The discussion below builds on a prior post focused on the work of Marjorie Kelly, whose two books provide a framework for analyzing characteristics and impacts of alternative allocations of enterprise ownership rights. That framework describes key differences between “generative” and “extractive” ownership models, and draws provocative and paradigm-challenging parallels between the principle of shareholder primacy as manifested in today’s corporate-dominated economy and the pre-Enlightenment belief in the divine right of kings as a doctrine justifying royalty’s claim to near-absolute political and economic power. Just as the pre-Enlightenment era’s injustices and imbalances in power were ameliorated by a transition to political democracy, Kelly argues for a similar evolution from capitalism’s “aristocratic form” to one characterized by what she and others refer to as economic democracy.
This post will consider cooperative ownership as a strategy for applying the principles of economic democracy to achieve a healthier balance of power in the function of online digital platforms. As discussed at various points in this series of posts, these platforms play an increasingly important role in human society by:
- providing feature-rich multimedia communication capabilities to large and often transnational networked user bases;
- gathering data contributed voluntarily by platform users and generated by their platform usage in ways they may not understand or approve of;
- using this data to create algorithms that are becoming increasingly influential tools of private and public governance, yet are largely opaque in their design and operation and largely immune from democratic oversight;
- wielding immense and arguably increasing market power, and internalizing large and growing financial surpluses generated via their interactions in the global economy;
- generating substantial but still-not-well-understood positive and negative spillover effects.
Reclaiming the Internet’s sharing & democratizing potential
The application of economic democracy principles to the platform sector is the central focus of what has become known as the platform cooperative movement. In a Shareable post published December 21, 2014, Nathan Schneider, one of the movement’s pioneering thinkers, summarized the problems that he and other platform co-op advocates were observing in the operation and priorities of dominant digital platforms.
High hopes for a liberating Internet have devolved into the dominance of a few mega-companies and the NSA’s watchful algorithms. Platforms entice users to draw their communities into an apparently free and open commons, only to gradually enclose it by tweaking terms of service, diluting privacy, or charging fees for essential features. Thanks to users’ unpaid labor of friending and posting, tech companies can employ far fewer people, and extract five to 10 times more profit per employee, than businesses in other industries. Fiduciary responsibility to their investors requires that they turn on the people who made them successful.
Roughly two years later, Schneider reiterated these concerns in an October 13, 2016 article in the Nation magazine entitled The Rise of a Cooperatively Owned Internet. In it he observed that:
It’s been pretty clear for a while now that the corporate Internet behemoths that claim to be involved in “sharing” and “democratizing” are doing little of either—not where it really matters. The venture capital that inflates them, and the IPOs that hand them over to Wall Street, result in an imperative to sell their users’ personal data, labor, and relationships to the highest bidder. It’s a business model based on surveillance and precarity. Many people on the front lines of the digital economy have realized that the ownership designs of the Internet’s dominant companies need to change. A few have started to figure out how.
During the period between the publication of these two articles, Schneider had helped organize the platform cooperative movement’s first conference, held at the New School in NYC in November 2015. Entitled “Platform Cooperativism: The Internet, Ownership, Democracy,” it attracted more than a thousand attendees, including New York City Council members, CEOs, investors, platform creators, and leading scholars. Follow-up events were held in November 2016 and 2017.
In January 2016, a report by Trebor Scholz, another pioneering thinker in the platform cooperative movement, was published by the Rosa Luxemburg Foundation. In the report, entitled Challenging the Corporate Sharing Economy, Scholz, used the term “produser” as a way to signify the productive contribution users make by engaging with the functionality provided by digital platforms. He also pointed to a more democratic approach to owning and managing digital platforms:
Produser-owned platforms are a response to monopolistic platforms like Facebook and Google that are luring users with the promise of the “free service” while monetizing their content and data. What if we’d own our own version of Facebook, Spotify, or Netflix? What if the photographers at Shutterstock.com would own the platform where their photos are being sold?
According to a review of Scholz’s 2016 report by David Bollier, co-founder of the Commons Strategies Group:
Scholz explains that platform cooperativism as a humane alternative to the gig economy relies upon three strategies: 1) cloning the technological heart of Uber, Airbnb and others; 2) developing social solidarity in the ownership and management of the platforms; and 3) reframing the ideas of innovation and efficiency with an eye on benefiting all, not just delivering profits to the few.
After the late 2015 conference, Schneider and Scholz teamed up to edit a book entitled Ours To Hack and to Own, which can be downloaded for free as a pdf file or purchased as a hard copy or e-book at Amazon and other sites. The book includes more than three dozen essays from leading thinkers in the platform cooperative movement and related areas, along with brief profiles of entities adopting business models based on key principles of the movement. I strongly recommend it for anyone interested in this topic. You can also access an online directory of these cooperative companies and projects here.
Scaling a platform co-op: easier said than done
While some of these cooperatively owned and managed entities may thrive and grow to significant scale, a key challenge facing the platform cooperative movement (and any digital platform startup for that matter) is how to finance and manage growth to a scale sufficient to benefit from the network effects and scale economies that dominant platforms leverage to: 1) drive subscriber growth and engagement (and arguably, addiction) and; 2) develop sophisticated and largely opaque systems of data extraction and analysis and algorithm-based targeting and control, which enable these platforms to very profitably monetize users’ attention.
As Evgeny Morozov put it in a December 3, 2016 opinion piece in the Guardian:
There is no reason why a cooperative of drivers in a small town cannot build an app to help them beat Uber locally. But there is also no good reason to believe that this local cooperative can actually build a self-driving car: this requires massive investment and a dedicated infrastructure to harvest and analyse all of the data. One can, of course, also create data ownership cooperatives, but it’s unlikely they will scale to a point of competing with Google or Amazon.
A similar skepticism was expressed by MIT researchers, Chelsea Barabas, Heha Narula and Ethan Zuckerman based on their study of efforts to develop decentralized social networks as competitors to Facebook and other dominant platforms. In an article entitled Decentralized Social Networks Sound Great. Too Bad They’ll Never Work, they discuss the challenges faced by social network upstarts:
The three of us investigated several of these most promising efforts to “re-decentralize” the web, to better understand their potential to shake up the dominance of Facebook, Google, and Twitter. The projects we examined are pursuing deeply exciting new ideas. However, we doubt that decentralized systems alone will address the threats to free expression caused by today’s mega-platforms, for several key reasons.
First, these tools will face challenges acquiring users and gaining the attention of developers…Social networks, in particular, are difficult to bootstrap due to network effects—we join them because our friends are there, not for ideological reasons like decentralization. And while existing social networks have perfected their interfaces based on feedback from millions of users, new social networks are often challenging for new users to navigate.
These platforms also pose new security threats. Decentralized networks generally allow anyone to join and don’t link accounts to real-world identities like phone numbers. These systems often use public key cryptography to ensure account security. But managing public keys is hard for most users, and building software that is both cryptographically secure and easy to use is difficult…
Platforms tend to optimize for advertising revenue, prioritizing attention-grabbing or feel-good content. Designing robust reward mechanisms to curate content that keeps people informed rather than entertained remains a problem. If distributed platforms could solve it, they could theoretically tackle media challenges like echo chambers and filter bubbles, but such dilemmas still present a serious challenge for new systems.
Finally, platforms benefit from economies of scale — it’s cheaper to acquire resources like storage and bandwidth in bulk. And with network effects, which make larger platforms more useful, you have a recipe for consolidation…Market consolidation is also driven by user-targeted advertising models, which encourage hoarding of user views and data, discourage interoperability, and drive platforms to become ever larger.
The #BuyTwitter campaign as a call for change
In 2016, the enormity of the funding and scaling challenges facing startups hoping to compete with the online giants, coupled with Twitter’s underperformance relative to Wall Street expectations, led Schneider to propose that Twitter be transformed into a user cooperative. Interest in the idea (see here and here) led to the following stockholder proposal, which was put to a vote at Twitter’s annual meeting on May 22, 2017.
Stockholders request that Twitter, Inc. engage consultants with significant experience in corporate governance, preferably including conversion of companies to cooperatives or employee ownership, to prepare a report on the nature and feasibility of selling the platform to its users via a cooperative or similar structure with broad-based ownership and accountability mechanisms. The requested report shall be available to stockholders and investors by October 1, 2017, prepared at reasonable cost and omitting proprietary information.
The rationale for the Exit to Democratic User Ownership proposal put up for a vote was:
As Twitter users and stockholders, we see how vital the platform is for global media. We are among millions of users that value Twitter as a platform for democratic voice. And in 2016, we’ve seen Twitter’s future in the balance, from challenges of hate speech and abuse to the prospect of a buyout.
That is why we want the company to consider more fully aligning its future with those whose participation make it so valuable: its users. As of today, 3,300 individuals signed a petition at http://wearetwitter.global urging Twitter to build democratic user ownership.
For successful enterprises like the Green Bay Packers, REI, and the Associated Press, their popularity, resilience, and profitability is a result of their ownership structure. Examples of online companies include successful startups like Managed by Q, which allocates equity to office cleaners, and Stocksys United, a stock-photo platform owned by its photographers.
We believe these models point the way forward for Twitter, Inc., overcoming challenges to thrive as a cooperative platform.
A community-owned Twitter could result in new and reliable revenue streams, since we, as users, could buy in as co-owners, with a stake in the platform’s success. Without the short-term pressure of the stock markets, we can realize Twitter’s potential value, which the current business model has struggled to do for many years. We could set more transparent accountable rules for handling abuse. We could re-open the platform’s data to spur innovation. Overall, we’d all be invested in Twitter’s success and sustainability. Such a conversion could also ensure a fairer return for the company’s existing investors than other options.
According to the #BuyTwitter web site, that proposal garnered 4.9% yes votes, more than the 3% support it’s advocates had targeted to be eligible to resubmit a stronger proposal in the future.
Encouraging the wisdom of crowds or the fears of mobs?
In considering the #BuyTwitter campaign, it’s worth remembering that Twitter’s 330 million active monthly user base is dwarfed by Facebook, which claims 2.1 billion monthly active users and a range of other popular platforms and services, and Google, which boasts seven services that have reached 1 billion users (Google Maps, YouTube, Chrome, Gmail, Search, and Google Play) and more than 2 billion monthly active devices employing its Android operating system. And Twitter’s revenue is only a small fraction of the revenues generated by Facebook and Google, which together dominate the online advertising market. In short, while Twitter is a substantial player in the platform space, Facebook and Google are in a separate class of dominance, wielding unprecedented social, economic and political power as the go-to platforms relied on by billions of users and the lion’s share of advertisers seeking to attract those users’ attention.
The reality is that any effort aimed at turning Facebook and/or Google into a user cooperative would make the #BuyTwitter campaign seem like a cakewalk in comparison. That being said, these companies’ massive size and dominant positions in the search, social media, advertising, AI and other key sectors has repeatedly raised concerns about social harms associated with that dominance; concerns that have become all the more urgent in the wake of the 2016 U.S. elections and social media-inflamed outbreaks of ethnic and religious violence in countries like Myanmar and Sri Lanka.
In this environment of heightened public awareness and regulatory scrutiny, it strikes me as useful to consider potential steps these giants could take—either voluntarily or by legal mandate—to provide an increased level of democratic control to the “produsers” that contribute so much value to their highly profitable platform enterprises. It is, after all, these users who suffer when these companies’ business models and management systems fail to adequately nurture and leverage the wisdom of crowds and instead encourage filter bubbles and misinformation that aggravate fears and prejudice and can fray and even shred the social fabric that healthy democracies and just and peaceful societies depend on and seek to build upon.
I’ll be discussing some such potential steps in subsequent posts.
Below is an outline, with links, to all the posts in this series. Unless otherwise noted, bolding in quotations is mine, added for emphasis.
- Digital Platforms & Democratic Governance: Standing at an Historic Crossroads
- The digital anthropocene: a pivotal & high-risk phase of human history
- Empathy + technology: a powerful recipe for shared prosperity & peace
- More (and more effective) democracy as part of the solution
- The tech sector can help lead the next phase in democracy’s evolution
- The Facebook F-Up as a Wake-Up Call
- A growing awareness of problems
- Where to look for solutions?
- Serving Users (to Advertisers to Benefit Shareholders)
- An IPO + mobile ads: 2012 as a turning point for Facebook
- Too busy driving growth to focus on privacy?
- Serving users or serving users to advertisers?
- Understanding & addressing social harms
- Data as Power: Approaches to Righting the Balance
- Our data is tracked & locked in a “black box” we don’t control or understand
- The EU tightens privacy protections amid mixed signals in the U.S.
- Platforms as “information fiduciaries”
- Reallocating power & benefits when users share their data
- Shifting from an “Attention Economy” to a more efficient “Intention Economy”
- Who owns and controls the data used to develop AI?
- Data as labor that should be financially compensated
- Data as an infrastructural public good
- A “data tax” that generates a “data dividend” we all share
- Data portability as means to enhance competition & consumer choice
- The Power of Dominant Platforms: It’s Not Just About “Bigness”
- New forms of concentrated power call for new remedies
- Platforms wield transmission, gatekeeping & scoring power
- Antitrust needs an updated framework to address platform power
- Creating a civic infrastructure of checks & balances for the digital economy
- Democracy & Corporate Governance: Challenging the Divine Right of Capital
- A “generative” or “extractive” business model?
- Dethroning kings & capital
- Moving beyond capitalism’s aristocratic form
- Embracing economic democracy as a next-step Enlightenment
- Platform Cooperativism: Acknowledging the Rights of “Produsers”
- Reclaiming the Internet’s sharing & democratizing potential
- Scaling a platform co-op: easier said than done
- The #BuyTwitter campaign as a call for change
- Encouraging the wisdom of crowds or the fears of mobs?
- Interactions Between Political & Platform Systems
- Feedback loops reinforce strengths & weaknesses, benefits & harms
- Facebook’s role in the election as an example
- If we don’t fix government, can government help fix Facebook?
- A Purpose-Built Platform to Strengthen Democracy
- Is Zuck’s lofty vision compatible with Facebook’s business model?
- Designed to bolster democracy, not shareholder returns
- Democratic Oversight of Platform Management by “Produsers”
- Facebook, community and democracy
- Is Facebook a community or a dictatorship?
- Giving users a vote in Facebook’s governance
- Technology can help users participate in FB governance
- Evolving from corporate dictatorship toward digital democracy