On studying business models in mobile social networks based on two-sided market (TSM)

In contrast to the huge popularity of Mobile Social Network (MSN) services, not sufficient attention has been reserved to the dynamics of revenue streams and business models in MSN. In this paper, we investigate how a two-sided market (TSM) formulation can be used to provide insight for the problem above from the perspective of MSN platform. Intuitively, MSN service platform could be described as a two-sided market, in which the critical feature is indirect value flow (indirect network externality): one/both sides of the market benefit from increasing adoption and/or consumption of the other side. For instance, participants, like consumers and the third service providers (or advertisers), are the “two sides” of MSN platform. In this paper, our contributions are threefold. First, we thoroughly characterize the economic features of MSN as TSM, including mobility, network externalities and herd effect, as well as long tail property. Second, we provide the various revenue streams within the framework of TSM, including advertising, subscription, and transactions, and characterize the basic components of general business model in MSN. Finally, the free plus premium (Freemium) business model in MSN is formally analyzed. Specifically, we quantitatively characterize the relationship of participation levels among free and premium users as well as service providers, and illustrate the mutual enhancement among those participants. And moreover, Freemium is theoretically compared with the traditional business model with no free users (NF model). The numerical results show that, in Freemium, the participation levels of premium users and service providers, as well as the profit of MSN platform always exceed the corresponding terms in NF model.