Platforms are the new gatekeepers

This post is one of a series of hunches that explore ideas around Liberatory technology. I am thinking aloud. Caveat emptor.

OK, so a strand of any discussion about technology and emancipation has to be about the role of the web in enabling more people to access tools, information, collaborators, distribution and markets, and conversely the new economics and behaviours that grow up around such systems.

The argument goes something like this:

  1. The web has dramatically lowered the barriers to entry for anyone who wants to participate in creative practice: writers, musicians, designers, makers, etc.
  2. The mechanism is the open protocols of the web/net
  3. In practice, thanks to these open protocols, a number of platforms have emerged that serve to link together people in different relationships. In the case of making, these might be things like YouTube or Instructables (information on how to make things); Facebook or Twitter (a way to share what you’re making with other people, to find people to work with, or market a commercial product); Etsy, Tindie, etc. (a marketplace where people can buy your product) … and so on.

So far, so good. We’ve all benefited from it, and Chris Anderson encapsulated the potential of this technology in his article and book, The Long Tail.

Where it gets tricky is that having disintermediated the old mediators (libraries, magazines, shops, distributors, and so on) we find ourselves at the mercy of a new set, many of whom are funded by VCs demanding vigorous returns on their investment. You can see this play out on Facebook quite simply. If you have a Page about your project or product, you can post an update to people who have Liked it, connecting directly with your fans so they can feed back, share it themselves, or buy it, depending on the nature of your relationship. But Facebook will limit the reach of your update, offering to give you better reach in return for money. Their business is structured in such a way as to incentivise them to extract rents from users in this way.

The ‘infinite shelf space’ and zero distribution costs of the web also kick back in another way. They lower the barriers to participation, but in doing so, create a new scarce resource: attention. There is simply too much stuff to look at, buy, read, share, fabricate or hack on the web. So very few makers make it big; it’s difficult to stand out.

Because platform owners are the ones aggregating all this attention, they’re well-placed to charge for access (as in the Facebook example), but also to commoditise creative content. Your cool project writeup, your 3D design file, your Kickstarter, even your hand-crafted artisanal whatnot are all fungible. If you decide not to share them on these platforms, chances are there’s another one that’s similar enough that no-one will notice. Thus the value in the sharing economy – particularly for purely digital goods – is largely captured by platform owners, leaving makers and content creators as an unpaid labour force. That is to say financially unpaid, though there are non-monetary benefits we do receive from using platforms, which should not be forgotten.

And it gets worse. Because audiences (other makers, journalists, consumers, etc.) only have time to give to a few platforms, the successful ones tend to become more successful. i.e. Markets in which aggregators can thrive can become monopolistic. Ben Thompson has written about this well, mostly in the context of commercial aggregators like Airbnb and Uber, but the same forces apply on other sharing platforms:

To briefly recap, Aggregation Theory is about how business works in a world with zero distribution costs and zero transaction costs; consumers are attracted to an aggregator through the delivery of a superior experience, which attracts modular suppliers, which improves the experience and thus attracts more consumers, and thus more suppliers in the aforementioned virtuous cycle. It is a phenomenon seen across industries including search (Google and web pages), feeds (Facebook and content), shopping (Amazon and retail goods), video (Netflix/YouTube and content creators), transportation (Uber/Didi and drivers), and lodging (Airbnb and rooms, Booking/Expedia and hotels).

The first key antitrust implication of Aggregation Theory is that, thanks to these virtuous cycles, the big get bigger; indeed, all things being equal the equilibrium state in a market covered by Aggregation Theory is monopoly: one aggregator that has captured all of the consumers and all of the suppliers.

Antitrust and Aggregation, Ben Thompson

Many platforms used by makers are run by people with good intentions, but ownership changes, people get tired, more aggressive competitors emerge. Many platform gatekeepers promise not to be evil, but business structures are powerful forces, that, over time exert more influence on products, than the ideals of individuals.

So one take out from this is simply: beware of platforms. There is another way of looking at it though: if the structure of platform businesses has undesirable — certainly not liberatory — effects on the behaviour of those businesses, then idealistic platform designers should approach business structure intentionally, and try to build platforms that don’t suffer from these flaws (an investor would not see them as flaws of course).

Going back to more widely used platforms, it’s easy to see how Uber is structured in a way that commoditises drivers (the ‘makers’ in this analogous context), whereas Airbnb leaves room for its ‘makers’ (people with a spare room) to differentiate themselves, and retain more of the value in the relationship.

It’s also easy to see that free-to-use, ad-supported platforms scale successfully (and in particular reach critical mass much more successfully than user-supported platforms), but that this model ends up incentivising user-hostile behaviour by platform owners, in the form of invasive data mining, excessive advertising, or paid-for placement. But subscription models are slowly becoming more accepted, and maybe there is room in the future for platforms in which the users are not ‘the product being sold’.

There are also governance structures which can help to mitigate some of these forces. The Wikihouse Foundation was set up to guide the eponymous open-source housing project and “establish a neutral, non-profit platform for the ownership & governance of the project”. But while in this case, the interests of the commons are protected in its constitution, it’s not clear how one could design a platform structure that is incentivised to serve the interest of its suppliers (makers, content creators, etc.) over the interests of the platform owners. Certainly it doesn’t sound like a great investment opportunity.