Platform co-ops: introduction

“At its heart, platform co-operativism is advocating a co-operative internet, built of platforms owned and governed by the people who rely on them.” – Simon Borkin, Co-operatives UK

What are platform co-ops?

They’re online marketplaces that are owned and controlled by their members, and are formalised into co-operatives. Often the members / owners are workers, but some are multi-stakeholder platforms involving both workers and users. There can be different tiers of membership. Workers and users can have different rights in terms of governance or profit-sharing, but because both groups contribute to the value of the platform, both can be acknowledged as members / owners. It can be good for workers to have customers that are part-owners, as it encourages them to use the platform more.

Co-ops force people to think beyond short-term profits, but they often become inward-looking, focusing on the members. So if members come from one particular group, with a particular set of interests, those interests can become entrenched inside the company. That may not necessarily be what’s best for the wider community. This is a challenge, because co-ops have usually functioned best when they have homogeneity of membership. With a more complex system, there is a wider range of interests, and sometimes, the different groups can almost be in conflict – for example, in a taxi co-op, drivers would like to obtain the highest income possible, but users want the lowest fares possible. If those conflicts can be resolved, the organisation can be much stronger because there will be agreement between the two core groups.

resonate

Resonate is a music-streaming platform co-op based in Berlin; you can become a user / member / owner, and help them in their mission to build a new music industry for independent music to thrive in.

History

In the 90s, we didn’t have the giant platforms we have today. Now, 7 of the top 10 companies in the world are platform companies like Amazon, Facebook and Über. The idea that platforms are the place to go to get the things we need has grown exponentially.

The origin of the platform is really the medieval marketplace. A town would provide a physical space that would allow producers and consumers to come and exchange on the physical platform – i.e. the market. Platforms have reinvented the marketplace for the digital age. Just as in medieval times, owning the town / city square gave you control over the market, today, owning these large platforms has proven to be a potent way of extracting value.

The reasons for that are that they grow seamlessly – once you have the initial infrastructure, you can bolt on additional bits very easily. It’s why Über have been so effective at jumping from city to city. Also, as the platforms grow, their utility doesn’t grow in a linear fashion – it grows exponentially, because it produces giant networks with more chances to link customers with producers.

How platform co-ops can ‘disrupt the disrupters’, by Open.coop, organisers of an annual conference on platform co-operativism in the UK.

It’s only recently that there’s been a backlash, as people wake up to the fact that these companies want to dominate completely. Über’s aim is to control transport globally – to make it impossible to compete, or to find alternatives. The same is happening in the food sector, energy sector, finance sector etc, and it’s very dangerous to have such essential things under the control of so few people.

Two articles in 2014 – Platform co-operativism vs the Sharing Economy by Trebor Scholtz and Owning is the New Sharing by Nathan Schneider criticised the so-called ‘sharing economy’ and called for its replacement by a co-operative economy. What was less clear was what was needed to make that vision a reality. Scholtz and Schneider later co-edited Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet.

platform-coop-infog

Infographic by the Platform Co-op Consortium on why platform co-ops are such a good idea. Click here for the full infographic.

What are the benefits of platform co-ops?

They’re not extractive. Corporate platforms concentrate wealth in the hands of a tiny minority, by taking a portion of the work of millions of people, sucking it out of communities and concentrating it. By encasing them in the co-operative model, this extraction is prevented.

The giant platforms are very poor global citizens – they avoid tax, exploit and shift risk onto the service providers and kill competition and any concept of a free market. These problems are mitigated or removed entirely by the co-operative model.

Corporate platforms tend towards monopoly. Think of search engines and social media. But also, Über want to monopolise taxi cabs, and Amazon want to monopolise the supply of everything. Monopolies are always a bad idea, as monopolies can fix prices. Monopsony power can be even worse – where just one giant company can dictate exploitative terms to thousands of suppliers.

Trebor Scholtz on the state of platform co-operativism.

What can I do?

Use them

Use platform co-ops rather than extractive platforms where possible. However, by 2018, there were no platform co-ops operating in the UK. This could change soon, as the Equal Care Co-op will be launching, doing social care through a platform co-op. There are several in other countries, including in the US and Europe.

In the meantime, try to find non-corporate alternatives to the giant platforms. Be that person refusing to book an Über. Ask for the number of a local mini-cab firm, and tell people why you’re doing it.

If you love music, people in the UK can use Resonate, based in Berlin, battling against Spotify / Apple Music etc. They’re multi-stakeholder, so listeners can become members, along with musicians and labels. Spotify and Apple Music have a completely opaque pricing mechanism, with almost no relationship between the number of listens and the amount you get paid. Resonate have used blockchain technology to make all of their rules / listens transparent, so that any artist at any time can question a public ledger and verify that they’re being paid the right amount.

There’s a global directory of platform co-ops. See if you find anything interesting.

Maybe the most important thing is to explain to people why corporate platforms are problematic, and that the ‘sharing economy’ is a misnomer.

Set one up

It’s getting easier to challenge the big boys. The New School is developing a platform co-op development kit, which will be available soon. Über has spent perhaps hundreds of millions on tech, but now you can get a similar package for a tiny fraction of the price.

Is there already a dominant, highly-capitalised platform operating in your sector? It’s much harder to set up a platform co-op providing taxis, food delivery or accommodation – because platforms operating in those sectors have deep pockets, and if anyone tries to compete, they will out-spend them. Maybe the place to start is in sectors without those dominant players. Also, what do users of the platforms think about them? In social care, for example, the providers, who get paid below minimum wage, know that the system is broken – but so do the users. It’s expensive, and carers don’t have enough time. Both sides are looking for something new, so a vision of a new system with service at its centre rather than profit, offering users and workers control, is very attractive.

TEDx talk by Nathan Schneider on the ‘Internet of Ownership’.

With Über, the drivers have no control, there’s no technical support, and 25% of the money they earn will be taken away to give to shareholders (this is increasing to 30% for new drivers). Über are losing money ($4.6 billion in 2017), and so they’re going to need to recoup it. They’re happy to lose money in an attempt to gain monopoly position, but once they have it (and now they do), then they attempt to recoup their losses. The drivers understand the exploitative nature of the relationship. Offer them an alternative with drivers’ rights at the centre, with a stake in the governance and a share of the profits, and they’ll take it. They may be skeptical as to whether you can compete with Über, but they’ll like the idea. 5% of fares can be used to run the platform, and the drivers keep the rest.

Users like Über much more than drivers. It’s quick, easy and cheap. So although it’s easy to attract drivers to an alternative, it’s harder to attract customers. To get them to switch is a huge effort and marketing cost. Platform co-ops have to offer the same simplicity and price. There’s a risk that if ethical credentials are too prevalent, the mainstream might assume that quality of service or price may be compromised. Get the price and the service right first.

platform-coop-dev-kit1

Platform co-op development kit, a multi-year project to help grown new platform co-ops. Click here for larger image.

US platform co-ops have proven successful when the unions work with service providers to help create entities that respect them, and their rights, long-term, and give them real power. It seems obvious that unions should support entities that are in opposition to platforms that exploit workers, but UK unions haven’t really got to grips with this yet. They’re not looking at helping set up alternatives.

We need a level playing field. For example, Über records all of its income in Luxembourg, so pays no VAT. Any co-operative alternatives are immediately at a 20% disadvantage, because they will be UK-based, paying taxes properly, being good citizens.

The first-ever accelerator programme for platform co-ops was run by Co-ops UK and Stir to Action. People are really trying to work out how to make platform co-ops work. There’s growing interest, but we’re going to need to see some successes soon. Social care is looking most likely.

Thanks to Duncan McCann of the New Economics Foundation for information.

 


The specialist(s) below will respond to queries on this topic. Please comment in the box at the bottom of the page.

Duncan McCann is a researcher for the New Economics Foundation, specialising in the changing nature of money, land/housing, the new digital economy, big data and algorithms. He is involved in developing a ride-hailing (taxi) platform co-operative in Brighton.


We'd love to hear your comments, tips and advice on this topic, and if you post a query, we'll try to get a specialist in our network to answer it for you.