Research On Price Strategy Of SNS Sites Based On The Two-Sided Theory

In recent years, SNS websites are booming with the popularity of the Internet inChina.Although there are thousands of SNS websites in China till now, few hasachieved profit. The SNS website has characteristics of the two-sided market, thus thisthesis,which is based on the two-sided market and intergraded special characteristicsof the SNS website,will analyze the best price decision of the platform owner for theaim of profit-maximizing.Firstly, this thesis reviews current theory and research of the two-sided market,which is the fundamental of this paper but lack of the pricing model intergraded specialcharacteristics of the SNS website.Secondly, in this thesis, the SNS website is divided into network media platformand software developing platform, which not only have characteristics of the two-sidedmarket, but also have special attributes. These attributes are the important prerequisitesfor following models of the SNS website.Then, as the analytical framework of bilateral markets is expanded, intergradedspecial characteristics of the SNS website，this thesis presents an optimal pricingmodel of the platform owner in the oligopoly market, under the condition that thedirect network externality on the user-side and on the base of a series of hypotheses.The results show that: with influences of many factors, the platform owner will notcharge user-side usually, even provides subsidy for them; advertisement is the mostimportant and steady income for the platform; the platform owner often chargesthird—software developer, but when the benefit from third-software developer to useris enough, the platform owner will provides subsidy for them，for the aim of moreusers to join. The result also indicates that innovation and to improve the level ofdifferentiation is the only path for the platform owner to enhance the market forces andachieve profit.Finally, the thesis presents a case study of the pricing model of RenRen, which isthe largest SNS website in China. On the basis of the introduction of RenRen and itspricing model，the thesis points out that its pricing model and the results of this studyare consistent. Meanwhile, the paper offers some suggestions of the price strategy to the operators of RenRen.