Beware the platform business

Here’s Ben Parr:

If you want to build a multi-billion dollar business, you can’t just build a product: you need to build a platform.

That was my major takeaway from the news that Spotify is launching an app platform. It’s in its infancy (thus why journalists are rightfully bashing it), but it’s the start of a transformation for Spotify.

In my opinion, the major inflection point for Facebook — the moment it transformed from a million dollar business into a billion dollar one — was May 2007, when it launched the Facebook Platform. When it opened up its APIs to developers, it created an ecosystem that drove up Facebook’s value. The next year, Facebook hit 100 million users and the engagement skyrocketed from there.

The web was a platform too, but a platform built around an open set of standards not controlled by any single corporation. If you want to build a billion dollar corporation you need to build a platform, and you need to own it. But is that really the best outcome for the rest of us?