Competition makes things better for consumers, right? So it must be a good thing that the most ambitious startup founders out there are seeking not just to build products and services, but platforms. In the social web, however, platforms are often marketplaces – Craigslist is a platform for exchanging goods/services, StackOverflow is a platform for exchanging knowledge, AirBnb is a platform for renting out your sofa bed.
Recently, however, we’ve seen a proliferation of platforms. Oodle and Zaarly are taking on Craigslist, for example. The reason for this is that Craigslist doesn’t innovate – it is a static product that probably deserves a little competition. When I as a consumer want to sell my bike, however, the proliferation of platforms creates a problem – which site do I choose? If I’m buying a bike, the same problem exists.
A bike is small beans – what about finding an apartment? This is a life changing decision – one where I’d like to see all the possible options. In San Francisco, Craigslist still rules the game, but increasingly other sites are building similar platforms. Are we supposed to visit all of them? Are landlords supposed to list on all of them?
The main reason for platform proliferation is simple – online marketplaces like Craigslist have a monopolistic element. The winner takes all and everyone uses certain sites because everyone else is using them. The problem, then, is that these cyber monopolies have no reason to innovate and front end / UX progress stalls. Nothing gets better. When things get so bad that someone has the chutzpa to try to build an entirely new platform, you know it’s time for change.
What if there were another way? What if these platforms were truly open, and developers could compete on design, functionality, and user experience instead of just competing to win the platform wars? There are examples of this – on the flip side of the apartment rental game are home sales, which are ruled by the MLS. Witness the competition in this space: Zillow, Trulia, Redfin. The same thing is happening for airline reservations – data is widely available to developers, and we get Orbitz, Kayak, and Hipmunk as a result. Better than Craigslist? I think so.
Quick side note: what about companies that post to multiple platforms, such as Postlets, which allows landlords to advertise on all the major rental platforms. Doesn’t this solve the problem? No, because there is still no open platform – just distributed monopoly power. If I create a wonderful front end for apartment search, there is no API to tap into with Postlets – it simply helps landlords save time by posting to the existing “winners” of the platform wars.
There is a well established precedent for governments or non profits to get involved when there are monopolistic situations, and I believe that there are opportunities to unleash tremendous growth if we just organize the data and make it a bit more available to developers. Maybe we don’t need a regulator forcing everyone to list their bikes on a specific database, but maybe something like this does make sense for apartments. Or jobs (for god’s sake, we need all the innovation we can get in this marketplace).
Ultimately, open platforms will lead to better marketplaces, and better marketplaces will lead to more options, better decisions, and greater wealth for all of us. There are certainly challenges – what data should be collected, how do you prioritize API requests to a centralized platform – but just open Craigslist and Kayak in windows next to each other on your computer, and ask yourself which system is working better?