Amy Cortese | December 4, 2015

Tech-based startups are drawing on cloud computing, algorithms and mobile phones to create a new on-demand service economy, conjuring help with the press of a button. There’s Uber for transportation, Handy for home cleaning, and Task Rabbit for everything from running errands to assembling furniture. In the process, they are changing the nature of work in profound ways.

The platforms allow independent workers the freedom to moonlight or work flexible hours, which sounds great, in theory. But the reality—starkly documented in a growing number of articles and studies—is that these for-hire workers often make less than a minimum wage and lack basic benefits and worker protections.

Rather than creating an economic utopia for independent workers, the gig economy seems to be perpetuating income inequality and vulnerability. Yes, there are lush profits to be made, but they flow to the platform and its venture investors, minting new “unicorns” and tech billionaires.

The clash has generated lawsuits, policy proposals and calls to classify these freelance workers as employees.

With freelance and contingent workers making up a growing segment of the workforce—currently more than a third of U.S. workers—this is no idle question. A debate has ensued over how to protect workers in this new world.

Regulation? Collective bargaining? How about beating the platforms at their own game?

Disrupting the Disruptors

That’s the aim of a loose-knit faction of activists and entrepreneurs that are borrowing the tools of Silicon Valley to create a more cooperative version of the on-demand apps—one that is owned and governed by the people who rely on it. Call it the worker-owned sharing economy.

They come from eclectic and unlikely sources, from the labor movement to the heart of Silicon Valley. And they even have their own conference: on Nov. 13 and 14, The New School in New York held a coming out party for what it calls “platform cooperativism.”

“Silicon Valley loves a good disruption, so let’s give them one,” urged Trebor Scholz, associate professor of culture and media studies at the New School, to loud cheers at the event’s opening session.

The conference showcased cooperatively run apps from established players such as Fairmondo, a German online retail marketplace that counts 1,900 people among its is user-owners, to startups such as Loconomics, an on-demand marketplace for services from housecleaning to tutoring to massage. Others are developing profit-sharing platforms for content producers, domestic workers and musicians.

The new platforms all share a vision of the Internet as a commons. While most so-called sharing economy platforms are top-down affairs backed by venture capital, these emerging platforms are structured as democratically owned and governed cooperatives run for the benefit of their worker-owners.

“The cooperative element of Loconomics ensures that the platform stays in the best interests of the people who are supplying the labor and not in the interests of short-term profits,” says Josh Danielson, the site’s founder. His goal, he adds, is to “create a long-term material impact with hopes of reducing income inequality by cutting out middlemen in local economies.”

Platforms of Power

Danielson got his first taste of the sharing economy when he began renting out his San Francisco apartment on Airbnb, the room-rental service, to help cover the rent while he was in business school. Itching to start a business that had social impact, he gravitated to the platform model. “I saw these platforms as being the future,” he explains. “I knew there would be great power in the hands of those who own and control them.”

The platform has been under development for more than two years. With help from the Sustainable Economies Law Center in Oakland, Danielson created a framework of bylaws that will govern the cooperative enterprise.

In early November, Danielson invited dozens of freelance service providers to a meeting where he unveiled the cooperative. Some 35 independent professionals have signed up for a beta test of the platform, which will officially launch as a cooperative early next year.

Loconomics takes no commission from their revenue. Instead, the cooperative’s worker-owners pay a monthly fee that gives them access to the platform and funds its marketing and operations. Any profits will be reinvested into the company or shared with the worker-owners, based upon the hours they have booked through the platform. The members will also elect a board to govern the site.

That appeals to Christopher Renfro, a furniture salesman by day who moonlights as a photographer, music producer, visual designer and consultant in his 0ff-hours. He was won over by the functionality of the Loconomics platform, including the ability to create a personalized profile that reflects his many talents and to tap into a community of freelancers and cross-referrals. But, he adds, “I’m also glad that this platform will not be helping someone high up in a penthouse get more rich.”

Will the upstarts be able to compete with established and well-funded players such as Task Rabbit or Uber, whose latest funding round values it at close to $70 billion? Given the network effects that govern such businesses, the challengers face a steep hurdle. But the options are stark.

As Janelle Orsi, executive director of the Sustainable Economies Law Center, commented in The Nation recently, “We have a choice: Keep using platforms that widen the wealth gap, or build tech platforms as commons.”

Related: New Funding Options for Cooperatives

An App For the Gig Economy

Feature image: Lumber Mill at Eugene Post Office, Carl Morris, 1942

Story used with the permission of http://thenetwork.cisco.com/.