Read this and get smarter: blog.pmarca.com: The three kinds of platforms you meet on the Internet.
The fastest summary:
- A Level 1 platform’s apps run elsewhere, and call into the platform via a web services API to draw on data and services — this is how Flickr does it.
- A Level 2 platform’s apps run elsewhere, but inject functionality into the platform via a plug-in API — this is how Facebook does it. Most likely, a Level 2 platform’s apps also call into the platform via a web services API to draw on data and services.
- A Level 3 platform’s apps run inside the platform itself — the platform provides the "runtime environment" within which the app’s code runs.
And which companies are working on Level 3 platforms, other than Marc’s Ning?
- Salesforce.com
- SecondLife
- Amazon (through AWS)
- Akamai
I think the really interesting part of a Level 2 and Level 3 really has to do with user acquisition – they allow you to absorb a huge torrent of traffic if your application is designed to hook into their API deeply enough to create viral loops of your own.