—
Is The Collaborative Economy Ineffectively Redistributing Value To Platform Providers
—
Unless you have been living under a rock, you probably know that Uber UK is duking it out with the Transport for London (TfL) officials, while the fate of its 40,000+ platform participants (Uber drivers) hangs in the balance. Oh and Uber UK’s boss Jo Betram quit several hours before this post was published and Dara Khosrowshahi himself has come to London. Can we imagine a city without Uber or vehemently deny the convenience and safety it provides to the consumers? Perhaps, perhaps not.
Another fantastic professor I had the opportunity to read under at Oxford Saïd was Prof. Rachel Botsman herself — the thought leader who sparked the concepts of collaborative consumption and the sharing economy through her widely-viewed TED talks and infamous book “What’s Mine is Yours” back in 2010 and 2011. Last week, I attended the launch event of Botsman’s new book aptly titled as “Who Can You Trust?”, where she made several bold and relevant observations, importantly that trust has not disappeared, but has shifted — from the local to institutions and now to a distributed trust model. This is also fueled by rapid advances in technology, which is steadily becoming all-seeing, all-hearing and all-knowing.
But, I want to talk about the collaborative economy, platform participants and value sharing. Over the course of eight weeks in Botsman’s class and over the months since, I surmised key perspectives about the significance and vulnerability of the platform providers, few of which are highlighted below:
Value sharing and attributing value creation in distributed networks is complicated
Social contracts of the old industrial system do not apply to the independent contractors of the collaborative economy
Provider economics in certain sharing economy models are skewed towards making profits for the platform than creating benefits for the providers
Global platforms such as Uber do not consider themselves as part of the sharing economy, yet take advantage of regulatory arbitrages in the market (hence the current backlash by TfL)
Labour platforms that unbundle jobs into discrete tasks seem to ignore aspects of stability, healthcare and other aspects of work
There is of course an alternate perspective:
Proponents argue that the new wave of sharing economy models has provided previously unheard levels of income opportunities to workers
Flexibility to customise and work across multiple jobs, is widely cited as the essence of the sharing economy participants
Labour market shortages, according to some studies, have demonstrated minimal causality to the growing contingent worker demographic
Income volatility in a post-financial crisis world is considered an influencing factor for workers to embrace the sharing economy
Based on the above, I hold the view that the sharing economy platforms are not effectively sharing with the peers that generate the platform’s value. Importantly, there seems to be a market failure in the ideology of an equitable collaborative economy itself, creating frictions in sharing value amongst the participants in the platform. Why do I think so? Let’s take a look!
Rise of Platform Cooperativism or the ‘Worker-owned’ Collaborative Economy:
In Dec 2014, Trebor Scholz (Associate Professor of Culture and Media, The New School USA) challenged that owners and investors of the platform alone should not be the benefactors of economic value derived from the social capital of the platform participants. Rather, he and Nathan Schneider (Scholar-in-residence, University of Colorado) proposed that worker-owned cooperatives foster the true ‘commons’ way of providing and sharing services, while being equitable and participatory in the collaborative economy.
Platform Cooperativism https://platform.coopIn a sharing economy system, where a tech-giant such as Uber is the intermediary, platform cooperativism suggests that worker-owned cooperatives are more equitable and socially responsible than labour capital platforms such as Handy or TaskRabbit (now acquired by IKEA). Stocksy for instance, is a successful stock-photo collective that ensures photographers are paid for their work and Loconomics, a San Francisco co-op that is looking to compete with TaskRabbit, but is cooperatively owned by the service professionals themselves.
Loconomics Cooperative Inc. https://loconomics.com/#!/Throughout the classes, we interacted with actual sharing economy participants from organisations such as:
Food Assembly: While discussing methods to building critical mass in local markets, it was interesting to learn about the challenges in a distributed network model, where the FA hosts struggled with the questions around sharing value within the network and if incentive structures can potentially help FA to achieve scale.
Jessica (Tasker, TaskRabbit) described her issues regarding changing commission structures, loyalty to the platform and the feeling of just being a platform provider and not a co-owner of the platform. Although the taskers self-organise themselves as an adhoc union, it did not seem entirely evident that sufficient social capital was being generated or if the taskers attached unquestionable loyalty to the platform.
These in-class examples, combined with the platform cooperativism movement highlight attention to the observation that value is being ineffectively distributed with the platform providers. Although in the case of Food Assembly, it is seeking to share the equity in their businesses with the broader network of participants, in a term called ‘Network Equity’ proposed by VC extraordinaire Fred Wilson (AVC). Yet, the case for platform cooperativism is not black or white and indeed critics argue technology businesses are ill-adapted to a cooperative model, while the lack of regulatory clarity makes equity sharing difficult.
Trebor and other critics of the platform economy companies such as Tom Slee (‘What’s Yours is Mine’ — his rather direct response to Botsman’s own book) argue that these companies are exacerbating neo-liberal economic trends and policies which favour business and undermine the power of labour. The shift of risk onto the workers is the core premise here and in Trebor’s 2016 book ‘Uberworked and Underpaid’, sharp criticism is drawn to the controversial classification of providers as independent contractors by Uber, effectively absolving them from the responsibility for expenses, benefits and employment security.
L: Tom Slee R: Rachel BotsmanMeanwhile in Europe, the cooperative model is widely praised and a study carried out by Cooperatives Europe showed that the European cooperative movement is aware of the collaborative economy opportunity. SCIC 1DLab, the first equitable streaming platform, has built an ecosystem to find a collective response to several needs: the reinforcement of cultural diversity and the economic strengthening of those who carry the value (the providers).