For a sizable portion of the people running the established cooperatives in the United States, I’ve found, the internet is still regarded as a kind of alien invasion, an ever-bewildering source of trouble. Along with the hassle of building and maintaining a website, the internet has brought new competitors—especially venture-backed startups that love nothing more than to disrupt the kinds of intermediary roles in value chains where co-ops have held niches for decades. And many co-ops seem stuck playing catch-up. They buy the latest software and hire expensive consultants, but it’s never quite enough. The disruptions keep coming.

Playing catch-up is never the role co-ops are best suited for, anyway. They’re at their best when they’re doing another kind of business—when they’re finding value that investors don’t see, when they’re meeting needs that Wall Street doesn’t bother figuring out how to meet.

This is what a new generation of cooperative entrepreneurs is doing. I’d like to introduce you to some of them, and to some of the ways that they’re doing better than catching up to the internet of venture capitalists and aspiring monopolists. They’re letting co-op values and principles guide them to a vision for a different kind of internet economy. As they do, they’re also rediscovering the competitive advantages of cooperation—old strategies, really, that powered this model in generations past but that can be too easily forgotten.

First, take a foray with me into the mind of one of our eminent internet overlords. Consider it a survey of the terrain.

In February 2017, as Facebook CEO Mark Zuckerberg was still coming to terms with the previous year’s election cycle, he published a post called “Building Global Community,” a manifesto of sorts. “In the last year,” he wrote, “the complexity of the issues we’ve seen has outstripped our existing processes for governing the community.” Then he admitted, remarkably, that he couldn’t rule a platform shared by billions of human beings out of the wisdom of his own head.

And so he called for something that sounds almost like democracy: “Building an inclusive global community requires establishing a new process for citizens worldwide to participate in community governance. I hope that we can explore examples of how collective decision-making might work at scale.”

As autocracy and oligarchy run aground, he reluctantly falls back on democracy, then announces it as if it were the latest software update. Should we or should we not tell him that cooperatives have been practicing forms of “collective decision-making at scale” for a long, long time? Perhaps they have something to teach him. Perhaps they can do what Facebook’s investor-owners can’t.

Business model innovation

The designers of the internet didn’t set out to build infrastructure for cat-meme-sharing on social-media monopolies. Paul Baran, who conceived of the “packet switching” system by which the cat memes and all else travel from server to server, was concerned about a Soviet missile attack. In the 1960s, Baran worked for the RAND Corporation, which was helping to build the military communications tool that would later evolve into the civilian internet. The system relied on a complex collaboration among peers to avoid any single, vulnerable point of failure.

Radically centralized systems like Facebook are a departure from the network’s underlying structure. They arose not for technical reasons but economic ones—to deliver the profits that early investors demanded. Centralizing Baran’s distributed scheme has been a gradual, expensive process. Much more akin to the internet’s design are standards-setting organizations like the World Wide Web Consortium, which balance the needs of diverse stakeholders. The internet, like a co-op, is built for federation.

Over and over, we have seen old, cooperative practices imitated online. Take the wonders of crowdfunding, which enable businesses and products to launch without the need for loans or profit-seeking investors; well, co-ops were the original crowdfunding. When people needed something the market wasn’t furnishing, they pooled their money and built a cooperative to provide it. And they got more than one gets in the usual Kickstarter: real ownership and accountability. Around half of U.S. households have an Amazon Prime membership, which delivers convenience to customers and loyalty to the company—but, again, without shared ownership and accountability to back it up. The internet giants are getting by with a pale imitation of what co-ops have in their bones.

The technology has added something new, however. When we talk about the online economy, we’re not just talking about slapping websites on existing business models. The real disruptions have been bigger than e-commerce; they’re happening through platforms. Platforms are a kind of business model that the internet has supercharged: multi-sided markets that generate value through interactions among users, not just through what the company provides to them. The canonical and over-used examples are platforms like Airbnb, the hotel chain that owns no hotels, and Uber, the taxi company that owns no cars.

Once again, cooperatives got to it first. When rural electric co-ops were forming across the U.S. in the 1940s, they depended on their members’ collaboration and sweat equity to build a shared asset. Marketing co-ops have enabled independent producers to set the terms on which they sell and even compete. For decades, Italian “social co-ops” have maintained balanced markets between care providers and patients who co-own their companies together.

With age, however, many co-ops have conformed themselves to the business models of their corporate competitors. They’ve come to focus on the value the co-op can deliver to members, not on the unpredictable interconnections it might facilitate. It’s service more than sharing. The rise of online platforms thus presents itself as a terrifying disruption, when it should be an opportunity for co-ops to take the lead.

The investor-owned platforms have been ambivalent creatures. In come Amazon’s conveniences, and out go the local retailers that co-ops enabled to thrive. In come flexible schedules on gig platforms like TaskRabbit, and out go protections and benefits that workers have fought for centuries to achieve. Inequality and conglomeration accelerate. And there’s no going back; the perks are too irresistible. But what if co-ops could face those disruptions on their own terms, with their own strengths? What if they invested in a new generation of cooperative innovation instead?

Silicon Valley likes to have us believe that innovation is the purview of its investor-driven formula. But when you look at a lot of the most successful companies there, they didn’t begin with a miraculous invention. From the GPS behind Uber to Google’s original search algorithm, the tech often comes from publicly funded research in government and universities. The Silicon Valley magic, more often, lies in spinning up a seamless interface and the means to monetize it.

According to Fred Wilson, a renowned investor at Union Square Ventures, “Business model innovation is more disruptive than technological innovation.” What innovations can the co-op model deliver?

The rise of platform cooperativism

I’ve been dwelling in abstractions so far, and please forgive me for that, because what I’m talking about is not an abstraction at all. I came to notice the potential that cooperative business might have for reinventing the online economy not through theoretical reflection but, as a reporter, by noticing how people were already making it happen.

Starting around 2014, hiding behind the fanfare and controversy surrounding “sharing economy” platforms like Airbnb and Uber, I began coming across startups that were trying to build a real sharing economy. This usually meant adopting cooperative models. They were working in isolation, not aware of one another, with little in the way of mentoring or co-op-friendly financing to support them. But there they were. By the end of that year, I was publishing about what I’d found, and one of my sources, the New School media professor Trebor Scholz, put a name to it all: “platform cooperativism.” The following year, we organized the first conference on the subject in New York, and more than a thousand people came. Even The Washington Post called it “a huge success.” Something real was indeed afoot.

At first, we had the idea that we could simply copy the Ubers and Airbnbs of the world, slap a co-op label on, and the world would switch over. But the more I’ve watched this platform co-op ecosystem grow, the more I get excited about how cooperation allows these businesses to do things differently. Cooperative ownership isn’t just some add-on mutation, it’s another sort of genome.

Quality, not monopoly

One of the earliest, most successful platform co-ops is Stocksy United, a Canadian stock photo platform owned by its photographers and employees. Its founders were executives for a much bigger platform who concluded investor-ownership was stiffing the photographers and hurting the quality of their work. The founders realized that if they made their startup accountable to its photographers, they could prioritize quality. After just a few years, the company is thriving in a crowded industry.

Stocksy also breaks a cardinal rule for tech startups. You’re supposed to achieve scale at all costs, but the thousand-or-so photographer-owners have been cautious about accelerating their growth. They don’t want to dilute what they offer. They’re growing, but only at their own pace and far slower than they could. They’re making their own rules.

Control over what’s ours

It has become an implicit social contract of life online that—in exchange for useful services like Gmail and Uber—we give up heaps of data about ourselves to who-knows-who for who-knows-what. But for platform co-ops, this trade-off tends to disappear. Users really can be the owners of their data from start to finish. There’s no more need for all the funny business hidden in the legalese no one reads.

MIDATA, for instance, is a Swiss co-op for personal medical data funded through the voluntary use of that data for medical research. Users get a convenient repository over which they have full control. Savvy Cooperative, based in New York, is a platform where medical researchers and startups can benefit from the data of patient feedback—on the patients’ terms, because the patients are the owners. Farmers are doing something similar through the Grower Information Services Cooperative, which allows them to benefit from the data their ever-more computerized machines produce without relinquishing it to third parties.

Federation not centralization

Social.coop brings that kind of user control to social media. It is a small experiment that operates an open-source alternative to Twitter called Mastodon—a federated system in which people can keep their data with a provider they know and trust, while still interacting with the wider network. Federated social networks like this are great for privacy, and the technology has been around for a while. They’ve just lacked a business model, since investors have so much to gain from highly centralized networks. Co-ops might be uniquely suited to change that.

Social.coop is unusual in other ways. It’s not legally incorporated; instead, it operates through Open Collective, a co-op-friendly platform that enables groups of people anywhere to collect money and distribute it without their own bank account. Accounting on Open Collective is public, for all to see and inspect. Social.coop members make decisions about how to use those resources and more on Loomio, a decision-making platform built by a New Zealand-based worker co-op. Most of them—well, us—have never met each other in person. We’ve built the trust we need to cooperate through transparency.

Trust on a trustless network

When the Bitcoin digital currency system first appeared in 2009, it promised the possibility of “trustless,” pseudonymous transactions over a network that would rely on no central authorities, like Visa or the Federal Reserve. Companies like Goldman Sachs and Walmart are now adopting the underlying “blockchain” technology. So are credit unions. A project called CU Ledger uses blockchain technology to better manage, secure and share data about credit union members’ identities. The credit unions, that is, are applying Bitcoin’s software to purposes nearly opposite from what others have in mind: to build on institutional trust and to better collaborate.

As the blockchain economy grows, co-ops may be poised to play a vital role. RChain, for instance, is built on a supposition that the co-op model can solve some of the technical bottlenecks that Bitcoin and its cousins have faced. In Berlin, Seedbloom puts the co-ownership back into crowdfunding with blockchains. Already, it has aided the development of Resonate, a music-streaming cooperative co-owned, over its own blockchain, by fans and musicians alike. Moeda, starting in Brazil, is a co-op that uses blockchains to help credit unions expand financial inclusion and to finance its own growth.

Venture capital as cooperative bank

For this platform co-op ecosystem to grow, it will have to develop its own means of financing, just as co-op sectors of the past have done. Already we’ve started to see developments like Purpose Ventures, a new fund designed to grow long-term with its startups, not to sell them off for a quick buck. It’s co-op compatible; in some respects it even resembles an old-fashioned cooperative bank.

The old and the new come together. They converge. And they need each other. One of the most important developments in recent years has been to see co-op veterans start to embrace and support this new generation.

This has been done before

The conditions that have given rise to cooperation in the past are appearing in new guises—workers barely getting by on gig platforms, or customers not sure whether they can trust the companies they nonetheless rely on. It’s not enough for co-ops to tack websites on existing business models. We need co-op business models designed in and for a networked world.

I must confess, however: When I’m in a room full of leaders in big, established co-ops, I’m not sure these kinds of innovations will come from them. I bet most of them would agree. But what we need isn’t coming from the small, experimental platform co-ops I’ve mentioned either. They’re not enough. We need both. We need experienced co-op mentors stepping in to support the new, risk-taking co-op entrepreneurs who will help keep this sector vibrant.

How can that happen? First, it needs to be easier for startups to see the co-op model as a viable option—with tech-oriented co-op incubators and seed capital, as well as outreach to existing startup communities. Second, established co-ops can find ways to pool their funds to invest in promising new co-ops, then share dividends back to their members. Finally, we need to identify the financing and policy tools to help existing platforms that should be co-op converts. Too many online platforms we depend on are stuck trying to meet investor demands when they should instead be accountable to their users.

I’m a reporter, so I don’t like to make predictions. But based on the experiments out there, I’ve noticed some patterns that may become more common in the co-ops to come.

They will create value not just with the services they offer to members, but with the connections they enable among members—and the efficiencies members discover together. Their specialty will be in fostering trust on trustless networks, federating local communities across the globe. And they will build on the long cooperative legacy with forms of online governance that are more transparent than both the competition and co-ops past.

Open software and open data could help co-ops cooperative with each other more deeply than ever. Open supply-chains could display, for potential customers to see, their commitment to the highest quality sourcing. If they’re doing their jobs right, greater transparency will only make the cooperative difference more evident. And that difference matters.

I meet more and more people all the time who are warming to the co-op idea—and not because they’ve already worked for co-ops or studied co-op history. For the most part, they haven’t. A cooperative internet might seem utopian, but they hope for it anyway.

I don’t think it is so far-fetched. Cooperatives brought electricity to rural America when no one else would, and they’ve given Main Street a fighting chance against the big boxes. They help millions buy homes. They pioneered the local, organic revival and the means of delivering fair-trade products from across the planet. Next, the internet. We have done this already, and we can do it again, even better than before.

Photo by Pat Guiney

The post Next, the Internet: Building a Cooperative Digital Space appeared first on P2P Foundation.

‘Ownership is the ground where the tug-of-war for the next social contracts is being played. Who owns what will determine who really benefits’

After a contentious early meeting of Green Taxi Cooperative’s driver-members, then in the process of forming the largest taxi company in the state of Colorado, I asked the board president, Abdi Buni, about self-driving cars.

The state legislature had started clearing the way for them on our roads, after all, and the airport was giving Uber and Lyft preference over the local taxis. Buni’s competitors were thinking about them, so what about him?

“We’re really trying to feed a family for the next day,” he said. “When it happens, we’ll make a plan.”

He said this with the kind of weariness about technological wonders that I’ve frequently found among co-op directors – and I could easily understand why. Uber and Google were testing their automatons with billions of dollars from Wall Street in the bank, while Green Taxi was running on what membership fees its mainly immigrant drivers could scrape together.

But the reality was that the self-driving cars were not some distant future that could be put off. As investors poured money into the car-sharing apps in anticipation of automation, the apps put so much pressure on Denver’s taxi industry that drivers fled their old companies for a better deal in their own co-op.

In that sense, it was as if the robots had already come. Green Taxi owed its existence to them.

There are two stories commonly told about robots these days. One is that, in the not-too-distant future, some enormous percentage of jobs currently being done by people will be taken over by computers, and the workers will be left twiddling their thumbs. The other is that, like past periods of technological change, job markets will simply evolve, and new, better things will arise for us to do.

The truth is neither – and everything in between. I say so, not by having any special insight into the future, but by noticing certain features of the present.

For instance, while it might look to some observers in affluent, urban areas that we’ve entered a post-industrial age, more stuff than ever is being produced on this planet, with human hands very much involved – it’s just that this is happening in different places.

Even where old factories have turned into apartment lofts, jobs show no particular sign of going away – they’re just less secure. People in places where it was once possible to support a family on one standard, career-long salary are becoming used to lifetimes of gigs, found and mediated by machines. Social contracts are shifting, while companies, governments, workers, and myth-makers are vying to set the new rules. It’s not a sudden robot apocalypse, it’s a longer, slower tug-of-war.

The winners will be the owners. Many of the world’s highest valued firms claim the title because they own vast, vast stores of data – data about us, data that can feed their algorithms.

Ownership is the ground where the tug-of-war for the next social contracts is being played. Who owns what will determine who really benefits. The owners, also, decide which tasks to invest in automating and what happens to the people who used to do those tasks.

Right now, a few very powerful conglomerates are likely to dominate this contest, companies based primarily on the west coast of the United States and in China. They are only getting stronger, as is their capacity to pull what they need from the rest of society and remake the rules on their terms. In new guises, this is a story we have seen before. It’s the story of railroad barons, big banks, and big boxes, of economic bullies that provoked people to create their own economies of scale through co-operative enterprise.

It begins with thinking about automation like owners do, not like victims of it. In worker co-ops, rather than fearing how machines might take work away, workers can imagine how they could use those machines to make their lives easier – in ways better and fairer than the investor-owners would. Consumer, purchasing, and marketing co-ops can use data visualization to demonstrate the superiority of their supply chains. The less people have to do to maintain all this, the more they can turn to opportunities for creativity.

Co-ops thrive when they discover how to do what other kinds of companies can’t or won’t do. Co-operative AI, also, may be intelligent in ways the investor-owned counterparts can’t be.

Emerging data co-ops like MIDATA (for medical data) and GISC (for farmers’ data) are built for privacy and transparency, while many of their competitors optimise for surveillance and central control.

TheGoodData harvests the proceeds from members’ web-browsing habits for micro-lending programs, and Robin Hood Co-operative runs an algorithm that prowls financial markets for opportunities to fund public-domain projects. This kind of data can in turn inform future co-op robots, like the flying drones that Texas utility co-ops used last year to restore power after Hurricane Harvey struck the state.

Rather than worrying about how robots and apps will make their current business models harder, co-ops should ask how smart, member-focused automation can set them apart. But the barriers are real: This takes economies of scale, and co-ops need to band together to create them.

For instance, there are driver co-operatives like Green Taxi all around the world – what if they created a shared hailing app that customers could use wherever they go, and pooled the data for mutual benefit?

Meanwhile, consumer car-sharing co-ops like Modo in Vancouver are well-poised to be leaders in adopting driverless vehicles – accountable to the local community, not to far-away investors. In hard-to-automate service professions like house-cleaning and childcare, platforms like Loconomics and Up & Go are using co-operation to automate marketing and payment so workers can focus on –and get paid better for – doing their core jobs.

The 20th century was full of science fiction about technology making people’s lives better and freer, but we’ve wound up with a 21st century of worsening inequality and insecure incomes.

The world of The Jetsons doesn’t arrive automatically. In order for the benefits of technology to be shared more widely, the ownership of it must be shared, too. Co-operation is uniquely well-suited to do this.

Reposted from The News Coop

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We recently had the chance to speak with Ernst Hafen and Ulrich Genick of MiData (pronounced my-data), a Swiss cooperative that aims to restore users’ data privacy through an innovative market solution.

Presently, the use of user data is mostly unregulated in the EU, with varying rights and privacy protections across EU member states which mostly stop at the requirement for consent and, thanks to “right to be forgotten” legislation, the deletion of collected personal data. In the United States, a patchwork of federal and state regulations safeguard various categories of data, e.g. financial data and video rentals, with a distinct lack of protections for personal data at large. As a result, personal data is collected by innumerable parties and ultimately used without the knowledge or (active) consent of exploited ‘data subjects.’ From the tracking cookies which document our movements across the Web to the flows of information generated by FitBits and other devices associated with the “quantified self” movement, personal data about our on- and offline activities is collected, bundled, and sold for massive profits. The emerging ‘asset class’ of personal data is estimated to reach $1.4 trillion by 2020 for European citizens alone.

With MiData, set to launch in Q3 2017, the citizens of the world may have a chance to take back this value which they generate through cooperative action and improve their own healthcare in the process.

MiData has termed itself a “health data cooperative,” offering a platform on which user-members can upload copies of their medical data, as well as alternative streams of information such as diet, exercise, and sleep metrics which have become more easily accessible through the rise of mobile devices (so-called “mHealth” data). Hafen and Genick were also very interested in genome data, insofar as it represents a category of information that currently does not exist in aggregate. The collection of these diverse streams of information into a single source, they said, could very well bring about a new age of “precision medicine” whereby treatments become highly targeted to individuals and their habits and all the more effective because of it.

MiData’s cooperative structure allows users to engage with the platform without becoming cooperative members and offers membership for a small fee. Members will govern the cooperative through a general assembly based on the principle of one-member-one-vote, including electing a governing board of directors and choosing where the cooperative will invest its profits. Though MiData will be a cooperative specifically for Swiss citizens, the software it has produced is open-source and will be freely licensed to any other data cooperative that meets their guidelines. Talks are underway to begin a German health data cooperative. MiData’s next challenge in its pursuit of a global federation of data cooperatives is developing software which will facilitate the secure sharing of data between these national instances.

By becoming a dominant health data repository, MiData hopes to become something of a gatekeeper for this data, attracting non- and for-profit researchers while allowing users a high degree of control over who can access their personal data. For example, one’s physician might be given access to all personal data through the platform, while a non-profit cancer research institute could be given access to only medical and dietary information; users could deny access to an exploitative for-profit drug company, or even for-profit researchers in general.

Those companies who do seek out the information held by MiData cooperative will serve as the cooperative’s source of funding, paying a fee to use the data in their research. Revenues collected will be used to pay for administrative overhead, and any leftover profits will be invested under the guiding hand of the cooperative’s general assembly made up of its user-members. Interesting to note is that, in the cooperative’s bylaws, these profits cannot be paid back to user-members as dividends but must rather be invested in projects and research of some benefit to the public. Hafen compared this strategy to that of blood donations which find more success when they do not offer a financial incentive to donate.

Alongside this use of data for research, MiData will also support a native app economy not unlike that of Apple and Google’s mobile-app marketplaces. With these apps, carefully vetted by a Data Ethics Committee, users will be able to make use of their own data; a marathon training app, for example, might combine a user’s sleep habits, BMI, and diet to generate a fine-tuned exercise regimen to shave a few minutes off of their mile time. Hafen and Genick were particularly excited about the possibilities of this app economy, going so far as to suggest that by its free-market forces the world might even see a standardization of health data markup which is now irregular not only between countries but even hospital to hospital. Were users to require their data in some particular format to make use of a popular app, they might very well incentivize their local healthcare provider to provide them this data in such an emerging standard.

Though MiData has not yet launched, they have already found major success. The cooperative has funded much of its own development via paid research trials which provide not only users for the platform — for example, one study asked post-bariatric surgery patients to use the app to monitor their recovery — but also proofs of concept that have attracted the attentions of additional researchers. The platform has also engaged in “citizen science” projects, led by Genick, which seek to demonstrate its capabilities by providing a fun space for user engagement. In one such trial, users were sent samples of compounds which they ingested. They were then asked to note whether or not their urine smelled of asparagus, the result of which was compared to their genome data in order to locate the gene which causes this effect. Genick noted that the cost of such trials are usually in the millions, while MiData was able to successfully run them for tens-of-thousands.

While much of our conversation centered around health data, it was clear that the ideological ambitions of Hafen and Genick are grand: they hope that MiData might set a model by which all personal data can be defended from lawless exploitation, with its value returned to the publics who create it. MiData’s immediate goal, however, must remain the protection and cooperative monetization of personal health data. This is because, at its core, the MiData platform relies on users voluntarily uploading their data, and thus these users require access to the data which they are to upload. Presently, personal health data is one of the few kinds of data to which citizens of the world have the “right of access,” a right to a copy of the data collected about them. While enhanced EU data protections legislation will come into effect in 2018, requiring that all data collected about EU citizens by companies across the world to be accessible to the data subjects who generate it, for now the scope of the MiData cooperative will be pragmatically limited.

We are absolutely taken by MiData’s early successes, and wish them well with their upcoming launch. We all ought to be reminded by their innovative model that platform cooperativism is not only about a one-to-one replacement of sharing economy apps with cooperatively owned solutions. The cooperative seizure of yet-exploited markets represents a meaningful avenue of struggle.

Photo by giladlotan

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