Platform Cooperative

1. Overview

A platform cooperative is a cooperatively owned and democratically governed business that uses a digital platform (a website or mobile app) to provide a service or sell a product. Unlike conventional platforms that are controlled by a small group of founders and investors, platform cooperatives are owned and controlled by their members—the people who create the value on the platform, such as workers, users, or producers. This model represents a fundamental shift in the ownership and governance of the digital economy, aiming to create a more equitable and democratic alternative to the dominant, venture capital-funded platform monopolies. The core purpose of a platform cooperative is to empower its members by giving them a direct stake in the platform’s success and a voice in its governance. This approach directly challenges the extractive nature of many platform-capitalist businesses, which often prioritize shareholder profits at the expense of worker and user well-being.

The problem that platform cooperatives solve is the increasing precarity and exploitation of labor in the so-called “gig economy.” Platforms like Uber, DoorDash, and Amazon Mechanical Turk have created a new class of digital piecework, where workers are often classified as independent contractors, denied basic labor protections, and subjected to algorithmic management and control. These platforms extract significant value from the labor of their workers while concentrating wealth and power in the hands of a few. Platform cooperativism emerged as a response to these injustices, offering a model for building a more just and equitable digital economy. The term was coined by professor Trebor Scholz in 2014, who, along with journalist Nathan Schneider, has been a leading voice in the movement. Their work has inspired a global community of activists, entrepreneurs, and researchers who are building and advocating for platform cooperatives as a viable alternative to the extractive platform economy.

Platform cooperativism is deeply aligned with the principles of commons-aligned value creation. By placing ownership and control in the hands of their members, platform cooperatives create a form of digital commons, where the platform itself is a shared resource that is managed for the collective benefit of its community. This model fosters a culture of collaboration, solidarity, and mutual support, in contrast to the hyper-competitive and individualistic ethos of many conventional platforms. Platform cooperatives also have the potential to promote a more sustainable and equitable distribution of wealth, as profits are either reinvested in the platform or distributed among the members. In this way, platform cooperatives offer a powerful example of how we can build a digital economy that is not only more democratic and just, but also more aligned with the long-term interests of people and the planet.

2. Core Principles

1. Member Ownership and Control: The platform is owned and controlled by its members, who have a direct stake in its success and a voice in its governance. This principle ensures that the platform is managed for the collective benefit of its community, rather than for the profit of a small group of investors.
2. Democratic Governance: Platform cooperatives are governed democratically, with members participating in decision-making on a one-member, one-vote basis. This principle ensures that all members have an equal say in the direction of the platform, regardless of their financial contribution.
3. Fair Distribution of Value: The value created on the platform is distributed fairly among its members. This can take the form of dividends, profit-sharing, or other forms of economic benefit. This principle ensures that the people who create the value on the platform are the ones who benefit from it.
4. Social and Ecological Responsibility: Platform cooperatives are committed to social and ecological responsibility. They strive to create a positive impact on their communities and the environment, and to operate in a way that is consistent with their values.
5. Cooperation Among Cooperatives: Platform cooperatives work together to build a more just and equitable digital economy. They share knowledge, resources, and best practices, and they collaborate on projects of mutual benefit. This principle is based on the idea that we are stronger together than we are apart.
6. Openness and Transparency: Platform cooperatives are committed to openness and transparency in their operations. They make their governance processes, financial information, and data policies publicly available, and they actively solicit feedback from their members and the wider community.

3. Key Practices

1. Multi-stakeholder Governance: Many platform cooperatives adopt a multi-stakeholder governance model, where different classes of members (e.g., workers, users, producers, community members) have representation on the board of directors. This ensures that the interests of all stakeholders are taken into account in the decision-making process.
2. Digital Democratic Tools: Platform cooperatives use a variety of digital tools to facilitate democratic participation, such as online voting platforms, discussion forums, and collaborative decision-making software. These tools make it easier for members to participate in the governance of the platform, regardless of their location.
3. Fair and Transparent Pricing: Platform cooperatives are committed to fair and transparent pricing. They often charge lower fees than their corporate competitors, and they make their pricing structures publicly available. This ensures that both producers and consumers get a fair deal.
4. Data Cooperativism: Some platform cooperatives are experimenting with new models of data ownership and governance, where members have control over their own data and can decide how it is used. This is a powerful way to challenge the data-extractive business models of many conventional platforms.
5. Community Building and Education: Platform cooperatives invest in community building and education. They organize events, workshops, and training programs to help their members develop new skills and to foster a sense of community. This is essential for building a strong and vibrant cooperative culture.
6. Federated and Interoperable Systems: To compete with the network effects of large, centralized platforms, some platform cooperatives are exploring federated and interoperable systems. This would allow different platform cooperatives to connect and share users, creating a more resilient and decentralized ecosystem.
7. Ethical Sourcing of Capital: Platform cooperatives often seek out ethical sources of capital, such as community-based investors, credit unions, and social impact funds. This allows them to raise the capital they need to grow without compromising their cooperative principles.

4. Implementation

Implementing a platform cooperative requires a thoughtful and deliberate approach that prioritizes community building and democratic governance. The first step is to identify a clear need and a community of potential members who are motivated to build a cooperative alternative. This often involves a process of community organizing and education, where potential members come together to define their shared goals and values. Once a core group of members has been established, the next step is to develop a business plan and a governance structure for the cooperative. This should be a collaborative process, with members working together to define the platform’s features, pricing, and decision-making processes.

When it comes to the technology, there are a number of options available. Some platform cooperatives choose to build their own platform from scratch, while others use open-source software or white-label solutions. The choice of technology will depend on the specific needs of the cooperative and the resources available. Regardless of the technology used, it is important to ensure that the platform is designed to support democratic participation and to give members control over their own data. Real-world examples of platform cooperatives include Stocksy United, a cooperatively owned stock photo agency; Up & Go, a platform for booking home cleaning services from worker-owned businesses; and Fairmondo, a cooperative online marketplace.

Key considerations for implementing a platform cooperative include securing funding, navigating the legal and regulatory landscape, and building a strong and engaged community. Raising capital can be a challenge for platform cooperatives, as they are often not attractive to traditional venture capitalists. However, there are a growing number of alternative funding sources available, such as community-based investors and social impact funds. It is also important to seek out legal advice to ensure that the cooperative is structured in a way that is compliant with local laws and regulations. Finally, building a strong and engaged community is essential for the long-term success of any platform cooperative. This requires ongoing investment in community building, education, and democratic participation.

5. 7 Pillars Assessment

6. When to Use

• When you want to create a business that is owned and controlled by its members.
• When you want to build a more just and equitable alternative to the extractive platform economy.
• When you are working in a sector that is dominated by a few large platforms.
• When you want to create a business that is rooted in a community and is committed to social and ecological responsibility.
• When you are looking for a more resilient and sustainable business model.
• When you want to empower workers and users and give them a voice in the decisions that affect them.

7. Anti-Patterns and Gotchas

• Lack of Member Engagement: If members are not actively engaged in the governance of the cooperative, it can lead to a concentration of power in the hands of a few.
• Difficulty Scaling: Platform cooperatives can have difficulty scaling and competing with larger, better-funded platforms.
• Legal and Regulatory Hurdles: The legal and regulatory landscape for cooperatives can be complex and difficult to navigate.
• Techno-Utopianism: It is important to avoid the trap of techno-utopianism and to recognize that technology alone cannot solve social problems.
• Underestimating the Importance of Community: Building a strong and engaged community is essential for the long-term success of any platform cooperative.
• Failure to Adapt: Platform cooperatives need to be able to adapt to changing market conditions and to the evolving needs of their members.

8. References

1. Scholz, T. (2014). Platform Cooperativism vs. the Sharing Economy. Medium. https://medium.com/digital-labor/platform-cooperativism-vs-the-sharing-economy-2ea737f1b5ad
2. Schneider, N. (2014). Owning Is the New Sharing. Shareable. https://www.shareable.net/owning-is-the-new-sharing/
3. Platform Cooperativism Consortium. (n.d.). What is Platform Cooperativism? https://platform.coop/
4. International Co-operative Alliance. (n.d.). Co-operative Identity, Values & Principles. https://www.ica.coop/en/cooperatives/what-is-a-cooperative
5. Scholz, T. (2016). Uberworked and Underpaid: How Workers Are Disrupting the Digital Economy. Polity.