Platform Cooperatives: Flowing with the Shift in the Market

Combining “the rich heritage of cooperatives with the promise of 21st century technologies, free from monopoly, exploitation, and surveillance,” is the definition of platform cooperatives as presented in the 2017 edited compilation, “Ours to Hack and to Own: The Rise of Platform Cooperativism, A New Vision for the Future of Work and a Fairer Internet.”

You may not be readily clear on what a platform-technology business is, but you have almost certainly been a consumer of one or more of these businesses, and maybe even a provider.

---

Many of the newest online-commerce success stories are samples of this “matchmaker” style of business as termed by economists David S. Evans and Richard Schmalensee in their pioneering work — titled “Matchmakers: The New Economics of Multisided Platforms” — to analyze and discover the principles of these platforms. Platforms refer to the structure of providing the good or service, and not the good or service itself. They move the model from including only producers and consumers, to also incorporating owners and providers. Think Uber, Airbnb, or Etsy.

Platforms contrast distinctly with the opposing, but longtime dominant format of product/service-to-consumer, known as pipelining — which is a linear vertical model. The existence of platforms is not new, however, analog examples include newspapers and magazines, or brick-and-mortar shopping centers. Though now, platforms are taking off incredibly fast with the advent of the digital commerce and information technology (IT) resources that don’t require large asset ownerships to launch, scale, or succeed — just look what is happening to so many of our shopping malls!

Locally, the economic revitalization of Syracuse and Central New York will no doubt rely on some amount of platform development from the IT professionals in our community. We already have examples of such. Plowz and Mowz refers to itself as “Just like Uber for lawn mow, yard cleanup and snow removal”; TCGPlayer provides a platform for individual providers to sell collectible game trading cards to consumers worldwide; and Sidearm Sports survived the tech bust of the early century and is now thriving as it transitioned from one-off website design to school-sport website platform design and maintenance.

Although the benefits of these platforms include the ability to hold a side-gig and have flexible hours for the producers and providers, they many times come up short regarding the more foundational requirements of laborers and providers, such as full-time schedules for full-time pay needs, unemployment insurance, collective bargaining for contracts, and other benefits such as health insurance or vacation leave. In addition, the term “sharing economy,” which is also quite often used for the primary platform businesses out there, unfortunately doesn’t refer to the assets and revenues of the companies.

A cooperatively owned and managed entity that incorporates democratic decision-making and equitable distribution of profits can be organized for any business type, including information-technology platforms; and this is where the platform cooperatives movement steps into the scene. With a growing number of practitioners and supporters, such as the Platform Cooperativism Consortium out of The New School university in New York City, “Upstarts, foundations, municipalities, advocacy groups, unions, established co-ops, co-op networks, and individual workers and co-op members” are combining to grow the value-laden model of platform cooperatives that are anchored in “collective ownership, democratic governance, a decisive commitment to the global commons, inventive unions, social justice, as well as ecological and social sustainability.”

When Trevor Scholz and Nathan Schneider, editors of “Ours to Hack and to Own” share their misgivings about “what the democratic promise of the Internet has come to: a democracy of access, of “collaborative consumption,” but not of control, real accountability, or ownership,” they are not venting against the platform model itself, which is clearly a model of our collective future, but against the control structures that traditional business ownership has carried over to the online platform world. With the platform cooperatives vision and movement, we are seeing the development of an ownership model coming just in time for the close to 60 million independent contract workers in the United States (according to a report by the Freelancers Union and Elance-oDesk) to take control of their careers and long-term futures, and not just make a bit of cash on the side as they struggle to piece together a living.

Article published in the BJNN on January 11, 2019

Frank Cetera is an advanced certified business advisor at the Small Business Development Center (SBDC) located at Onondaga Community College. Contact him at ceteraf@sunyocc.edu.