An aggregator business model can be classified as a sort of platform business model, however, with its specific features. For instance, the aggregator might act as a middleman. Still, it monetizes the eyeballs on the platform (advertisers subsidize the aggregator) while keeping a tight control on the whole experience of users.
Aspect | Explanation |
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Aggregator Business Model | The Aggregator Business Model is a business strategy in which a company or platform aggregates and organizes information, services, products, or experiences from various sources into a single, user-friendly platform for consumers. It creates value by offering convenience, choice, and efficiency. |
Key Characteristics | Centralized Platform: Aggregators operate a centralized platform or app that serves as a one-stop destination for consumers. – Diverse Offerings: They offer a wide range of products or services across various categories, often from multiple suppliers or providers. |
Examples | – Uber: Uber aggregates ride-sharing services and connects drivers with passengers. – Airbnb: Airbnb aggregates accommodations from hosts worldwide. – Food Delivery Apps: Apps like Grubhub aggregate restaurant listings for food delivery. – Travel Booking Sites: Websites like Expedia aggregate travel options. |
Value Proposition | – Aggregators provide convenience by simplifying the process of finding, comparing, and accessing products or services. – They offer variety and choice, allowing consumers to explore options in one place. – Often, they provide competitive pricing or special deals. |
Business Model | Aggregators typically generate revenue through commissions, subscription fees, or advertising. They may charge suppliers a fee for access to the platform or take a percentage of each transaction. |
Challenges | – Competition: Aggregators face competition from both traditional businesses and other aggregators. – Quality Control: Maintaining consistent quality across diverse offerings can be challenging. – Regulation: Regulatory issues and disputes with suppliers can arise. |
Ecosystem Impact | – Aggregators can disrupt traditional industries and change consumer behavior by offering more efficient and convenient alternatives. – They often create opportunities for smaller businesses and individual service providers to reach a broader audience. |
Digital Transformation | – The rise of digital technology has facilitated the growth of aggregator models. Mobile apps and online platforms make it easier for consumers to access aggregated services. – Data-driven: Aggregators use data to personalize offerings and enhance the user experience. |
Examples of Success | – Companies like Amazon, Alibaba, and Google have successfully implemented aggregator models in e-commerce, advertising, and search, respectively. – Netflix is a prime example in the content streaming industry. |
Conclusion | The Aggregator Business Model is a strategy that capitalizes on digital technology to provide consumers with convenience, choice, and efficiency by aggregating diverse offerings into a single platform. Its success often hinges on effective data utilization and competitive pricing. |
The birth of the aggregator
There isn’t a single way to define aggregator business models. The person who most popularized this term was Ben Tompson from stratechery.com, as he explained in the graphic below:
This is a great way to classify aggregator business models.
In this guide, we’ll look at a few key differentiators, to define an aggregator business model, but also to distinguish it with the platform business model based on my observations.
Is the aggregator a platform?
Before looking at how an aggregator might be different from a platform, let’s specify that the aggregator can be comprised within the platform business model, however, it has very specific features.
Middleman vs. invisible hand: intermediation rather than interactions
In an aggregator business model, the company which acts as the aggregator doesn’t work to make users on the platform interact freely. Rather it has tight central control. In short, the aggregator controls how the company will scale.
Therefore, while in a pure platform business model the platform scales by becoming invisible (a smooth experience is one of the keys to trigger network effects).
In an aggregator model, it’s the aggregator that keeps interacting with the two or more parties involved (Google shows users a search result page, and the same Google handles the ad inventory; users and advertisers don’t interact with each other to set the price).
For instance, Google as a search engine is more of an aggregator, where the company centrally enriches its index and builds up its rankings. As a side effect, there is still an ecosystem of publishers and advertisers born as a result of this aggregation process but it’s not proximate.
Therefore, the aggregator acts like a middleman but rather than monetizing directly by getting a cut it might monetize via advertising.
Central control vs. Network effects: top-down vs. bottom up
One of the key elements of platform business models is network effects. Or put it shortly, for each additional user joining the platform, that becomes more valuable to the next one.
While in a platform business model this is the essence, in an aggregator business model instead, it’s the aggregator that centrally scales up the platform. Going back to Google’s case, the company performs wide and core algorithms change to substantially influence how the search engine will give back results, at scale.
Subsidized and asymmetric vs. taxed and symmetric
The aggregator might leave the service free forever, and sell the eyeballs through a sort of attention-based model. Thus, advertisers or companies pay to get visibility on top of the aggregator’s platform.
The pure platform instead acts like a government, getting a tax on each transaction. While the aggregator makes the service subsidized by a key customer (companies paying for visibility on the platform) and the service is free.
A platform business model by acting more like a state – once it makes sure some key guidelines are followed (safety of the network, lack of spam on the platform, stable and liquid infrastructure, and so on) – the rest is left to the key players’ interactions.
Case studies
Food Delivery Industry
UberEats
- Role as an Aggregator: UberEats partners with restaurants to display their menus and facilitate the order process. Customers can browse various food options, place orders, and get deliveries, all within the app.
- Monetization: UberEats charges restaurants a commission on each sale and also charges customers a delivery fee.
Travel and Hospitality
Expedia
- Role as an Aggregator: Expedia aggregates information from various hotels, airlines, car rental services, and more to provide travelers a one-stop platform for all their booking needs.
- Monetization: Expedia earns commissions from hotels and airlines for bookings made through its platform.
Job Boards
Indeed
- Role as an Aggregator: Indeed pulls job listings from company websites, other job boards, and offers companies to post directly on its platform.
- Monetization: Indeed earns revenue through premium job listings, where companies can promote their job posts for better visibility.
Real Estate
Zillow
- Role as an Aggregator: Zillow aggregates real estate listings, providing details about homes for sale, rent, and more. It also offers tools for buyers, sellers, and renters.
- Monetization: Zillow earns through advertising by real estate agents, premium listings, and services like mortgages.
News and Content
- Role as an Aggregator: Flipboard aggregates news, articles, and content from various publishers and provides users with a personalized reading experience.
- Monetization: Flipboard earns through advertisements displayed to its users.
E-commerce
Shopify
- Role as an Aggregator: While primarily an e-commerce platform, Shopify has an app store where third-party developers can offer tools and integrations for Shopify store owners.
- Monetization: Shopify earns a share from the sales of these third-party apps to its users.
Music
SoundCloud
- Role as an Aggregator: SoundCloud allows artists to upload their music tracks, making it available for listeners worldwide. It aggregates various artists, genres, and tracks.
- Monetization: SoundCloud offers a premium subscription for listeners and also earns through ads.
Educational Content
Udemy
- Role as an Aggregator: Udemy allows educators and professionals to create and sell courses on its platform. Users can browse, purchase, and learn from a vast array of topics.
- Monetization: Udemy takes a percentage of course sales.
Ridesharing
Lyft
- Role as an Aggregator: Lyft connects riders with drivers. Users can request rides, and nearby drivers can accept the request.
- Monetization: Lyft takes a commission from each ride fare.
Professional Services
Upwork
- Role as an Aggregator: Upwork connects freelancers with clients. Clients can post jobs, and freelancers can bid or apply for them.
- Monetization: Upwork earns a commission from the freelancer’s earnings.
Key takeaways
- It’s not always easy to differentiate between aggregators and platforms and in some cases, the two might overlap. Indeed, an aggregator is a platform, but with specific features.
- An aggregator might act more like a middleman, however, rather than monetizing directly by getting a cut, it might monetize the eyeballs on the platform.
- A pure platform business model instead acts more like a state, and as such it will collect a tax for enabling the key players to interact almost freely (key guidelines are set by the central platform).
Key Highlights
- Introduction to Aggregator Business Model: The aggregator business model is a type of platform business model with specific features. It acts as a middleman and monetizes the platform by controlling the user experience and leveraging advertising to subsidize its services.
- Birth of the Aggregator: The term “aggregator” gained popularity through Ben Thompson of stratechery.com. The graphic introduced by Thompson helps to classify aggregator business models based on key differentiators.
- Aggregator within the Platform Model: While an aggregator can be part of the platform business model, it has distinct characteristics that set it apart. It exercises tight central control and interacts with multiple parties rather than enabling free interactions between users.
- Middleman vs. Invisible Hand: In an aggregator model, the company acts as a middleman, controlling how the platform scales and interacts with users. Unlike pure platform models, the aggregator doesn’t become invisible but remains actively involved in the platform’s functioning.
- Central Control vs. Network Effects: While platform models rely on network effects, where the value increases with each additional user, aggregator models scale up the platform through central control. Aggregators, like Google, perform core algorithm changes to influence search results.
- Subsidized and Asymmetric vs. Taxed and Symmetric: Aggregators may offer free services subsidized by advertisers who pay for visibility on the platform. In contrast, pure platform models act more like a government, collecting taxes on each transaction and facilitating free interactions among key players.
- Differentiating Aggregators and Platforms: Distinguishing between aggregators and platforms can be challenging as they might overlap. An aggregator is essentially a platform with specific features and a focus on centralized control and advertising-based monetization.
- Aggregators as Middlemen with Advertising Monetization: Aggregators function as intermediaries between users and advertisers and monetize by selling advertising space on their platform.
- Pure Platforms as States with Tax-Based Monetization: Pure platforms act more like states, setting key guidelines for interactions among users and collecting taxes for facilitating those interactions on the platform.
Example | Description | Implications |
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Online Travel Agencies (OTAs) | OTAs like Expedia and Booking.com aggregate hotel and flight listings from various providers, making it easier for travelers to compare prices and book accommodations and flights. | – Simplifies the travel booking process by providing a one-stop shop for travelers, offering convenience and competitive pricing. |
Food Delivery Platforms | Food delivery platforms like Uber Eats and DoorDash aggregate restaurant menus and enable users to order food for delivery or pickup from multiple restaurants. | – Offers consumers a wide range of dining options and provides restaurants with an additional revenue stream through delivery services. |
E-commerce Marketplaces | E-commerce marketplaces like Amazon and eBay aggregate products from numerous sellers, giving consumers access to a vast selection of goods in one place. | – Provides sellers with a platform to reach a large customer base, while consumers benefit from a diverse range of products and competitive pricing. |
News Aggregators | News aggregators like Google News curate articles from various news sources, allowing users to access news and information from multiple outlets in one location. | – Helps users stay informed by presenting a broad spectrum of news sources and perspectives, but it can also raise concerns about filter bubbles and media consumption habits. |
Ride-Hailing Services | Ride-hailing platforms like Uber and Lyft aggregate ride options from individual drivers, offering passengers a convenient way to request transportation services. | – Enhances urban mobility and provides drivers with additional income opportunities, but it has also raised regulatory and labor-related issues. |
Real Estate Listing Sites | Real estate listing websites like Zillow and Realtor.com aggregate property listings from multiple real estate agents and agencies, simplifying property searches for buyers and renters. | – Streamlines the home-buying and renting process by offering a centralized platform for property listings and market information. |
Job Search Platforms | Job search platforms like LinkedIn and Indeed aggregate job postings from various employers and recruiters, helping job seekers find employment opportunities. | – Facilitates job matching and networking for professionals while enabling employers to reach a wide pool of candidates. |
Financial Comparison Websites | Financial comparison websites like NerdWallet and Bankrate aggregate financial product information, allowing users to compare credit cards, loans, and savings accounts. | – Assists consumers in making informed financial decisions by presenting transparent comparisons of financial products and services. |
Healthcare Booking Platforms | Healthcare booking platforms like Zocdoc and Healthgrades aggregate information on healthcare providers, enabling patients to book appointments and read reviews. | – Enhances patient access to healthcare services and helps providers attract new patients, but it can also pose challenges in managing patient data and reviews. |
Freelancer Marketplaces | Freelancer marketplaces like Upwork and Freelancer.com aggregate freelance job listings, connecting clients with freelancers for various projects and tasks. | – Offers a platform for freelancers to find work and clients to access a global pool of talent, but it can involve competition and pricing challenges. |
Related Framework | Description | When to Apply |
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Platform Business Model | The Platform Business Model involves creating a digital or online platform that connects multiple groups of users, facilitating transactions, interactions, or exchanges between them. Platforms enable producers and consumers to interact directly or facilitate transactions between third-party providers and customers. This model is prevalent in online marketplaces, social media networks, and sharing economy platforms, where the platform operator serves as an intermediary that enables value creation and exchange among participants. Platform businesses focus on building network effects, attracting users, and monetizing transactions or interactions on the platform. | When developing digital platforms or online marketplaces, applying the Platform Business Model to create ecosystems that connect multiple user groups and facilitate interactions, transactions, or exchanges between them, thus leveraging network effects and scale economies to drive value creation and revenue generation in diverse industries and markets. |
Two-Sided Marketplace Model | The Two-Sided Marketplace Model involves creating a platform that connects two distinct groups of users, often buyers and sellers, to facilitate transactions or exchanges between them. Two-sided marketplaces serve as intermediaries that enable interactions and transactions between buyers and sellers, charging fees, commissions, or subscription charges for facilitating transactions or providing value-added services. This model is prevalent in e-commerce platforms, ride-sharing apps, and freelance marketplaces, where the platform operator facilitates transactions between supply and demand sides. Two-sided marketplaces focus on balancing the needs of both user groups, building liquidity, and generating revenue from transaction fees or commissions. | When launching online marketplaces or platforms that connect buyers and sellers, applying the Two-Sided Marketplace Model to facilitate transactions or exchanges between two distinct user groups, thus creating value by matching supply with demand, building network effects, and generating revenue through transaction fees, commissions, or subscription charges, while providing value-added services and ensuring a seamless user experience for both buyers and sellers on the platform. |
Aggregator Business Model | The Aggregator Business Model involves consolidating and curating products, services, or information from multiple sources into a single platform or interface, providing users with convenience, choice, and value-added services. Aggregators collect, organize, and present content or offerings from various providers, enabling users to compare options, access a wide range of choices, or find relevant information in one place. This model is prevalent in online travel agencies, price comparison websites, and content aggregators, where the aggregator acts as an intermediary that aggregates and presents offerings from multiple sources. Aggregators focus on providing convenience, transparency, and value to users while monetizing transactions, referrals, or advertising revenue. | When developing platforms or interfaces that consolidate offerings or information from multiple sources, applying the Aggregator Business Model to provide users with convenience, choice, and value-added services, thus aggregating content or offerings from diverse providers, enhancing user experience, and generating revenue through transactions, referrals, or advertising, while building a competitive advantage based on curation, convenience, and the breadth of offerings available on the platform. |
Freemium Model | The Freemium Model is a business model that offers basic services or a product for free while charging for premium features or additional content. It aims to attract a large user base with free offerings and then convert a portion of those users into paying customers by providing enhanced features or value-added services. This model is commonly used in software, gaming, and digital services industries to acquire users and generate revenue through upselling or subscription models. Freemium models offer a free version of the product with limited features or functionality, enticing users to upgrade to premium versions for access to additional features or premium content. | When launching a new digital product or service, applying the Freemium Model to attract a wide user base with free offerings and then monetize the user base through premium features or subscriptions, thus maximizing user acquisition and revenue generation in the digital marketplace. |
In-App Purchases | In-App Purchases refer to the sale of digital content, goods, or services within a mobile application. Users can make purchases to unlock additional features, access premium content, or enhance their experience within the app. This monetization strategy is commonly used in mobile gaming, productivity apps, and multimedia platforms to generate revenue from users after the initial app download. In-App Purchases allow developers to offer a free app while monetizing engaged users through microtransactions or one-time purchases. | When developing mobile applications or games, applying the In-App Purchases model to offer free app downloads and generate revenue through the sale of virtual goods, premium content, or additional features within the app, thus monetizing user engagement and maximizing revenue potential from mobile app users. |
Subscription-Based Model | The Subscription-Based Model involves charging customers a recurring fee at regular intervals (e.g., monthly, annually) in exchange for access to a product or service. Subscriptions can offer various levels of access, features, or benefits based on different pricing tiers. This model is prevalent in streaming services, software-as-a-service (SaaS) platforms, and subscription boxes, allowing businesses to generate predictable recurring revenue and build long-term relationships with customers. Subscription-based businesses focus on providing ongoing value to subscribers to retain them over time and reduce churn. | When offering digital services, content platforms, or software solutions, applying the Subscription-Based Model to generate recurring revenue streams and establish long-term relationships with customers, thus providing ongoing value and maintaining customer loyalty over time. |
Ad-Supported Model | The Ad-Supported Model relies on advertising revenue to monetize digital content or services. Businesses offer free access to content or services and generate revenue by displaying ads to users. This model is prevalent in online platforms, social media networks, and free mobile apps, where advertisers pay to reach a large audience of users. Ad-supported businesses focus on maximizing user engagement and ad impressions to attract advertisers and generate revenue through ad placements, such as display ads, sponsored content, or in-stream ads. | When offering free digital content, online services, or mobile apps, applying the Ad-Supported Model to monetize user traffic and engagement through advertising revenue, thus providing free access to users while generating revenue from advertisers based on impressions, clicks, or other ad metrics. |
Pay-Per-Use Model | The Pay-Per-Use Model charges customers based on their usage or consumption of a product or service. Instead of paying a flat fee or subscription, customers are billed for the specific resources or features they use. This model is common in utility services, cloud computing, and pay-as-you-go software licensing, allowing customers to pay only for what they consume. Pay-per-use pricing offers flexibility and cost control for customers while enabling businesses to monetize usage-based services and scale pricing based on usage volume or intensity. | When offering on-demand services, cloud-based solutions, or resource-intensive products, applying the Pay-Per-Use Model to charge customers based on their actual usage or consumption, thus providing cost-effective pricing and scalability while aligning revenue with customer value and usage patterns. |
Connected Business Model Types And Frameworks
Attention Merchant Business Model
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