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 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
• PCssmartphonesInternet of Things
– Sense, store, process, transmit data
• Cloud computing (see Zysman 2012)
• Software eats everything (open source)
All at decreasing cost
Digital Platforms
• Software-enabled “cyberplaces” where
constituents can act or transact
• Create network effects between applications
and users, virtuous circles of growth
What Is New?
• Connect 40, 50% of world population
• Characterize nearly everything digitally
and then informate
• Replace much work with intelligent
machines – Brynjolfsson (Vonnegut -Player Piano?)
• What is the new “work”
• The Makers Movement based on similar
tendencies
Liquidity event, stock
options valuable, no
longer Venture Labor now
operating companies
subject to stock market
etc..
Platform firms
funded by VCs, e.g.
Google, Facebook,
Uber – their direct
employees
Wage,
stock
options
Can become Venture
Labor
Contingent
Compensation
Fee for
Service
or
Product
contract
These are
platform builders
and VC financed
Venture
Labor
Virtual
Project
Funding,
Kickstarter,
Indiegogo,
etc..
Open Source
commercial
Redhat, Github
Open Source
Wikipedia (no
payment)
None
Financial Reward
Liquidity event,
capital gains,
secure
employment,
Figure One: Labor in the Platform Economy
Apps stores, Youtube etc..
shared advertising revenue,
Amazon self-published
books, games, such as Zynga,
King Digital, Supercell, etc..,
affiliate marketing revenue
Cyberformal labor
monetization. Amazon,
Mech Turk, oDesk, etc.
Can become
monetized if
sufficiently visited
Cyberformal asset
monetization. Ebay,
Amazon Market, Uber
Craigslist, AirBnB
Monetizing assets such as
automobile, spare room
Free labor such as posting to
Facebook, Twitter, LinkedIn,
Youtube, Pinterest, Yelp, etc..
All activity on the netGoogle, Bing, Browsers, ad
networks
Compensated by
employer for building
website, etc..
Number of Participants
Acknowledgements: Thanks to John Zysman, Ruth Collier, Bryan Pon and Lilly Irani for suggestions and comments on this figure.
Copyright: Martin Kenney
What Is “Work?”
• Surfing the internet (Terranova, Lanier
et al.)?
• Putting content on Facebook, Pinterest,
Youtube, LinkedIn?
• Creating open source software?
– If on GitHub?
• Sharing economy -- Wikipedia, Khan
Academy
Five Forms of Compensated CyberMediated Work
1. Global bidding/cyber-contracting –
eLance/Odesk
– Microwork – fill up working day -- AMT
2. Industry cyber-transformed, e.g., taxi
cab – Uber; hotel -- Airbnb
3. Informal work – cyber formalized, e.g.,
TaskRabbit, Instacart
4. Virtual consignment – Apps stores
5. Virtual project funding –
Indiegogo,Udemy
1. Globally Biddable Contracting
Elance/oDesk – Top Hiring and Provider
Nations
Top 10 Provider Nations
Top 10 Hiring Nations
United States
Australia
United Kingdom
Canada
UAE
Singapore
Israel
Germany
Netherlands
New Zealand
1
2
3
4
5
6
7
8
9
10
United States
India
Ukraine
Pakistan
United Kingdom
Russia
Canada
Philippines
Romania
China
1
2
3
4
5
6
7
8
9
10
Source: oDesk 2014
Mechanical Turk -- Microlabor
Globally Biddable Contract Labor
• Lowest price
• Contractors largely powerless
– Exception if they have rare skills (Kunda and Barley’s
gurus)
• Little upside for contractor besides possibly
learning
– Could lead to a permanent job?
• Social Outcome:
– Replace permanent employees
– More efficiently allocate people to work
2. Industry Cyber-Transformed
Uber – Taxi – Monetize Car and Driver
AirBnB – Hotel -- Monetize Excess
Space
Airbnb Model
Credit card information
Travelers –
Picture, various
information,
credit card
Background check information
AirBnB,
Uber,
etc..
Facebook, LinkedIn
links
Entire platform hosted by
Amazon, etc..
Airbnb
validated
pictures
Providers – Various
information including
pictures
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
Winner take all returns
$
Of course, platform owner
always wins
But if there is referral, research
shows that long-tail refers to
winners ipso facto they
subsidize winners!
Super long tail
Very small return
Discoverability an issue
Items, videos etc..
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 lowlycompensated 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
Thank you