Where Will Work Come From Or Value in the Era of the Platform Economy* Martin Kenney Professor Community and Regional Development Unit University of California, Davis & Senior Project Director Berkeley Roundtable on the International Economy & Senior Fellow Research Institute for the Finnish Economy (ETLA) This presentation was first made at the Colegio de la Frontera Norte in Tijuana, Mexico on January 14, 2014. It continued to evolve at various other in the U.S., Europe, and Canada. John Zysman of BRIE has been instrumental in the progress of this line of thinking; a number of the
Transcript
Where Will Work Come FromOr
Value in the Era of the Platform Economy*
Martin KenneyProfessor
Community and Regional Development UnitUniversity of California, Davis
&Senior Project Director
Berkeley Roundtable on the International Economy&
Senior FellowResearch Institute for the Finnish Economy (ETLA)
This presentation was first made at the Colegio de la Frontera Norte in Tijuana, Mexico on January 14, 2014. It continued to evolve at various other in the U.S., Europe, and Canada. John Zysman of BRIE has been instrumental in the progress of this line of thinking; a number of the ideas are from our joint work.
Technological Change and the Platform Economy
The assembly line gives you the corporate capitalist (and industrial union). The Cloud gives you the platform capitalist (and precarious labor)?
Or a cooperatively owned platform and a sharing economy?
My Proposition
Capitalism and its value creation and extraction process is changing as we speak and we need to talk about it.
Setting the Stage for the Platform Economy: Digital Technologies
• Moore’s Law • Ubiquitous connectivity• PCssmartphonesInternet of Things– Sense, store, process, transmit data
Credit card information Background check information
Facebook, LinkedInlinks
Airbnbvalidated pictures
AirBnB, Uber, etc..
Providers – Variousinformation includingpictures
Industry Cyber-Transformed• Breakdown former barriers to market competition
(taxi rules, zoning, anti-discrimination)– But these barriers are eroding (Airbnb pays hotel tax,
Uber/Lyft get commercial insurance, etc..)• Providers largely powerless vs. platform owner– Little upside for contractor
• Convenience and often lower price for consumers• Social Outcomes:– Convenience, efficiency, mobilization of slack assets– Erosion of barriers that protected labor (taxi
medallions, unionized hotel workers, etc..)
3. Informal Work -- Cyber-Formalized
Task Rabbit
InnoCentive – Innovation Outsourcing
InnoCentive• Total Registered Solvers: 355,000+ from nearly
200 countries• Total Challenges Posted: 2,000+ External
Challenges & thousands of Internal Challenges (employee-facing)
• Project Rooms Opened to Date: 500,000+• Total Solution Submissions: 40,000+• Total Awards Given: 1,500+• Total Award Dollars Posted: $40+ million• Range of awards: $5,000 to $1+ million
Informal Work -- Cyber-Formalized
• Cyberhistory is long – eBay, Craigslist• Have created a number of large platforms• Movement of control and monitoring to the
Cloud• Social Outcomes– Greater efficiency and price discovery– Greater transparency in terms of taxation, trust
etc..– Social power moved to platform owner
4. Virtual Consignment Model
Virtual Consignment
• Produce the work prior to compensation no investment by platform owner– From apps ($30B payout) and Youtube videos to
Yelp reviews• Can become viral• Increase in downloads results in exponential
increase in income
Returns to Producers for Cyber Consignment
Super long tailVery small return
Discoverability an issue
Winner take all returns
$
Items, videos etc..
Of course, platform owneralways wins
But if there is referral, researchshows that long-tail refers to winners ipso facto theysubsidize winners!
Virtual Consignment
• The Apps stores have now paid out $15 billion• YouTube – YouTube Partner Program–Created in 2007–1M+ creators –1,000s of channel earning $100K+–Vidcon Convention 2014 – 19K+
• Udemy – Online courses
Virtual Consignment Model• Platform owner gets content at no cost• Content provider bears all costs• Content provider has two forms of upside– Payment through platform owner– Ancillary income sources from audience• Appearances, testimonials, product placements, items
• Content provider return characterized by long tail• Social Outcome:– Enormous opportunities for new work but WTA
5. Virtual Project Funding
• Crowd “charity” funding – Kickstarter ($612M) and Indiegogo ($98M)
• Cyber platform for angels – Angel’s List
Concluding Reflections
Second Machine Age suggests much work will be displaced
I am hypothesizing new types of
work and organization thereof are emerging
Labor Atomized Throughout Society• Online human activity, both work and not
work, creates (or transformed into) value • Most “long tail” work is not sufficiently
valued to produce substantial income, but forms the corpus from which certain work becomes valuable– Flappy Birds etc.
• Where is the work place – potentially everywhere!
Winners Take All?
• Does entrepreneurial economy reinforce income inequality?
• Platforms serviced of relatively lowly-compensated contractual or consignment workers with a few big winners
• Platforms themselves are WTA• Barriers to entry dissolved digitally– With approving state
New Classes?• Creative class (Florida)• Cognitive-creative class (Alan Scott)• Symbolic analysts (Reich)
Or Old Classes Weakened• Gig economy (Friedman)• Precariat (Standing)
Or Better to Think About How It Works
Platform economy
If It Is a Platform Economy Is a Social Wage Proper Response?
• Extend reward for the “lucky” individual to the milieu– Many of the consignment economy winners may
be one-off “hits”
• Increase entrepreneurship – As we cannot know a priori who will win, e.g.,
Flappy Birds
• Support creative activities• Increase consumption
