#8 - Existential risks for content platforms
How do platforms assess and respond to risks that threaten their survival?
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Hello subscribers! If you read my previous post, you might conclude distribution platforms are positioned well for guaranteed long lasting relevance, especially as the creator economy reaches new heights.
In fact, these businesses face countless challenges, and are constantly trying to neutralize threats.
In this article, I’ll illuminate how creator economy platforms strategically look at risks.
Who is this for?
Platform operators. A framework for organizing the risks that could threaten your platform’s relevance. By understanding the different types of risks your platform faces, you can better prioritize amongst them.
Learners. What are the biggest fears for today’s tech giants? What keeps Zuck and Jack up at night when they think about the future of Facebook and Twitter?
What are the challenges and existential threats for platforms?
Platform leaders are always thinking about longevity, and considering ways to increase their platform’s relevance over the next decade. They assess and respond to risks at five different tiers, where higher tiers are further removed from their own control.
1. Execution: This is the layer businesses have the most control over. The company determines its own mission, principles, and set guidelines for how the team operates, hires, communicates, prioritizes, makes decisions. The company puts processes in place that help the organization to work cohesively as it scales.
Serving the ever shifting needs of customers also fits squarely into this bucket. Identifying, understanding, and solving customer problems is the core of execution.
Note: Within execution, Trust & Safety has become a supremely important dimension. As people spend more of their lives on the internet, platforms become bigger targets for bad actors of various kinds. Preserving psychological safety and removing harm and manipulation in the digital realm has become paramount for all platforms.
2. Competition: The next layer up is competitors, whose success often comes at your cost. If a competitor does everything you can but better / faster / cheaper, then your customers won’t be staying with you for long.
Competition comes in all shapes and sizes, and distribution platforms like Facebook watch the ecosystem with tools such as Onavo to get intel on both established threats (e.g. Twitter) and emerging ones (e.g. Clubhouse).
Competition is not in a higher tier is because competitor actions can be anticipated, assessed, and responded to methodically. For example, Instagram launching Stories after Snapchat uncovered a latent demand, or Disney acquiring 20th Century Fox.
3. Platform: Whereas the web operates on an open standard, mobile is more of a walled garden tended to by Google and Apple. Want your app downloaded? It’ll have to go through Google and Apple.
As such, full vertical integration becomes a challenge. Even distribution platforms need distribution. This is the reason Facebook’s most costly error in the last 10 years was its late start on Mobile, and also why Facebook invested so heavily in next potential platform shift to VR by purchasing Oculus for $2B.
Notably, the rise of decentralized systems will stress test the established ecosystem of aggregators in the coming years, and incumbent platforms are looking to participate or nudge this impending shift in ways that are favorable to themselves.
4. Regulation: Social media and content platforms enjoyed a lot of unregulated growth over the past two decades. Lawmakers are now paying a lot more attention to the consumer tech sector, and regulatory changes represent some of the most existential threats to how platforms can operate.
Article-13 is the poster child of ill-conceived regulation that causes grief for platforms and creators. Although unlikely to happen, if Article-13 were enforced to the letter, platforms would become liable for any content with potential copyright infringements. This would cause platforms to be extremely conservative in what it allows creators to post, which then reduces the platform value for creators and consumers.
This threat is the reason tech companies are dialed in to the politics more than ever. Big tech’s political donations and open roles for public policy are telltale signs that they are paying serious attention to regulation.
5. Macroeconomic: Global pandemic —> Supply chain breakdown —> Businesses forced to close —> Total economic downturn. These black swan events are rare, hard to predict, and have unknown impact to businesses.
COVID led to positive growth for content platforms, as people were stuck at home with nowhere else to turn for entertainment. However, the next major global event of this magnitude may have completely different results.
Tech is continuously evolving. The best in class for any consumer software from 5 years ago is likely obsolete today. Winning platforms do not rest on yesterday’s laurels, they constantly shape-shift to improve how they meet user needs.
The longevity of platforms hinges on the ability to identify and respond to key movements in risks across Execution, Competition, Platform, Regulation, and Macroeconomic levels.
For startups, which can only do one thing well at a time, it’s important to focus on its own execution, rather than be distracted by things that are further out of their control.
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