play the long game

Platform capitalism is the ability of a common internet exchange medium to enable easy commercial transactions. Buyers of services get convenience, while sellers get a larger market. The spoils go to the owner of the platform, receiving a percentage of revenues. Most of these platforms are created when regulations and oligopolies make these transactions difficult by traditional means. Platform capitalism initially disrupts a sector that is poorly served.

PayPal is an example of facilitating small financial transactions between parties in different countries because the banks were terrible at it. PayPal facilitates small businesses to engage in  e-commerce. Uber is disrupting taxi monopolies. Uber enables car owners to make some extra money and eases payment for passengers. AirBNB is taking on the hotel industry and its practices. AirBNB provides an easy way to rent out extra space in your home by connecting you to a global market.

At some point, network effects kick in. This is the hope of the investors in these platform companies. Once they dominate a sector, it is almost impossible for a competitor to compete directly. Facebook has achieved this for social networking; Amazon is getting there for online retail sales; and Google controls online advertising. The wealth that is created for the users pales in comparison to the value for the platform owners. For instance, it is very difficult for any site to make significant revenue from Google ads.

Once the platform capitalists achieve dominance, they act like any monopolist. This can be seen by looking at consumer complaints about PayPal, driver and passenger abuse at Uber, and how dependent we have become on Google.  These companies shift from rebels with a cause, to the 800-pound gorilla you cannot get away from.

So what can the average person do to Uber-proof their labour in a post-job economy?

As they say on the Web, if you are not paying for the service, then you are the product. We need to be careful about what free services we use and understand the total cost of use. Once our data are trapped in a system, it is tough to get them out. With all these new platforms being launched, any independent, small, or medium-sized business needs to play the long game. Determine what 5 or 10 years of use and growth will look like. Something cheap at the onset may be expensive later. Never build a business model on their platform, unless it is short-term and you have an exit strategy. Sites that are dependent on Google’s ads now have to ride every change to the system, with no control. The famous long tail helps nobody but the platform owners.

departure-timeCollectively we should put more energy into the real sharing economy. There are already cooperative models that work, like Mondragon with 74,000 members. Seb Paquet said that the Web and social media enable ‘ridiculously easy group-forming’. Use this to join with peers and develop new ways to create wealth together, outside traditional organizations and beyond the platform capitalists. We have been experimenting at the Internet Time Alliance since 2009. As we go through this next phase of the Internet economy we have to avoid the easy money, and play the long game.

3 Responses to “play the long game”

  1. Ben Werdmuller

    As with any decentralized model, I think the key is examining what kinds of value the consumer can get that aren’t provided by a more centralized monopolist-to-be. It’s not enough to provide an ideological alternative: the product itself must be an inherently better alternative.

    So many of these business models would be enabled by a truly decentralized social web. If the web itself supported transactions and interactions, it would empower completely new kinds of businesses that would be on a level standing with each other.

    Reply
    • Harold Jarche

      Both Uber & Airbnb could easily be cooperatives, or enable profit-sharing, so it is possible, even with current constraints. It’s just that all that valley VC money feeds the hype machines.

      Reply

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