Software components and product variety in a platform ecosystem: a dynamic network analysis of WordPress

Abstract

Software components, such as application programming interfaces (APIs), provided by both the platform owner and external developers in a platform ecosystem are vital to online digital platforms. These APIs are associated with functionality provided by the platform. A larger number of APIs used is generally associated with an increase in the platform ecosystem's variety of products. However, the precise nature of the relationship between the use of APIs and product variety in a platform ecosystem is not yet known because of the lack of appropriate methodologies to analyze the complex data generated in such platform ecosystems. Drawing on a recombinatorial design perspective, we use a dynamic network model to create metrics for product variety in a digital ecosystem and study how the use of different types of APIs affects product variety. In particular, we theorize that, contrary to existing models, the structure of APIs in a large platform ecosystem is not limited to a core-periphery structure, but includes an additional third layer that we refer to as the regular core. We further hypothesize that external APIs in the regular core play a crucial role in increasing product variety in the ecosystem. To test our hypothesis, we conduct an empirical study using longitudinal data of all available digital product (i.e., plug-in) source codes on WordPress.org, the world's largest content management system and one of the most extensive digital platform ecosystems. By analyzing all of the plug-ins on WordPress over 10 years from its inception, we find the support of our three-layer structure of APIs in a platform ecosystem: complete core, regular core, and periphery. Our empirical analysis further supports the role of external APIs in the regular core in increasing product variety. We, however, find that the strength of this effect diminishes in a newly created product category.