Chapter 52

Two-Sided Market

Attracting indirect network effects

A man with his arms wide open, standing on a curved wooden bridge across a stream. A hammer, few nails and a handsaw with an open handle are seen lying next to him.

The pattern

Two-Sided Markets facilitate interaction between two complementary groups for mutual benefit via an intermediary or a platform. For example, recruitment websites link jobseekers and recruiters, while a search engine attracts both users and advertisers (WHO?). Central to the concept are so-called ‘indirect network effects’: the more people from one group use the platform, the more attractive it becomes to people in the other group. This works in both directions (WHAT?). The main challenge in operating such a platform is to steer the two customer groups in such a ...

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