The Social Web Economy: Product Companies

Posted by Nick O'Neill on September 24th, 2008 9:21 AM

This is a continuation in the series on “The Social Web Economy“.

This is one type of company that entrepreneur leaders run. On the social web product companies are those that help give meaning to our media, they provide context. They are also the services that we frequently refer to as â€œapplicationsâ€ or â€œappsâ€ for short. Product companies rely on the large distribution companies (as described in the next post) to grow.

There is a constant tension between product and distribution companies. Given the product companies’ reliance on the large platforms they are constantly monitoring the environment to make sure their reach isn’t wiped out overnight by subtle changes by large platforms. Product companies have substantial influence in a number of ways.

First and foremost, these organizations have become the lifeblood of many distribution companies. As such, the platforms have to balance the demands of users and the demands of product companies (which are sometimes referred to as â€œdevelopersâ€). We have been watching this play out on the Facebook platform where it has taken more than six months to roll out their new design as they receive feedback from developers and users.

The second form of influence that product companies have is with agencies and advertisers. Successful product companies are ultimately building mini-platforms that compete directly with the platforms that they relied on to build their company. The competition is for advertising dollars and ultimately the team with the best negotiators and best portfolio of advertisers wins.

Next Post: “The Social Web Economy: Distribution Companies“

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