I went to a live venue to see the stand-up comedian, Dave Hughes not long ago. Queued to collect tickets at the door, queued for pre-show drinks, queued to be seated and queued for post-show drinks. That’s ok. That’s what you expect when you see live entertainment, be it ballet, stand-up, music or opera.
Dave Hughes held the crowds’ attention for a full 90 minutes. Made everyone laugh. Good work. Good on him. Must be hard. I struggle to hold a rooms’ attention for five minutes. He mingled after the show. Had a chat. It was a moment. Two tickets – $90, drinks all up about $40. Glad I went. Good night out, but just a good night out. No Twitter, Facebook, Instagram shout outs enthusing my Dave Hughes experience tonight. Not Dave’s fault. He was terrific – 4 stars; venue; – 2.5 stars; so overall experience was just average, say around 3 stars.
Last weekend, we stayed in to watch Jessica Jones, the new Netflix series. I had received an email from them: because I liked Spiderman, Green Lantern, Captain America and Iron Man, I might like Jessica Jones. Here’s the trailer, a taster. Our 13 year old son likes these super heroes; we don’t particularly, but that’s ok. Jessica Jones, the troubled, hard drinking super hero looked good. This show was designed for us, not our 13 year old. It was slick, sexy and sophisticated.
The whole 13 episodes are available but we contained ourselves to three. We’re hooked. We’ll be watching the whole series in coming weeks…or maybe days. Here and there, when we get a moment. We supped on canapés, cheese and a decent red wine during our Netflix bingette.
Monthly Netflix subscription $12: in-house food & beverage about $50, mainly the wine. Could have had corn chips and plonk but we opted for better quality since the admission price was so low. Great night in. Really good. Memorable. We’ll do it again, 5 stars all round to Jessica Jones, in-house F&B and Netflix.
Netflix was a different experience to Dave Hughes live. It was better, easier, comfortable, consistent: it felt spontaneous.
So Netflix is one of these emerging and flourishing platform players. They’re very different from traditional businesses as we’re reminded of all the time on social media: “the world’s largest taxi firm, Uber, owns no cars. The world’s most valuable retailer, Alibaba, carries no stock. And the world’s largest accommodation provider, Airbnb, owns no property.” But these platform businesses do have something that other businesses don’t have, they have a value driving asset, a technology platform.
Unlike traditional businesses, Platform players – Uber, Twitter, Airbnb, Etsy, LinkedIn, Facebook, Netflix and others – have built technology platforms that attract producers and consumers who interact on the platform to create value. This producer/consumer trading creates communities, communities on steroids, unconstrained by location.
These technology platforms are ultra-scalable. Netflix has a community of 69 million streaming subscribers worldwide and spent (US) $5 billion on content acquisition in 2015. Platform players also go-to-market, build competitive advantage and create value differently from traditional “value chain” businesses.
Platform players provide free or affordable technology platforms and invite producers and consumers to plug in, play and transact. They don’t create end-value, they enable it through the platform. They need to balance supply and demand so care as much about their external producers as consumers because they don’t own or control the factors of production like traditional companies.
Relatively few staff are required to drive these global platform behemoths. Airbnb and Netflix are multi-billion dollar businesses which employ less than 2,000 staff respectively. According to Sangeet Paul Choudary, founder of Platform Thinking Labs, “Ecosystems are the key enablers of value creation on platforms and a new source of competitive advantage”.
These technology platforms are packed with smart stuff to realise the value created by matching the most relevant digital or physical resources from producers with consumers most in need of those commodities. Algorithms, drawing on the transactional data already residing on the platform, match demand with supply. So when you order an Uber ride, algorithms work out the best car to send you. There is no enormous, labour intensive call centre. The more information that is stored about you and the car, the better the match. Good matches result in great experiences which deepen trust and reinforce loyalty.
Live entertainment venues are similar to these scale platform players in some ways. They’re almost a bricks-n-mortar version: they’re physical platform companies. They don’t make products; they curate producers and consumers from which communities evolve around their venues.
Venue operators can learn much more from these platform players. They can learn how to make it easier for producers and consumers to plug into their physical platforms. They can learn how to collect, analyse and monetise both producer and consumer data, and they can learn how to develop and apply labour saving algorithms to match supply and demand.
They can then dare to scale better, bigger, faster. Reach beyond their local vicinities. They can be smarter, more agile and innovative in order to attract, retain and scale both producers and consumers. If a producer like Dave Hughes was “plugged in” he could rate his venue experience, rate his venue contract and rate his venue audience. Consumers could rate live events, rate the F&B and rate the overall experience.
I didn’t get any emails last week informing me that, “because you liked Dave Hughes, you might like Dani Cabs” or “because you’ve come here three times lately, have a wine on us.”
Yes it demands embracing technologies, not in a geeky, techie way, but in a visionary business, strategic way. It requires an investment in mindset bending, culture change, strategy and creativity to work out how to scale a physical platform & community beyond its local vicinity.
Netflix invests more and works harder to get my attention and to get me back on its platform again and again. What if live venues worked as hard at this? We’d all be going out a lot more probably. Netflix is winning for now.
The key questions for the boardroom:
- What similarities does our business share with platform businesses?
- Where are we vulnerable to attack from platform players?
- What opportunities exist to apply data analytics and algorithms to our customer data sets?