Research On Pricing Models Of SNS Platforms Based On The Theory Of Two-sided Markets

Social Networking Sites have become one of the most valuable Web2.0applications with millions of users and great information spreading power. However, most SNS platforms face the problem of negative profit and cannot find a suitable business model.SNS have the characteristics of two-sided market and it’s impossible to explain some phenomenon happened in SNS with traditional one-side market theory. So, in this paper, on the basis of two-side market theory, we fist analyze the industrial feature of SNS and find that within-group externality is strong on user side. Then, combined industrial attributes, this paper presents optimal pricing models of monopoly SNS platform and find that non-neutral price is reasonable and within-group externality will reduce user’s price. Last, this paper further establishes three models in which platforms competing for participants from two sides considering within-group externality in different participants’ multi-homing situations, finding that within-group externality’s impact on price varies with participants’ multi-homing or not. Platform can take steps to prevent participants from multi-homing to increase profits.