Extraction Mechanisms in Digital Business Models

Digital business models contain technology-enabled perverse incentives that may result in an extractive economy, in which one dominant player obtains so much value from other players that most of them can barely survive. We identify five mechanisms enabled by digital technology that can be used to implement an extractive business model, illustrated with examples. Next, we propose a design approach to digital business modeling that prevents these mechanisms. We illustrate our design approach with an example in the music sector.