The seemingly unstoppable rise of companies such as Google, Amazon, eBay, Uber and Airbnb has left many feeling powerless over their economic security. But could a more ethical business model challenge their dominance? The Phone Co-op founder Vivian Woodell makes the case for co-operatives
We’re seeing the consolidation of a trend in the online economy towards the creation of what I call ‘unnatural monopolies’. These are businesses which are eminently capable of being replicated, but which have become so dominant in their area of business that they are very hard to challenge. The likes of Google, Amazon, eBay, Uber and Airbnb have dominance in their spheres. Some of them have almost complete dominance. And they display typical monopolistic behaviour.
If you are a trader on eBay, you’ll know they sometimes force you to take a loss on things like postage, and impose rules that put you at a disadvantage in disputes. An Uber driver once told me that the amount charged to customers and paid to drivers was supposed to fluctuate with supply and demand. But he had seen situations where the price to the customer had gone up, while the pay he received had not.
Some of these new behemoths seem to be ‘here today and gone tomorrow’, reaching considerable scale and then vanishing. Remember Myspace? What’s particularly galling for co-operators is that these unnatural monopolies make their money by taking a hefty slice of exchanges between people, freeing up value that was previously unused – someone’s empty house for example. Hence the misleading title of ‘the sharing economy’.
The co-operative movement has succeeded in carving out a role in some of the industries that were once considered ‘natural monopolies’. The Phone Co-op has proved that we can operate in a former state monopoly with a real culture of public service, financed entirely by our own members, pioneering ethical ways of doing business, and making a real difference. The Midcounties Co-operative has shown through Co-operative Energy – which now has a quarter of a million customers – that a co-operative approach can work in energy supply. Many co-ops have been set up to generate renewable power too.
Our challenge now? To take on the space occupied by the unnatural monopolies. This looks simultaneously easier, and more difficult. Easier because all we need to do is create the software platform, and find the users. Easier because many people hate the overbearing behaviour of the new monopolists, and are looking for alternatives – a co-operative model would appeal to them.
The co-operative movement has succeeded in carving out a role in some of the industries that were once considered ‘natural monopolies’
But it’s harder because these businesses came into being as a result of huge risk-taking that we find it hard to replicate in the co-op movement. Venture capital investors spread their investments over many startups, each with a tiny chance of success, in the hope that overall they come out ahead.
After all, the successes are super-successful. In the co-op movement, we are oriented towards meeting member needs, and we don’t want to lose our members’ investments. So this kind of approach is anathema to us.
Truly co-operative entrepreneurs
But some are making inroads. Fairmondo is a new co-operative online marketplace, owned by buyers and sellers, that is taking on eBay and Amazon. Canadian-based Stocksy is an artist-owned co-op which offers royalty-free photography online, taking on the giant picture agencies. In the US, Loconomics is a worker-owned co-op that helps people find better terms than TaskRabbit in the so called gig economy.
Like The Phone Co-op, these organisations started with limited resources (The Phone Co-op started with £35,000 in a spare bedroom). By sheer sweat and effort, they are growing and making their mark for a fairer economy. The Phone Co-op has grown every year since we started. I’ve no doubt these new co-ops will too. But if we are to become global beacons of co-operation, playing a really significant role in these new markets, we will need new ways to finance our ventures. The market is changing faster than our co-operatives typically grow, in our traditional model.
In some ways, we had the tools long before these new entrants came along. You could say that co-operators were the first crowdfunders. The Rochdale Pioneers raised small amounts of capital from large numbers of members to create their co-op, a model copied since by millions of co-ops the world over. The new model pioneered by Co-operatives UK – community shares – has opened the door to many new co-operative ventures.
If our movement wants to see ventures of this kind reach their potential in transforming the economy of the 21st century, we need new thinking. We need new mechanisms for sharing and limiting the risks. In the new Phone Co-op Foundation for Co-operative Innovation, which I’m leading, we’ll be putting our heads together to try to find solutions, drawing on the immense innovative spirit that characterises our movement.
I could imagine a crowdfunded co-operative venture capital fund, which invests in a variety of new platform co-op ventures, perhaps taking some kind of royalty from the really successful co-operatives, and accepting losses on a higher proportion of the others than we normally would in our world.
If we are truly to be on the eve of a new era of co-operation, based on platform co-ops taking their rightful place in the online economy, we need to find those answers. So how ambitious are we? Do we want to replace the dominant businesses with platform co-ops? If we do, there is a lot of thinking to do, but a big prize. Let’s do this together.
Featured image: Nina Gibson from the Unicorn Grocery, a worker-owned co-op in Manchester