Competing With a Crowd: Informally Organized Individuals as Platform Complementors

Abstract:     
Platform complementors are increasingly organized as “crowds” of individual producers working outside formal relationships – rather than as complementor firms. As crowds are motivated differently from firms in a market, here we hypothesize that the best way to stimulate complementary development differs from usual “grow-the-platform” strategies known from earlier platform studies. In crowd complementary development on online multiplayer games, we find that strategies intended to stimulate crowd complementary development by boosting platform usage did so (elasticity of .45), even when the crowd received no cash payments from users. However, boosting the size of the crowd itself had no impact on subsequent development rates or network effects. We found evidence that strategies more directly geared to inducing complementary innovation (i.e., an inducement prize) had much greater impact.

Number of Pages in PDF File: 38

Keywords: two-sided platforms, platform strategy, crowds, digital innovation, motivations

JEL Classification: L1, O31, D03

working papers series