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Unformatted text preview: o ther side (so f tware develo pers), that’s called a
crossside exch ange benef it . The Positive Feedback Loop of Network Effects
IM is co nsidered a o ne-sided market (o r o ne-sided netwo rk), where the value-creating,
po sitive-f eedback lo o p o f netwo rk ef f ects co mes mo stly f ro m same-side benef its f ro m a single
gro up (IM members who attract o ther IM members who want to co mmunicate with them).
Disco unt deal sites like Gro upo n, ho wever, are co nsidered to be two -sided markets, where
signif icant benef its co me f ro m two distinct classes o f users that add value by attracting each
o ther. In Gro upo n’s case, the mo re peo ple that subscribe to receive the f irm’s daily deal
messages, the stro nger the magnet that attracts po tential advertisers who o f f er mo re deals,
who in turn attract mo re subscribers (and so o n). This dynamic has pro duced f reak-sho w
gro wth f o r the Chicago -based f irm. Less than two years af ter Gro upo n was f o unded, Fo rbes
declared the f irm to be the fastest gro w ing co mpany in histo ry.C. Steiner, “...
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This document was uploaded on 01/31/2014.
- Winter '14