Multisided

Multisided describes platforms that create value by enabling interactions among two or more distinct user groups. In a multisided market, the value of the platform to one group depends on the size or engagement of another group, through indirect network effects. Examples include credit card networks connecting cardholders and merchants, online marketplaces connecting buyers and sellers, app stores linking developers and users, ride-hailing services linking riders and drivers, and ad-supported platforms connecting users and advertisers.

Key features include distinct value propositions for each side, cross-side network effects (positive feedback loops), multi-homing (participants joining multiple platforms), and platform governance to set rules, quality standards, and fee structures. Platform operators typically subsidize one side to attract the other or extract value via take rates, dynamic pricing, or data-driven services. The aim is to achieve liquidity and critical mass on all sides.

Economic significance: multisided platforms can capture large value by coordinating ecosystems, reduce transaction costs, and enable markets with high coupling between groups. They face chicken-and-egg problems, governance challenges, and regulatory scrutiny; performance depends on trust, safety, and interoperability.

History and usage: the concept matured in economic literature as multisided platforms and two-sided markets, with early formalizations by researchers such as Evans and Schmalensee. In practice, the term covers modern tech platforms and marketplaces; not all networks are multisided, and some platforms primarily serve a single user group while supporting auxiliary participants.