What the heck is 3P?

I hear folks using the terms “3P,” “1P,” and even “2P” or “0P” often in my line of work, and I am realizing that many times, these words have subtly different meanings for those who use them. So I figured: hey, maybe I could write a blurb capturing my understanding of this. So here goes.

The term “3P” or “third_party” typically enters the scene in two-sided market setups, when there are three parties at play. Two-sided markets are exciting to me, because they have these additional opportunities of indirect influence. With the typical one-sided market (not to be confused with a similar term from investment lands), it’s just producers and consumers. I sell you stuff and you buy it. In a two-sided market, there’s an additional side to the market: the category of users I’ll call developers. 

A two-sided market unlocks fascinating possibilities of non-linear effects. If I, as a first party, can influence my developers to create products that lead to outcomes that add to both our bottom lines, it may feel like I suddenly gained a massive new team that works for my organization. What’s even more exciting is that more beneficial outcomes within the ecosystem leads to more satisfied customers, which in turn attracts more developers. If I am lucky, I might even find myself in a self-sustaining ecosystem, where most of my ever-growing bottom line is generated by developers.

With this understanding at hand, here’s a disambiguation cheat sheet: when you say zeroth-party (0P), you probably mean a subset of first-party (1P). When you say second-party (2P) and you’re not talking about users/consumers, you probably mean a first-party partner (1P). And certainly, when you’re saying third-party (3P), you’re discussing a two-sided market setup.