There are two more benefits from exploiting two-sided markets operating Web 2.0. By Web 2.0, I mean that software is being offered as a service over the Internet and is accessed by developers and end user alike. First, the cost of innovation goes down. Platforms allow complementors to release new products faster by reusing pre-existing functionality. Platform providers can also respond quickly to requests for new APIs from complementors. As a result, complementors can innovate faster. Finally, the pace is quickened due to the instant feedback provided by end users.
Another benefit from platforms is derived from network effects. These effects push the cost of acquiring the next customer lower. As a result, companies benefiting from the direct and indirect network effects can keep pushing the acquisition costs lower and keep distancing themselves from the competition.