewers have the possibility to invest in these projects if there are interested in. It’s clearly a donation model because a viewer who decide to become contributor in a project is not going to receive a reward or something like that because once a project is launched everyone has access to it without discrimination. For Millenium this model is a ‘first try’ so maybe that in a few month it will be stopped because it’s not viable and that the viewers will not contribute to any project. Nonetheless Millenium believe in the loyalty and the dynamism of their viewers to carry the streamers’ projects.

Millenium exerts different intermediation roles in the crowdfunding part of its platform. Firstly it’s important to highlight that there are few streamers selected to stream on Millenium. Then there is a strong relation between Millenium and its streamers. Moreover Millenium aims at providing good contents to its viewers. According to this the most important role of Millenium in its crowdfunding part is to ensure the quality of the project proposed by streamers to viewers. In order to do so, once a streamer has project that he wants to finance by crowdfunding, Millenium will bring its expertise to identify if the project is technically workable. Then Millenium will allow (or not) the streamer to raise funds for his project by crowdfunding.

Secondly Millenium expects that its crowdfunding part gives the opportunity to streamers to launch more ambitious projects. Crowdfunding will allows viewers to donate in order to launch ambitious projects in which they are interested in, and give by the way the necessary means to streamers to develop their activity (3). I believe that is really nice because plenty of viewers are interested in choose a specific project. Add to this I believe that most of the viewers’ community thinks that video-game streaming has to be developed with larger financial means in order to make the most of the possibilities of video games in terms of divertissement. Then crowdfunding enables them to take part in this development.

It seems like this project of crowdfunding to increase the quality of stream contents launched by Millenium is really ambitious. Firstly the funds asked for projects are around 20.000 euros and it may seems a lot regarding the share of viewer which should be interested into donating. In my view Millenium relies too much on its community. I mean that most of the viewers will just wait that others contribute because they are used to have a free access to Millenium TVs. Then it’s possible that the donation will not be enough to cover the funds asked. I believe that a reward-based model will attract more viewers. The reward should be special emoticons on the stream chat or wallpapers for example that cost almost nothing to Millenium.

As a conclusion, crowdfunding models are more and more used to launch project in plenty of domains. Millenium has decided to launch a donation model on its platform and it’s quite impossible to say if it will work or not. Knowing that it’s a structure that I really like I’m impatient to see how the viewers community will react and if as expected by Millenium it will be able to carry the development of new video games’ streaming projects.

(1) Crowdfunding: some empirical findings and microeconomic underpinnings Paul Belleflamme, CORE & Louvain School of Management Thomas Lambert, Louvain School of Management https://www.uclouvain.be/cps/ucl/doc/sshilsm/images/lsm_wp_201404.pdf
(2) http://www.millenium.org/
(3) https://www.twitchalerts.com/donate/milleniumtv

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Jean Maxime Sacré
In this comment, I will show that CFP’s ensure mediation roles that are uncommon for multisided platforms. As mentioned by Evans, 2011, one of the conditions to be referred as a multisided platform is the following: “An intermediary can facilitate that coordination more efficiently than bilateral relationships between the members of the groups”. The latter obviously refers to the…
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In this comment, I will show that CFP’s ensure mediation roles that are uncommon for multisided platforms.

As mentioned by Evans, 2011, one of the conditions to be referred as a multisided platform is the following: “An intermediary can facilitate that coordination more efficiently than bilateral relationships between the members of the groups”. The latter obviously refers to the mediation roles that are performed by the CFP’s. Among them, many functions are usually taken in charge by the multisided platforms such as connecting different groups of individuals having complementary or similar purposes. For instance, Uber links two groups with complementary needs: people who want to reach a particular destination and drivers who are willing to make extra money by driving them there. Regarding similar purposes, dating sites are an obvious example.

I will now tackle two mediation roles provided by the CFP’s.

Firstly, the majority of CFP’s connect entrepreneurs to contributors who would have been impossible to reach since they weren’t used to finance projects in the first place. Thereby, CFP’s not only connect more easily people with complementary goals but create a new mass of contributors by encouraging them to finance projects by offering a user-friendly and trustful funding platform. This aspect is barely seen in other multisided platforms. If we consider the case of Uber, passengers already had to reach destinations but they used to call taxis. Therefore, the mobile application isn’t creating a new group of people demanding to be transported to a particular destination.

Secondly, the mediation role of the CFP’s is multi goal-oriented for both entrepreneurs and contributors. Indeed, contributors have two main objectives. First, they expect to do profit by investing money in promising project. Then, a majority of CFP’s users are willing to fund projects because they share personal values with the project’s purposes. Contributors are concerned by the issues the project will deal with. Regarding the entrepreneurs, they are obviously looking for a way to fund their company. Moreover, CFP’s provide an interesting way to value the interest of the public for their ideas or products.

In order to conclude, I think that CFP’s are leading the multisided platforms into a brand new level, combining more types of groups and more types of interests.

Source:

Evans, D., (2011), Platform economics: essay on multi-sided businesses, Competition Policy International

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Marine Malherbe
Crowdfunding platforms are often said to be multi-sided platforms. However, crowdfunding platforms have specific characteristics that make them different from all the multi sided platforms that we have seen so far. First of all, concerning the type of product that the platform offers. As we know, crowd funding platforms propose to invest in projects, they don't offer tangible product or…
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Crowdfunding platforms are often said to be multi-sided platforms. However, crowdfunding platforms have specific characteristics that make them different from all the multi sided platforms that we have seen so far.

First of all, concerning the type of product that the platform offers. As we know, crowd funding platforms propose to invest in projects, they don’t offer tangible product or concrete services.

Secondly, to stay in this idea of non tangible product, many crowdfunding platforms follows the “threshold pledge model”. The entrepreneurs and the platform agree on precise period of time within which the necessary amount of money has to be collected. If, at the end of this period, this amount isn’t reach, the project don’t take place. It is important to know that investors only promise to give a certain amount of money and financial transactions only take place at the end of the period, if enough money have been collect. So on the platform, users only agree to pay a certain amount of money but no transaction take place. This idea of “hypothetical investment” is very characteristic to the crowd funding platforms.

This bring us to the third characteristics of crowdfunding platforms. In many cases, financial transaction don’t take place on the platform itself but imply, in order to enhance the confidence of investors, the presence of another intermediary; a bank.

It is important to mention that in order to protect investors the domain of crowdfunding is highly regulated. Therefor, entrepreneurs must have their projects to be approved which imply a long and costly procedures. As a result, access to crowd funding platform is restricted to projects that respect certain criteria, proper to each platform.

The last thing I would like to mention concerns the network effects that appear on a crowdfunding platform. Indeed, on a crowdfunding platform, the nature of the network effects differ from those observe on a typical multi-sided platform such as a dating website.
Indeed, for the dating website, the two within-sided network effects are negative while, in the case of the crowdfunding platform, entrepreneurs are worse off if the number of entrepreneurs on the platform increases (so negative within-side network effect). Moreover, as mention in the article, the effect of entrepreneurs on investors is unclear.

All those characteristics, proper to crowfunding platforms, indicate that they differ, in some terms, from multi sided platforms.

[1]https://www.econstor.eu/dspace/bitstream/10419/52302/1/671522264.pdf

[2]Sunghan. R, Young-Gul. K. Dynamics of the Crowdfunding Platform: Participation Model Development and Empirical Analysis.

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Louis Rion
In this comment I will try to point out some differences between CFP’s and multi-sided platforms such as dating sites. Multi-sided platforms coordinate the demands of distinct groups of customers who need each other in some way. Dating sites, for example, enable men and women to meet each other while CFP’s enable interaction between entrepreneurs in need of funds for a…
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In this comment I will try to point out some differences between CFP’s and multi-sided platforms such as dating sites.
Multi-sided platforms coordinate the demands of distinct groups of customers who need each other in some way. Dating sites, for example, enable men and women to meet each other while CFP’s enable interaction between entrepreneurs in need of funds for a particular project and consumers willing to finance that project. But some differences exist between these platforms.
In dating sites each member of a group values the service more highly if there are more members of the other group, thereby increasing the likelihood of a match and reducing the time it takes to find an acceptable match. It is obvious that a male person will find it more interesting to be on a dating site with many women and a small amount of men. But however, in this kind of site the goal is principally to find THE good person for both, men and women. It is the same weather it concerns a male or a female. This is not the case in CFP’s because while investors may want to find a good project to invest in and to be profitable, entrepreneurs want MANY investors in order to reach the amount of money required for the project. So the difference here is more about the “singularity” of dating site and the “plurality” of CFP’s.
We could also find many other differences. Dating sites are platforms that connect humans, men and women. CFP’s do not go in the same way because they connect projects with investors and are made in order to get funds while dating sites are made to create relationships. Another difference consists in the fact that for dating site it should end by a real interaction between two persons and it happens out of the platform. This won’t be the case for CFP’s because all transactions are conducted through the platform with no real interactions between the different parties.
Although there are some differences as those mentioned above, it is also obvious that there are many similarities between these two types of platforms.

Sources:
http://www.justice.gov/atr/public/hearings/single_firm/comments/219673_c.htm
http://psi.sagepub.com/content/13/1/3.full?ijkey=cK9EB6/4zQ0AM&keytype=ref&siteid=sppsi

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Gwenaël Bailly
Through this comment, we will to see if the the advantages and drawbacks of crowdfunding platforms also applies to dating websites. First, let's see what are the common points between those two kinds of MSP. To begin with, as it is said in the MIT article listed below, one important rule for the management of MSP is to charge if not…
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Through this comment, we will to see if the the advantages and drawbacks of crowdfunding platforms also applies to dating websites.

First, let’s see what are the common points between those two kinds of MSP.
To begin with, as it is said in the MIT article listed below, one important rule for the management of MSP is to charge if not both side, the side that can extract the more value out of this exchange. For a crowdfunding platform, a percentage is taken from the total amount of money that has been gathered if the campaign is successfull, the money is thus taken from the investors.
On dating website, there are registration fees that are charged in order to deliver the service. On a lot of dating website, those fees only target men, who are considered as the users that benefitiate more of the exchange. Thus, on this point, crowdfunding platforms and dating websites are not so different even if the business models are not the same.
Second, as it is said in the article, there are usually 2 sides to these platforms : investors and entrepreneurs on one hand and men and women on the other hand.

The general rule of MSP is the following : the more you have people on one side, the more you will attract on the other. But there are also drawbacks as it is said in the article and we will see here how these apply on dating websites.
To begin with, it is more difficult to attract women than men on dating websites, that is why their subscription fees are often lower or free. The more there are women on a website, the more men will be attracted and pay their subscription. But on the other hand, the more there are men, the fiercer is the competition.
The effect is not as pronounced as it is for MSP, the most important being to keep a balance between these two groups.

To conclude, even if there are similarities between these two kinds of platforms, competition one crowdfunding ones is more likely to be thougher. Indeed, money is at play and the concerns of the two sides are more serious than in the case of dating websites.
According to us, all MSP have advantages and drawbacks coming from the number of their users, but the point that really matters is to be abble to make a balance between the number of users on both sides.

Sources:
[1] http://sloanreview.mit.edu/article/strategic-decisions-for-multisided-platforms/
[2] http://blog.paymentwall.com/guides/dating/monetizing-matchmaking-quick-guide-dating-site-revenue-models/
[3] http://www.lumosforbusiness.com/blog/792

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Heijmans Gaëtan
For this article, I will compare Sandawe.com, a crowdfunding platform for comics and a dating site very well-known Meetic. First I will present how Sandawe works. Sandawe is a multi-sided platform with one side investors ‘édinautes’ and on the other side, designers of comics. Sandawe offers the possibility to designer who are not ‘accept’ by the big companies of comics…
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For this article, I will compare Sandawe.com, a crowdfunding platform for comics and a dating site very well-known Meetic.

First I will present how Sandawe works. Sandawe is a multi-sided platform with one side investors ‘édinautes’ and on the other side, designers of comics. Sandawe offers the possibility to designer who are not ‘accept’ by the big companies of comics to have the possibility to enter the market of the comic books. But Sandawe employees consist also on a side of the multi-sided platform and they inspect the quality of the comic book. Sandawe offers a guaranty of 75% of the fund are found. It offers also a distribution network for the comic which are full fund in all the Belgium, France, Switzerland, Canada and online shops. All of the shops and online shops in the land mentioned before also consist in an other side. The ‘édinautes’ earn money from the sales of the comic book in which they have invest. The designers of the comic books earn also money for their jobs. And Sandawe take a percentage of profits of the sales.

Now I will compare Sandawe with Meetic, a dating website. Meetic allows people which pay a fee to use the system to found people they will likely go out with. Then there are ‘two’ sides. The two sides are simply the people who subscribe an account and Meetic which earn money for providing the service. The sides can be more if we consider men who wanted women, weman who wanted men, men who wanted men and so on. The users earn no profit with the system only the satisfaction whenthey found the right person.

Comparing the two different multi-sided platforms, we can assume that a crowdfunding platform have to earn to everyone on the website. They would have concrete return of invest for all of the sides. The two multi-sided platforms face the network effects. Meetic offers to gather people which wanted to meet other people. But Sandawe go a little bit further by giving the possibility to designer to found investisors, an expertise of comics manufacturing and a distribution networks. Sandawe wants to help first the designer and the consequences are that a lot of sides which participate will earn from their participation.

Source :
1. http://www.sandawe.com/fr
2. http://fr.meetic.be/

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Fionn Whelan
1. Multi-sided Platforms: Online Dating vs. Crowdfunding A traditional multi-sided platform brings together two or more distinct but interdependent groups of customers. The value is derived to one group on this platform, only if the presence of another exists. An online dating site is a perfect example of the traditional multi-sided platform, as distinct groups; men seeking women, women seeking men,…
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1. Multi-sided Platforms: Online Dating vs. Crowdfunding

A traditional multi-sided platform brings together two or more distinct but interdependent groups of customers. The value is derived to one group on this platform, only if the presence of another exists. An online dating site is a perfect example of the traditional multi-sided platform, as distinct groups; men seeking women, women seeking men, men seeking men etc are only of use, if the group they are seeking are also on the site.

Crowdfunding platforms or CFPs are also multi-sided platforms , although not in the traditional sense as with online dating sites or video game consoles. The primary reason crowdfunding differs from these other MSPs is that it is unclear as to whether or not an increase in one side (in this case entrepreneurs) has a positive effect on another side (investors/contributors). This is not the case in online video games/dating sites/real estate vendors, as in these platforms, an increase in the participants on one side, has a direct positive influence on the other side and of the platform as a whole.

2. Role of Intermediaries

Intermediaries are vital platforms for crowdfunding, and generally take the form of a specialized website. These websites connect entrepreneurs with investors who can then contribute fiscally online to “kickstart” these entrepreneurs ideas. (Powers, 2012) There are two distinct types of crowdfunding platforms which can be availed of by both entrepreneur and investor depending on their preferences. The first platform holds all investment in an escrow account, until a specific total is reached, and if that total is not met within a given time period all funds are returned to the investors. The second platform has no specific total or time limit and allows the entrepreneur to keep and use all funds raised. (Valenciene & Jegeleviciute, 2013)

3. Future Prospects

Crowdfunding platforms have grown exponentially in recent years, and that trend is projected to continue in the future. The internet and the digital age in which we live allows investors and entrepreneurs from all around the world interact and engage in mutually beneficial business agreements through crowdfunding and its intermediaries. In 2012, according to the crowdfunding industry report by Massolution , it was found that 2.7 billion dollars were raised by these platforms across over 1 million individual campaigns worldwide. More recent numbers , also by Massolution , report that crowdfunding platforms raised 16.2 billion in 2014 with a projection of 34.4 billion dollars raised in 2015. This exponential growth illustrates the crowdfunding as a platform is one which thrives in the digital age, and companies like “Kickstarter”, “Indiegogo” and “Crowdfunder” will only continue to grow and become more prevalent with time and further internet penetration.

Sources:
Powers, T. V. (2012). SEC regulation of crowdfunding intermediaries under Title III of the JOBS Act. Banking & Financial Services Policy Report, 10 (31), p.1-7.

VALUATION OF CROWDFUNDING: BENEFITS AND DRAWBACKS Loreta Valanciene, Sima Jegeleviciute, Kaunas University of Technology, Lithuania, 2013

Crowdfunding Industry Report, Massolution, 2012 http://research.crowdsourcing.org/2013cf-crowdfunding-industry-report
Date accessed: 4/5/2015

Massolution, March 31, 2015
http://www.marketwired.com/press-release/crowdfunding-market-grows-167-2014-crowdfunding-platforms-raise-162-billion-finds-research-2005299.htm
Date accessed 4/5/2015

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Justine H
As multisided platforms, crowdfunding platforms aim to connect project promoters requesting funds and people bringing funds. It can be projects of individuals, start-ups or companies. This is a way of alternative financing. It typically happens on Internet platforms that play the role of intermediaries. There are a lot of examples but I will list three of them. The first one is…
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As multisided platforms, crowdfunding platforms aim to connect project promoters requesting funds and people bringing funds. It can be projects of individuals, start-ups or companies. This is a way of alternative financing. It typically happens on Internet platforms that play the role of intermediaries.

There are a lot of examples but I will list three of them. The first one is BNP Paribas Fortis that made a partnership with MyMicroInvest to allow companies to get funds in order to finance projects. The second one is “Kisskissbankbank” that is the European leader of crowdfunding for all people willing to get funds for all kinds of projects. The last one is “Kickstarter” that is the world’s largest funding platform for creative projects.

Among the people interested in offering funds, there are several profiles such as general public, institutional entities, rich people eager to support initiatives flourishing for the future, etc. These people have a double role : they bring funds and at the same time they bring a support to the initiative, either as a future consumer or because of the interest in this investment that should generate profits in the future or meet some needs. Therefore it is not a model where people just finance but they also co-decide in a certain way on projects that are going to be realized and those that will not. They influence each other and they contribute to the development and the success of the project. If a project is supported by a large number of people or by professional investors for example, it will give a feeling of the viability of the concept and it will reinforce the idea that this project has a high probability to succeed. Therefore there is an interaction between the various channels bringing funds. Besides that, these platforms can sometimes generate buzz. It helps start-ups not known yet to access capital that they could not find in another way.

The distinctive feature of crowdfunding platforms is that the funding is made by individuals, “the crowd”, and not by traditional sources such as banks for example. On one hand, in a traditional model, we have entrepreneurs on one side, a bank as intermediary and savers on the other side. There is generally a credit committee formed by a limited number of people that takes the decision whether to grant a credit. The more the activities are innovative, the more it is complicated for these few people to take a favorable decision, given that banks try to limit the risks while granting a credit. On the other hand, in crowdfunding platforms, we have entrepreneurs on one side, the platform as intermediary and investors on the other side. The platform is just a tool that allows both needs to meet each other but it does not decide anything.

Crowdfunding platforms differ from well-known multisided platforms for several reasons. On a dating website for example, there are two parts that have the same expectations – find a partner, so both parts have identical expectations. They do not have interactions with other members of the platform. On a real estate website for example, there is on one side sellers and on the other side buyers. They have different expectations but there is no direct influence between buyers. Therefore, on well-known platforms, they “just” connect a supply and a demand. On crowdfunding platforms, there is a participative side given that it will show the number of people who support the project, the profile of these people, the amount of funds collected, the amount of funds still needed, etc. Moreover, there is a different time notion ; we are in a longer approach.

More generally, dating or real estate platforms could be seen as activities that already existed before the platforms. The latter just added a channel to the activity. People intervening on crowdfunding platforms are people who did not finance directly any projects before then. The innovative notion is stronger. It is difficult to conceive it without the platform. It is a business that develops itself thanks to the Internet because it made it simpler than before.

To conclude, it can be said that crowdfunding platforms go further than well-known multisided platforms ; they are more interactive and more innovative. What these platforms created is a larger availability of risky capital by people who are going to evaluate themselves in an informal way the projects they want to support. But as crowdfunding platforms are a growing trend, each of them must find the right approach to get funding for the projects they suggest in order to lead them to success.

Sources :
http://cpb.bnpparibasfortis.be/Mid-sized-Companies/FR/news-multimedia/News-detail/page.aspx/6102?xd_itemId=7665&i=Crowdfunding-accord-partenariat-entre-MyMicroInvest-
http://www.kisskissbankbank.com/
https://www.kickstarter.com/
http://www.inc.com/magazine/201111/comparison-of-crowdfunding-websites.html
– Mitra, D. (2012). The role of crowdfunding in entrepreneurial finance. Delhi Business Review, 13(2). En ligne http://www.delhibusinessreview.org/v_13n2/v13n2g.pdf
– Onnée, S., & Renault, S. (2014). Crowdfunding : vers une compréhension du rôle joué par la foule, Management & Avenir, 74. En ligne http://www.cairn.info/resume.php?ID_ARTICLE=MAV_074_0117

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de Dorlodot Aude
"Crowdfunding platforms enable the financing of projects by soliciting small investments from a large base of potential backers over the internet."(Zvilichovsky et al., 2003) There exists many CFP and each as different rules, so contributors can choose which kind of platform they prefer according to the ways of fundings, types of projects they can invest into,.. On this site, http://crowdfunding.cmf-fmc.ca/fr/directory, they…
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“Crowdfunding platforms enable the financing of projects by soliciting small investments from a large base of potential backers over the internet.”(Zvilichovsky et al., 2003)
There exists many CFP and each as different rules, so contributors can choose which kind of platform they prefer according to the ways of fundings, types of projects they can invest into,.. On this site, http://crowdfunding.cmf-fmc.ca/fr/directory, they resume some different platforms that exist. The entrepreneurs also choose their platforms according to their rules, for example Kickstarter requires a prototype for complex projects like a gadget. (https://www.kickstarter.com/rules)

A first difference between CFP and well-known multisided platforms is the within-side effects. Indeed, in a multi-sided platform such as dating site the within-direct effects are negative on both side whereas on CFP contributors have positive effects on their own group. However, for videogame console, the players have positive within-direct effects like for the contributors on the CFP.
Then for the cross-side effects, we can see a difference with date site and videogame consoles. Indeed, in the case of date site the two side have positive effects on the other side. Girls prefer when there is a lot of boys on the side, and conversely boys prefer when there is a lot of girls. While on CFP, entrepreneurs have a negative and a positive effect on the contributors.

Crowdfunding platforms such as Kickstarter raised funds for many different types of organizations (Doshi A., 2014).
A difference exists in the way CFP earn money, they charge a fee on successful projects ( for example Kickstarter and Indiegogo). Moreover, there exist criterias in order to subscribe on a CFP for the projects ( Doshi A., 2014) but not for contributors. On date site, everyone (both sides) can become a member.
On CFP, like on videogame consoles, there are the sellers (the entrepreneurs in the CFP case) who try to sell something to consumers (contributors in the CFP case). But for videogames, consumers just expect a good console in return of his money and choose it on its characteristics while for CFP contributors base his choice of a project on the return is expecting and if the project interests him. So with CFP, there is a risk, the contributors could loose some money, if the project doesn’t work (platforms like Kickstarter doesn’t offer refunds).

Sources:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2304101
http://www.anilrdoshi.com/uploads/3/2/0/6/32062545/adoshi_jmp.pdf

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Baudoux Flore
Why CFP differ from real-estate platforms? Analyse this questions with the three conditions of the multisided platforms: 1. Distinct group of consumer: - In one side, there is the group of sellers that want to sell their property. They will go to the platform in order to find a potential buyer. - In the other side, there is the group of buyer. They come on…
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Why CFP differ from real-estate platforms? Analyse this questions with the three conditions of the multisided platforms:

1. Distinct group of consumer:

– In one side, there is the group of sellers that want to sell their property. They will go to the platform in order to find a potential buyer.
– In the other side, there is the group of buyer. They come on the real-estate platform to find a house or a apartment that fit with their taste.

2. Presence of externalities:

There are 4 kinds of externalities:

a) The cross-side effects: sellers on buyers. The more goods are available for sale on the website, the more the consumers will have a broader choice. The probability that a buyer find the perfect property that matches their taste rises. More over, that allows comparison between similar goods. The consumer can compare and be sure that is not a swindle. There is a positive external effect.
b) The cross-side effects: buyers on sellers. An increase of clients’ number on the platform means an increase of the potential buyer. That can lead to an increase of competition for one precise good and, in turn, can lead to a raise in the price of the good. So, there is also a positive external effect.
c) Within-side effects: buyers on buyers. An increase of buyers on the platform can raise the competition between them. If for one good there are more potential interested people, the price will go up. It is negative for the buyers.
d) Within-side effects: sellers on sellers. The bigger the number of available goods, the more clients are attract on the website. To join a platform with a large choice of property is more attractive than on with fewer possibilities. So, there is a positive internal effect.

3. High transaction costs

The buyers and the sellers can meet without a specific platform but it is more expensive, more time-consuming and less effective. Put together in one place these two kinds of consumers facilitate the transaction and increase the probability to make a deal.

4. Comparison between CFP and real-estate platform

In the case of the real-estate platform, the cross-side effects are clearly positive. About the CFP, the effects of entrepreneurs on contributors are unclear: it can be positive or negative. This is a main difference because it can change the competition.

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Pierre-Yves Peeters
Dating sites, video-games plateform and crowd-funding plateform have the characteristic to be multi-sided plateform. However, some externalities are not the same. First of all, lets compare CFPs and dating sites. If we define man and woman as the two different groups for datings sites and contributors and entrepreneurs for the CFP, the within-side effects are not completely the same. In fact,…
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Dating sites, video-games plateform and crowd-funding plateform have the characteristic to be multi-sided plateform. However, some externalities are not the same.

First of all, lets compare CFPs and dating sites. If we define man and woman as the two different groups for datings sites and contributors and entrepreneurs for the CFP, the within-side effects are not completely the same. In fact, as this article argued, contributors are attracted by plateforms regrouping a lot of contributors. Indeed, the more contributors they are, the greater the chance they have to see the project they like as a success. On the other side, one man would be interested to subscribe on dating sites where the number of other man is low, because more woman will be presented to him.

Secondly, CFP are multi sided plateform offering no real products like videogames console, real-estate plateform do. The principle of the CFP is that you invest for a product hoping other contributors will also contribute to that project. Contributors have thus no certainty to gain something. That is why, some plateform collaborates with business angels. The expertise these lasts reassures the contributors.

Lastly, one characteristic proper to the CFP is that the project are commonly limited in time. The creator choose in the beginning how long would the project remain avaible to contributors (Doshi, 2014) [1]. This charateristic can not be found in videogames console or dating sites.

[1] Agent Heterogeneity in Two-Sided Platforms:
Superstar Impact on Crowdfunding
Anil Doshi, 2014

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Arnaud Gourdange
In this paper I will develop the differences between CFP’s and the multisided platforms’ dating sites. As said in the article, we find in both the characteristics of having distinct groups of customers, the presence of externalities (at least if we concentrate of dating sites for heterosexuals, this will be explained later) and high transactions costs. First, in both platforms, we…
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In this paper I will develop the differences between CFP’s and the multisided platforms’ dating sites. As said in the article, we find in both the characteristics of having distinct groups of customers, the presence of externalities (at least if we concentrate of dating sites for heterosexuals, this will be explained later) and high transactions costs.

First, in both platforms, we find distinct groups of customers. On the CFP’s, we have the entrepreneurs (fundraisers) and on the other side the contributors (funders). On dating sites, we also have those two different groups: men and women. In CFP’s we can also imagine other groups of investors as business angels or banks (in order to show the strength of a project). The number of contributors also shows how serious a project is. This means that a lot of contributors have a positive impact on the same group. On dating sites, we see that there is a negative impact of the number of subscribers on the same groups. The more the men, the less there is a chance to be taken by a women and it’s the same for women. In this vision, we use dating sites for heterosexual’s people. On a gay or bisexual dating site, the internality would be positive. The more men are registered, the more it is interesting for other to subscribe.

Then, we will speak about the externalities of both platforms. In the article, we see that more entrepreneurs could provoke a lower chance for contributors to have a successful campaign. In the case of dating sites, externalities play a huge role. Because internalities have a negative effect, the externalities must have a positive impact for the site to be successful. Indeed, the more women are on the site, the more men will subscribe event if more men means more competition. Thus, externalities have a bigger positive impact than the internalities and their negative impact.

In a personal opinion, I don’t see the competition as strong in CFP’s than it is with dating sites. Dating sites propose all the same “product”: meeting new people and in exchange for that, you pay some sort of subscription. In contrast, with CFP’s, every project is different and have particularities. An investor could totally invest on two different platforms because he likes particularly a project on each one. That wouldn’t be possible with dating sites without subscribing on 2 sites which would cost a lot for anybody. And because every project is different, we could promotion of different campaign of crowdfunding on different websites or discussions on the web.

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Willems Robin
While being part of the multisided platforms group for sure, CFPs differ from classic multisided platforms in different points. First, in CFPs, the services or the goods contributors are participating might not be created yet. Kappel (2008) distinguish two different kind of CFPs: "ex post facto crowd funding" and "ex ante crowd funding". The first is where contributors are paying for…
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While being part of the multisided platforms group for sure, CFPs differ from classic multisided platforms in different points.

First, in CFPs, the services or the goods contributors are participating might not be created yet. Kappel (2008) distinguish two different kind of CFPs: “ex post facto crowd funding” and “ex ante crowd funding”. The first is where contributors are paying for a finished product and the second is when contributors are paying to achieve a mutually shared result [1]. Therefore, the platform is not only used to raise funds, but can also be used as a way to gain information from the contributors to adapt the product according to this information. CFP might be considered as a way for creators to gain free information. The social aspect in this platform is thus more important for the creators, as long as they are willing to use it.

Second, contributors may have a large scope of different reasons to participate to a project, and thus waiting for different kind of return, while in classic multisided platforms, customers are usually waiting for the same kind of return. Indeed, the motivations that lead someone to participate financially at a project through a CFP is highly correlated to his expected return [2]. On the other hand, creators can choose the return to give to the contributors, and this without considering the motivations of the contributors. Therefore, some of the contributors might receive at the end less than they wanted, and some might receive more, which leads to inefficacity. Of course, this analysis is not relevant in the case of non-profit organizations.

Finally, I personally think that creators in CFPs have an additional role that explained in the article. In my opinion, CFPs that do not have “sophisticated investors” have therefore small contributors. Those contributors will not go on the CFP website to search for a project to contribute to. They will rather be informed of a project and on the capability to participate to it on another platform, usually related to the subject of the project. Therefore, I think that creators also have the role to promote their project on other website to make it known, which is not the case for classic multisided platforms.

[1] Kappel, T. (2008). Ex ante crowdfunding and the recording industry: A model for the US. Loy. LA Ent. L. Rev., 29, 375.

[2] Gerber, E. M., Hui, J. S., & Kuo, P. Y. (2012, February). Crowdfunding: Why people are motivated to post and fund projects on crowdfunding platforms. In Proceedings of the International Workshop on Design, Influence, and Social Technologies: Techniques, Impacts and Ethics.

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Julien Horlay
What could be the differences among crowd-funding platforms and dating site in terms of within-side and cross-side effects? I’m conscious that both platforms have completely different purposes, but in a certain way, they have something in common, which is the fact of being a multi-sided platforms. Let me explain you why… I’d like to begin with…
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What could be the differences among crowd-funding platforms and dating site in terms of within-side and cross-side effects?
I’m conscious that both platforms have completely different purposes, but in a certain way, they have something in common, which is the fact of being a multi-sided platforms. Let me explain you why…

I’d like to begin with the distinct groups of consumers. While we have entrepreneurs and contributors on crowdfunding platforms, we can have two cases for a dating site.
The distinction will be clear if the site is for heterosexuals, i.e. men on one side and women on the other. It will be possible to do specific offer aiming a target group (for example, if the website does not have enough women, it can be a good solution to propose a free registration for women in order to increase their number).
However, if the site is for homosexuals, the boundary between the two groups does not exist anymore, men are looking for men and women are looking for women. Thus, this type of site does not fit with the characteristics of a multi-sided platform. It is impossible to provide specific offer to reach one type of customers since we have a unique group. Therefore, to simplify the sequel of my analysis, I will consider that dating sites are for heterosexuals only.

Let’s focus on the presence of externalities. Regarding the within side network effect, one could say that it is negative on both sides. If I’m a man registered on Meetic, I would like to be the only one so that I have no competition with the other male persons. The same argument can be applied for women. However this is not that simple. If there is only one man, women will not be likely to register to the website since there won’t be any choice. In the end, nothing will be registered on the website. That is where the positive cross side effect takes place. Women appreciate that there are a lot of men, and vice-versa. Thus, one can say that the internal effect is lower than the external and that’s why we can find many people registered on website such as Meetic.

Finally, I will conclude with the lowering on the transaction cost which does not need a lot of argumentation. It is clear that it saves times and money to find “l’âme soeur” since the diversity of profiles is really rich and allow to find the person that suits the most.

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Cyprien Georges
In this comment I will try and investigate what makes CFPs different from another well-known multi-sided platform, i.e. videogame consoles. To do so, I sall show that videogame consoles can be seen as a multi-sided market as it fulfills the 3 conditions that are described in this article. 1. Distinct groups of consumers The game consoles bring together 2 types of customers:…
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In this comment I will try and investigate what makes CFPs different from another well-known multi-sided platform, i.e. videogame consoles.

To do so, I sall show that videogame consoles can be seen as a multi-sided market as it fulfills the 3 conditions that are described in this article.

1. Distinct groups of consumers

The game consoles bring together 2 types of customers:
– The gamers who buy the console and games which are compatible for this platform (it is very important to understand that there’s no cross-compatibility between competing game consoles)
– Game developpers who develop and sell the game and who can of course decide to multi-home, i.e. develop games for competing platforms. Of course, if all game developpers were multihoming, then game consoles would probably not be considered as a two-sided market as the only thing that would differ would be the stand-alone benefits, the quality of the products, the tastes of the consumers, etc. But if all games are available on all platforms, then it means the platform doesn’t really matter in terms of network effects. It’s very easy to see that this is of course not the case: developers are very often singlehoming.

2. Presence of externatlities.

There are 4 types of externalities in a this two-sided market:

– the cross-side effect of the presence of gamers on developers, which is clearly positive: the more there are gamers using a particular game console (platform), the more developers will want to develop games for this game console (market size);

– the cross-side effect of the presence of developers on gamers which is also positive since the more there are developers, the more there are games, and hence the wider the variety of games and the bigger the chance you will be interested in the games developed;

– the within-side effect of the presence of gamers on gamers which appears to be positive as well. In fact, people would rather have the same console as their friends, in order to be able to play online together or to share/lend games. PlayStation has for example decided to implement a new feature in its PS4: you can know play a game you don’t own but one of your friend does for a few hours simply by a peer-to-peer transaction: you are invited by your friend to play the game he owns and if you accept you can play it for 2 straight hours. This gives an extra incentive for people to buy the same console, as it decreases the searching cost (you can test the games for free before buying them) and allow you to benefit from your friend’s acquisitions;

– the within-side effect of the presence of developers on developers which is most probably negative because of the competition effect: the more developers, the more sellers and the more intense competition. This might actually be one of the reasons why there exist competing game consoles, otherwise on the long-run everyone would be better-off using the same platform since all the cross and within-side effects would be positive.

3 Transaction costs

Not only are game consoles the platform that brings together two distinct groups of consumers, they also provide the needed physical support (hardware) for the transaction between the two groups to have any value. In fact, developers and gamers might as well find each other without the platform but their transaction would be completely worthless since you can’t play the game without the consoles. It’s also clear that neither developers nor gamers would be better off if every single developer were selling their own consoles.

Now let us compare the videogame industry with CFPs.

One very noticeable difference is that in the case of CFPs, it’s unclear whether an increasing number of entrepreneurs has a positive effect on the contributors (or at least at some point it might end up being negative, even if it’s likely to be positive to a certain extent). This simple difference might actually have a big impact on the structure of the competition.

In fact, if there’s some kind of threshold above which more entrepreneurs has a negative effect on the contributors, then at equilibrium we should observe more firms in the sector of CFPs than in the videogame industry as it would be unprofitable to increase the number of entrepreneurs on the platform. This effect simply does not exist for videogames: both side of the platform are always better-off when the size of the other side increases. The competition effect on the other hand is clearly present in both sectors, making sure a single platform is not the most efficient strategy (among other reasons).

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