Here’s how co-operatives are making a comeback

Platform Co-Ops Are Tackling the Uphill Battle for Fairness

Why It Matters

The benefits of platforms such as Uber and Airbnb are clear, but people are becoming aware of the downside. Platforms are making work more precarious and the sharing economy has been co-opted by investors seeking massive returns. In response, the old co-operative approach (one that Canada knows well) applied to platforms is emerging as an alternative.  

A few years ago, the Calgary-based photography platform, iStockPhoto.com, was sold to Getty Images for 50 million dollars. iStock was a stock photographer community that sold low cost stock images with modest payouts to photographers. After the sale, those payouts were cut to pennies on the dollar in order to get a return on Getty’s investment.

Brianna Wetlauffer, a former community manager for iStock was appalled by what transpired. As a photographer, she knew the community was being hurt and disrespected by this investor-driven decision. Luckily, Wettlauffer is also an entrepreneur. She sought a way to compete with the stock image giants that would respect the contributing photographers in the community she once managed. What she found was a new way to use the age old co-operative business model. Along with a group of former iStock employees, she ended up founding a platform co-op, Stocksy United. Today Stocksy sells more than $10 million of stock photos that compensate the member photographers fairly, and stock photographers are lining up to join.

Stocksy has members in 65 countries, which is unusual, because most platform co-ops need to be city or country based to comply with legal and regulatory requirements. Fairbnb, a short-term rental co-op launching in four European cities in June, is set to challenge Airbnb’s business model. Fairbnb is constrained by local bylaw, so it is structured as city-based co-ops that connect to an international federation via a digital booking platform. Fairbnb aims to undercut Airbnb’s near monopoly by charging half the commission, respecting single location rentals, and investing 50 percent of the platform’s profit into local community projects. With municipalities facing budget constraints, this social investment model has gained a lot of attention and support.

Nothing the investor-owned platforms are doing is proprietary or patented, so replicating them with socially responsible competition is feasible.

 

New Models

Independent workers in Europe use a platform co-op to share “back office” services. The Smart EU model is easy to use. It starts with a cloud-based invoicing program used by more than 35,000 freelancers to bill clients, but it also provides access to group benefits, tax planning, and collections. Importantly, it pays the freelancer in two weeks of the invoicing date regardless of whether or not the invoice has been paid by the client. With freelance work growing quickly, independent workers can now share mutualized services and protection to reduce precarious work conditions. For people who are concerned with the future of work, Smart EU gives us a glimpse of what social innovation looks like.

 

Platform Cooperativism can leader to a fairer economy as things such as ride-sharing services come to occupy a large part of the way we work.

 

The elevator pitch for platform co-ops has always been “a platform like Uber, but owned by the drivers,” and in Montreal, Eva Rideshare Co-operative is one of many platform co-ops vying to undermine Uber and Lyft in the mobility space. Eva is a platform for drivers and passengers that create a genuine sharing economy ecosystem. It features a decentralized network on the blockchain that organizes mobility on a global scale. The blockchain provides security, transparency and fairness, but what is really novel is that it redistributes the profits it generates at the local scale, similar to Fairbnb.

There are now a few hundred platform co-operatives, but most of these are still small, or in startup mode. There is an emerging consensus in the traditional co-operative movement, the labour movement, open source, and commons movement–and even the blockchain community–that distributed ownership of platforms offers us the chance at a more sustainable, less exploitative digital economy.

 

Scaling Up for a Better Economy

Institutions may have a role to play in scaling up this new ecosystem. Culture Creates, a platform co-operative owned by cultural organizations, is re-taking ownership of meta-data in the Canadian entertainment industry and has received $500,000 from The Canada Council for the Arts. This investment will enable small- and medium-sized cultural organizations to own and control their event data with the goal of increasing ticket sales for all. Other institutions may need to support private sector co-operative approaches to compete with the likes of Google.

Up and Go, a platform developed in New York City for a domestic workers co-op needed help from the Robin Hood Foundation to develop a sustainable platform business that competes with investor-owned services. What was evident from their experience is that it takes time to get it right, to do the in person associative work, and to make it consumer friendly. Once done right though, these co-ops are easier to replicate, both in terms of their technology and their democratic governance models.

Although there are some structural issues that work against co-operative enterprises—from coordination and engagement costs, to growth capital, to a perception of cumbersome governance—there remains a pathway to delivering on its promise in a digital context. The advent of cryptonetworks and the trust that they can engender in a community may be providing answers and opportunities to accelerate co-op models. Time will tell, but every day the mega platforms seem to further consolidate their control of our data and our dollars.

The movement that is driving this concept forward, Platform Co-operativism, so named by associate professor of media and culture at The New School, Trebor Scholz, is working to make it easier to start-up new platforms. Building on the successes of the open-source software movement, platform co-operativism is templating proven business models as a digital toolkit. This work, in partnership with Ontario College of Art and Design University and The New School, is being funded by the Google Foundation and has the goal of “creating fair jobs in the digital economy at a time when labour markets are shifting to the Internet.” To date, pilot projects underway are all found in developing countries, which may signal another way that co-operatives might take hold; where the massive corporations don’t care to provide adequate services.

The conversation on how co-operative models can “disrupt the disruptors” in the digital space is still relatively new. Each new conference convenes new stakeholders and entrepreneurs newly acquainted with the model who need more information. Each gathering also brings forth new co-ops and new innovations. But momentum is a fleeting thing, and knowledge of co-operatives is sadly limited. Only the interest of governments and institutions can help accelerate the conditions for these beneficial enterprises to thrive. Largely, this is because traditional investors, including impact investors, won’t have the courage to support democratic platforms that can’t be controlled—except by the people who rely on them.