Platform Cooperativism

1. Overview

Platform cooperativism represents a fundamental shift in the ownership and governance of digital platforms. It is a model where platforms—such as websites, mobile apps, or online marketplaces—are owned and controlled by the people who create and use them, including workers, users, and other stakeholders. This approach directly challenges the dominant model of platform capitalism, where platforms are owned by a small group of investors and shareholders who prioritize profit maximization above all else. The problem that platform cooperativism seeks to solve is the extractive nature of many contemporary digital platforms, which often leads to precarious labor conditions, data exploitation, and a concentration of wealth and power in the hands of a few. By placing ownership and control in the hands of the community, platform cooperativism aims to create a more equitable, democratic, and socially responsible digital economy.

The historical context of platform cooperativism is rooted in the long tradition of cooperative movements, which have existed for centuries as a means for people to collectively meet their economic and social needs. The term “platform cooperativism” itself was coined by Professor Trebor Scholz in 2014, in response to the rise of the so-called “sharing economy” and the exploitative labor practices of companies like Uber and TaskRabbit. The movement gained momentum as a way to reclaim the original promise of the internet as a decentralized and democratic space, and to build a digital economy that is aligned with cooperative values. It draws inspiration from various sources, including the open-source software movement, the commons-based peer production model, and the principles of social economy.

For organizations and commons, platform cooperativism offers a powerful alternative to the extractive logic of platform capitalism. It provides a framework for building digital infrastructures that are not only economically viable but also socially and environmentally sustainable. By fostering democratic governance and shared ownership, platform cooperativism can help to create more resilient and equitable communities. It enables organizations to build platforms that are tailored to their specific needs and values, rather than being subject to the whims of external investors. Furthermore, by promoting data sovereignty and ethical data practices, platform cooperativism can help to protect the digital rights of individuals and communities, and to build a more trustworthy and transparent digital world.

2. Core Principles

1. Democratic Member Control: Platform cooperatives are controlled by their members, who actively participate in setting their policies and making decisions. In a digital context, this means that the users, workers, and other stakeholders who rely on the platform have a direct say in how it is designed, operated, and governed. This principle ensures that the platform serves the interests of its community, rather than the interests of a small group of investors.

2. Member Economic Participation: Members contribute equitably to, and democratically control, the capital of their cooperative. This principle is realized in platform cooperatives through various mechanisms, such as shared ownership, profit-sharing, and reinvestment of surpluses into the platform and the community. This ensures that the value generated by the platform is distributed fairly among its members, rather than being extracted by external shareholders.

3. Autonomy and Independence: Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy. For platform cooperatives, this means resisting the pressures of venture capital and other forms of speculative investment that can undermine their cooperative identity and mission.

4. Education, Training, and Information: Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. In the context of platform cooperativism, this includes educating members about the cooperative model, digital technologies, and the importance of data sovereignty. This empowers members to participate fully in the governance of the platform and to make informed decisions about its future.

5. Cooperation among Cooperatives: Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures. Platform cooperatives can collaborate with each other to share knowledge, technology, and resources, and to build a more resilient and interconnected cooperative ecosystem. This can help them to compete more effectively with large, investor-owned platforms.

6. Concern for Community: While focusing on member needs, cooperatives work for the sustainable development of their communities through policies approved by their members. Platform cooperatives can contribute to their communities by providing decent work, promoting local economic development, and supporting social and environmental causes. They can also help to build a more inclusive and equitable digital society by providing access to essential services and by empowering marginalized communities.

3. Key Practices

1. Establish a Cooperative Legal Structure: The first step in building a platform cooperative is to choose and establish a legal structure that is consistent with cooperative principles. This may involve incorporating as a cooperative corporation, a limited cooperative association, or another legal form that allows for democratic governance and member ownership. The choice of legal structure will have important implications for the platform’s governance, financing, and taxation.

2. Design for Democratic Governance: Platform cooperatives need to design governance structures that enable meaningful participation from their members. This can include a variety of mechanisms, such as online voting, participatory budgeting, and consensus-based decision-making. The goal is to create a governance process that is transparent, inclusive, and responsive to the needs of the community.

3. Build a Community of Members: A platform cooperative is only as strong as its community of members. It is essential to invest in community organizing and engagement to build a sense of shared ownership and collective identity. This can involve a variety of activities, such as online forums, in-person meetups, and educational workshops.

4. Develop a Sustainable Business Model: Platform cooperatives need to develop a business model that is both economically viable and socially responsible. This may involve a variety of revenue streams, such as membership fees, transaction fees, and value-added services. The goal is to create a business model that can sustain the platform over the long term, without compromising its cooperative values.

5. Use Appropriate Technology: The technology used by a platform cooperative should be aligned with its values and goals. This may involve using open-source software, decentralized technologies, and privacy-enhancing tools. The goal is to create a technology stack that is transparent, accountable, and empowering for its users.

6. Foster a Culture of Cooperation: Building a successful platform cooperative requires more than just the right legal structure and technology. It also requires a culture of cooperation, trust, and solidarity among its members. This can be fostered through a variety of practices, such as open communication, mutual support, and a commitment to shared values.

7. Measure and Report on Social Impact: Platform cooperatives should measure and report on their social and environmental impact, in addition to their financial performance. This can help to demonstrate their value to their members and the wider community, and to hold themselves accountable to their social mission. This can also help to attract mission-aligned investment and support.

4. Implementation

Implementing a platform cooperative requires a thoughtful and strategic approach. A typical step-by-step process begins with a founding group of individuals who share a common need or vision. This group should conduct thorough research to understand the market, identify potential members, and define the cooperative’s mission and values. The next step is to develop a solid business plan that outlines the platform’s services, revenue model, and marketing strategy. Once the business plan is in place, the group can proceed with choosing and establishing a cooperative legal structure, which will provide the foundation for the platform’s governance and ownership. With the legal structure in place, the focus can shift to building the platform itself, which may involve developing custom software or adapting existing open-source tools. Finally, the cooperative can launch the platform and begin the ongoing work of engaging members, providing services, and growing the community.

There are several key considerations to keep in mind when implementing a platform cooperative. First, it is crucial to build a strong and engaged community from the outset. This means investing in community organizing, fostering a culture of participation, and creating clear channels for communication and decision-making. Second, it is important to choose the right technology for the platform. The technology should be aligned with the cooperative’s values, and it should be scalable, secure, and easy to use. Third, it is essential to have a clear and sustainable business model. The cooperative needs to be able to generate enough revenue to cover its costs and to reinvest in the platform and the community. Finally, it is important to be patient and persistent. Building a successful platform cooperative takes time and effort, and there will inevitably be challenges along the way.

There are a variety of tools and frameworks that can be helpful for implementing a platform cooperative. For example, there are a number of open-source software platforms that can be adapted for cooperative use, such as Loomio for decision-making, and Cobudget for participatory budgeting. There are also a number of organizations that provide support and resources for platform cooperatives, such as the Platform Cooperativism Consortium and the Sustainable Economies Law Center. In terms of success metrics, platform cooperatives should look beyond traditional financial metrics and also measure their social and environmental impact. This can include metrics such as member engagement, worker satisfaction, and community well-being. Ultimately, the success of a platform cooperative should be measured by its ability to create a more equitable, democratic, and sustainable digital economy.

5. 7 Pillars Assessment

6. When to Use

• When you want to create a more equitable and democratic alternative to an existing platform. If you are frustrated with the extractive practices of a dominant platform in a particular sector, you can use the platform cooperative model to build a more just and fair alternative.
• When you want to provide a service that is not being adequately provided by the market. Platform cooperatives can be a good way to provide essential services to a community that is being underserved by traditional for-profit businesses.
• When you want to create a business that is accountable to its community. If you want to build a business that is deeply rooted in its community and that is accountable to its stakeholders, the platform cooperative model can be a good choice.
• When you want to build a business that is aligned with your values. If you are passionate about social and economic justice, the platform cooperative model can provide a framework for building a business that is consistent with your values.
• When you want to create a more resilient and sustainable local economy. By keeping ownership and control in the hands of the community, platform cooperatives can help to build more resilient and sustainable local economies.
• When you are a group of freelancers or independent workers who want to pool your resources and create your own platform. Platform cooperatives can be a powerful way for independent workers to gain more control over their work and to capture a greater share of the value they create.

7. Anti-Patterns & Gotchas

• Underestimating the importance of community. A platform cooperative is a community before it is a business. Failing to invest in community organizing and engagement can lead to a lack of member participation and a weak sense of ownership.
• Trying to be a purely technological solution. Platform cooperativism is not just about building a better app. It is about building a more just and equitable social and economic system. Focusing too much on the technology and not enough on the social and political dimensions of the project can lead to failure.
• Not having a sustainable business model. A platform cooperative needs to be financially sustainable in order to survive and thrive. Failing to develop a clear and realistic business model can lead to financial instability and ultimately, the collapse of the cooperative.
• Becoming a cooperative in name only. It is easy to adopt the label of a cooperative without actually embracing the principles of democratic governance and member ownership. This can lead to a loss of trust and legitimacy, and can undermine the cooperative’s mission.
• Ignoring the legal and regulatory challenges. Platform cooperatives operate in a complex legal and regulatory environment. Failing to get expert legal advice and to comply with all applicable laws and regulations can lead to serious problems down the road.
• Trying to do everything at once. Building a platform cooperative is a marathon, not a sprint. Trying to do too much too soon can lead to burnout and a lack of focus. It is better to start small, iterate, and build momentum over time.

8. References

1. Scholz, T. (2014). Platform Cooperativism vs. the Sharing Economy. The New School. https://www.rosalux.nyc/wp-content/uploads/2020/11/RLS-NYC_platformcoop.pdf
2. Platform Cooperativism Consortium. https://platform.coop/
3. Wikipedia. Platform cooperative. https://en.wikipedia.org/wiki/Platform_cooperative
4. Schneider, N. (2015). Owning Is the New Sharing. Shareable. https://www.shareable.net/owning-is-the-new-sharing/
5. Sustainable Economies Law Center. https://www.theselc.org/