Act 1: From Linear Businesses to Aggregators and Back — Packy McCormick

An “aggregator” is a company which aggregates demand in a vertical and has three key features: 1) it has a direct relationship with its customers, 2) it has effectively zero marginal costs for serving users and 3) its costs to acquire customers fall over time. Level 1 aggregators acquire supply (Netflix). Level 2 aggregators don’t own their supply ... See more

Ben Thompson described this phenomenon in his signature aggregation theory. Pre-internet, you captured profits by controlling supply. Now, post-internet, you capture profits by aggregating demand.

An aggregator like Facebook or Airbnb brings all the relevant goods, services, or information that a consumer might seek into one place, and it gathers all the consumers there, too. Netflix is a one-stop shop for film and television. YouTube is a one-stop shop for user-generated video. Uber is a one-stop shop for car rides. These aggregators amass ... See more