Abstract
Since 2005, the number of Peer-to-Peer (P2P) platforms has grown substantially in areas such as carpooling, online dating, and crowdfunding. Though the development of P2P activities is increasing, there is a lack of strategic and managerial theories for this type of platform, especially when identifying the elements of its business model. This paper seeks to clearly define what a business model is. Extensive literature is reviewed to build a theory of business model for P2P activities. The validity of the model is tested through crowdfunding platforms. Keywords: Business model, crowdfunding, customer value proposition (CVP), governance, income stream, infrastructural technologies, P2P, two-sided markets,
TopBackground: Review Of Literature On Business Models
To propose a theoretical and operational reference business model for P2P activities, the review of literature opts for a funnel approach, starting with general concepts before focusing on specific aspects.
First, we position the business model in relation to strategy because the two concepts are often mistreated as equivalents. Second, we examine the taxonomy of business models to identify the one that corresponds to P2P activities and its theoretical foundation. Third, we look for the components of the economic model in the literature.
Key Terms in this Chapter
Governance: Governance aims to encourage some specific behaviors and relations among stakeholders and avoid some others and relies on a third-party authority to oversight how a firm manages the interests of and relations between different internal and external parties.
Customer Value Proposition (CVP): A CVP is the worth (satisfaction, value, utility) a consumer perceives as the (positive) difference between the total benefits s/he obtains from a vendor’s offering, minus the sum of pecuniary costs and non-pecuniary sacrifices that s/he has to give up in return. Customers continuously take into account competitive alternatives along with their relative benefits and costs. A CVP is always subjective and includes not only an offering’s features, but also personal and social values.
Business model: A business model states key activities and processes to support the principles of competitive advantage the strategy defines for a firm. While a strategy defines the foundations for effective value creation, a business model outlines the specific way of creating value for them. A strategy and a business model are complementary rather than identical and required for success of P2P platforms.
Infrastructural Technologies and Competencies: A business model’s component of technologies and competencies allow a firm to operate flow of goods, information, and money for delivering customer value and support competitive advantage. The Web 2.0 technologies and the competencies of using them have played a significant role in development of P2p activities by reducing the transactions costs between distant peers.
Revenue Stream: A revenue stream defines a mode of regular flow of earnings (cash-flow) that come into an organization in a period of time. Firms generally mix different income streams (revenue mix) to finance operations, investments, and rewarding shareholders and stakeholders.