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PlatformForge

Build a two-sided platform economy and follow the dollar (ages 15–18): set the take-rate, payout rate, and cash-out floor; a million simulated makers on a…

Where this idea comes from· Zipf 1949 · Salganik et al. 2006

The long tail and the rich-get-richer feed

In his 1949 book the linguist George Kingsley Zipf set out a pattern he had been describing since the 1930s: a few words are used enormously often and most words rarely, in a steady pattern where the second most common is used about half as often as the first. In 2003 Jean-Charles Rochet and Jean Tirole described platforms as two-sided markets that must win buyers and sellers at once, and in 2004 Chris Anderson named the long tail of things that each sell a little. In 2006 Matthew Salganik, Peter Dodds and Duncan Watts ran MusicLab: 14,341 people heard 48 songs by unknown bands, some in groups that could see how often each song had been downloaded and one group that could not.

One thing to hold: One ranked list of makers by earnings, and a second list of the same makers in a different world.

Why it matters: In MusicLab the best songs rarely did badly and the worst rarely did well, but the same song could top one world and sit in the middle of another, because early downloads drew more downloads. The sociologist Robert Merton called this the Matthew effect in 1968: those who already have attention get more of it.

What we don’t know: PlatformForge is a teaching model inspired by these ideas, not a measurement of any real platform. How much of a real maker’s success is quality and how much is early luck cannot be split for any one person.

Dates:

  1. 1949 Zipf sets out the steady rank pattern in word use in a book.
  2. 1968 Merton names the Matthew effect.
  3. 2003 Rochet and Tirole describe two-sided platforms.
  4. 2004 Anderson names the long tail.
  5. 2006 MusicLab: the same 48 songs rank differently in different social worlds.

Sources: G. K. Zipf, Human Behavior and the Principle of Least Effort (Addison-Wesley, 1949) · R. K. Merton, “The Matthew Effect in Science”, Science 159 (1968) · J.-C. Rochet & J. Tirole, “Platform Competition in Two-Sided Markets”, Journal of the European Economic Association 1(4) (2003) · C. Anderson, “The Long Tail”, Wired 12.10 (October 2004) · M. J. Salganik, P. S. Dodds & D. J. Watts, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market”, Science 311 (2006)

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