The “Free Parking” Business Model

Mobile networks are multisided platforms. They link people who make calls and people who receive calls (we discuss more sides below). The subscribers to a mobile telephone network make calls to, and receive calls from, other subscribers on the same mobile network, subscribers of other mobile networks, and individuals with traditional fixed-line tel

Businesses in multisided markets often subsidize one side of the market to get the other side on board—sometimes explicitly by charging low or negative prices.

In fact, establishing a favorable monetization model can be as important as the new product itself and the price you charge for it. A highly innovative monetization model can make a new offering take off like a rocket. A number of innovative—yet proven—monetization models are in use today: subscription, dynamic pricing, and freemium to name just a

A fundamental decision facing all multisided platform businesses is choice of a price structure: How much should the platform vendor charge each side relative to the others? Since transactions involving some sides may have significant associated variable costs (the production and distribution costs of video game consoles, for instance), the most il