Open Business has an interview with Marshall van Alstyne, professor at MIT’s E-Commerce centre, who has done some thinking and research on open business models, and is developing a new free license model.

We’re quoting the part on two-sided networks as a business model:
“OpenBusiness.cc looks into how some of these “open projectsâ€? can be financially sustained. Did you come across, in your research, any interesting, new business strategies?

One of the more novel open strategies involves use of “two-sided� networks. These are open platforms with distinct user groups that attract one another. For example, game developers want to write for the platform with more users while game players want to buy the platform with better games. Job seekers want to go where there are more employers while employers want better pools of candidates.

Often the platform owner opens part of the platform, giving it away for free to one of these user groups, in order to make money from the other user group. So for example, buyers pay nothing to use the E-Bay service while sellers pay posting and sales fees. Job candidates can post resumes at recruiting sites while firms pay for access. Google gives away search for free in order to attract advertisers.

The trick is figure out how to match the groups of non-paying users with paying users and segment the market. If it’s done well, this also invokes network effects in ways that tend to lead to large dominant players as each side attracts more of the others.”

For anyone specifically interested in “two-sided� business models, we’ve written a bit:
1) Parker & Van Alstyne “Two-Sided Network Effects: A theory of information product design� Management Science (2005) v51 n10 pp. 1494-1504.
2) Eisenmann, Parker & Van Alstyne, “Strategies for Two-Sided Markets� Harvard Business Review (forthcoming Oct. 2006).