Are marketplaces "software"?
This is just a weird categorization / naming / semantics question... is a marketplace technically software?
Here are some examples to help understand my question:
- SeatGeek: I would think this is software because there's a whole backend of tools etc. that allow venues to accept tickets; but semantically, is this software, and the actual marketplace separate in your mind?
- Steam: There is a marketplace on the Steam app; the app itself is software, but is the marketplace itself actually software? Or does the marketplace just refer to the exchange medium?
Am I overthink it? Can someone explain the demarcation of these business models?
I'm kind of at the stage where I've thought about it so hard I'm just confusing myself.
Do you consider a marketplace to be software? What are the criteria to bucket these?
In my mind, almost all tech companies hire software engineers that write code and their companies are powered by software, but this to me doesn’t make them ‘software’ companies, at least for the purposes of categorizing tech into verticals.
The key distinction in my view is how are these businesses monetized? If they SELL software or charge customers based on how much they use the software, they are software companies. If they are monetized by other means, such as a commission on every transaction on their platform over the internet, as in a marketplace, I’d classify those as internet companies.
To add the the above, I think of network effect as a key driver of value for a market place. It just happens that a number of marketplaces today utilize software to bring different parties together.
It's definitely a grey area. What analyst 1 said above is pretty good guidance. What's the context of this - are you asking this to figure out comps?
It's not about tech, but the business model.
If you're "selling" software and monetize on delivering a software product for e.g. monthly fee (e.g. Shopify), then you are a software or, in that case, a SaaS company.
If you're making money on taking a cut from a product sales (Steam) or charge listing, tx and other fees (Etsy), you are a marketplace business. Even though you obviously have huge backend tech, you're running a marketplace model.
Everything is being digitized and software component is a vital part of virtually every industry these days. These categories blend like crazy, so it's not always easy to make a distinction, but one thing for sure - software truly "is eating the world".
yes, my firm categorizes as "internet software"
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