Through rose-colored glasses: On cyberutopianism and the digital platform economy

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The tenacity of

cyberutopianism

in the

digital platform economy

Through

rose-‐colored

glasses

The tenacity of

cyberutopianism

in the

digital platform economy

On

cyberutopianism

and the

digital platform economy

Master thesis MA New Media & Digital Culture Odiel van de Nobelen | 10003656

ovanden@gmail.com | 06 - 811 45 130

Supervisor: dr. Marc Tuters

Second reader: Amanda Wasielewski 23 August 2017

Master thesis MA New Media & Digital Culture

Odiel van de Nobelen | 10003656 Supervisor: dr. Marc Tuters

Second reader: dr. Niels van Doorn 23 August 2017

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Abstract

Companies within the digital platform economy such as Airbnb and Uber are transforming the ways we live, work and generate value. There are various, conflicting observations about this new emergent digital economy. On the one hand it is imagined as progress and liberating empowerment by its advocates. While on the other hand critics raise concerns that this

(unregulated) digital economy is a glide path to work precarity, entrenches existing inequalities, redistributes risks or, simply formulated: operates by exploitative mechanisms. Despite these concerns companies within the digital platform economy are very successful. This success can partly be explained from a basic economic perspective which focuses of transaction costs. Besides the economic argument of transaction costs this thesis will mainly focus on the concept of cyberutopianism. I will sketch a genealogy of cyberutopianism, a discursive tradition rooted in the 1960s counterculture that emerged during the early days of the Internet in the 1990s. I will use this concept to examine how the Internet and platform economy today – more

specifically Airbnb ― are framed in utopian terms throughout history. Following the, on the first sight, strange gap between the exploitative, “dystopian” side and the utopian, appealing side of the digital platform economy this thesis aims to answer the following question: what makes the cyberutopian discourse celebrating the digital platform economy sustainable despite the exploitative mechanisms in this new economy? The argument of this thesis is unfolded in three parts. I will show that cyberutopianism is necessary as an ideological legitimization of the darker, exploitative side of the digital platform economy. Furthermore, it remains attractive because it describes an utopian, ameliorated future engineered through technology (“making the world a better place”), while at the same time it epitomizes the desire for the restoration of an enchanted, non-‐alienated condition of the past.

Keywords

Cyberutopianism; digital platform economy; Airbnb; exploitation; ideology; Silicon Valley;

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Introduction

In one of the latest episodes of the Dutch satire television program Zondag met Lubach (VPRO), host Arjen Lubach presented a list of “nice brands” (“Lubachs Leuke Merken Lijst”), which included brands such as Tony Chocolonely (100% slave free chocolate) and Triodos Bank (sustainable banking). Lubach ended the list with Airbnb, which he considered the most

“sympathetic” company of all because it is part of the so-‐called “sharing economy”. On platforms such as Airbnb everyone can become a host or supplier with one mouse click and share their underutilized human, social, and real capital with strangers. Lubach enthusiastically concluded that this is the biggest advancement of the sharing economy. However, this enthusiasm in reality is to a large extent not really justified. Hence the abundance of concerns and critiques on the exploitative mechanisms of this new digital economy. This thesis questions why utopian visions on the new digital platform economy remain appealing and endure despite a less rosy-‐ colored side they fail to account for.

The home-‐sharing platform Airbnb is at the forefront of the buzz around the new emerging digital economy. Airbnb co-‐founder Joe Gebbia explained in a 2016 TED Talk why home-‐sharing through the platform is so great: “we just [discovered] it was possible to make friends, while also making rent” (03:47-‐03:51). There is a belief that companies within this new digital economy form a viable alternative to distant, impersonal and centralized corporations. Furthermore, proponents suggest that the companies are about to bring a new, digitally enabled, people-‐driven economy: an economy that is able to abolish economic injustice by facilitating direct interactions between individuals. For example, this vision is reflected in Airbnb’s statement when they speak about “communities of regular people, occasionally sharing the homes they live in as an alternative to large, corporate hotel chains” (“Introducing the Airbnb Economic”).

Although renting out (underutilized) rooms and homes is hardly something new, the lowering of transaction costs by the platforms − the costs that are associated with market exchange − make it easier for people to join the market and therefore arguably offer flexibility in the way we work and live. According to Airbnb the additional income hosts earn through the platform “helps them pay their bills, start new businesses and pursue new projects”. Tom Slee, author of the book What’s Yours Is Mine: Against the Sharing Economy (2015), explains this advantage of the lowering of transaction costs by the platform as follows: “Each exchange [within this digital economy] helps someone make a little money and helps someone save a little time: what’s not to like?” (1).

In its own rosy narrative, the $31-‐billion start-‐up Airbnb is a “financial lifeline” for countless families, “helps [people] make ends meet”, provides a financial boost to communities

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and small businesses and benefits social and environmental impact (“Unlocking economic opportunity”). Airbnb further stresses this narrative through its website Airbnbcitizen.com by showing the steps the company is taking to “democratize capitalism” and “create economic opportunities”, using technology to help people connect and empower their community.

Thus, both from an ideological perspective, which focuses on altering the face of

capitalism, and from an economic perspective, which focuses on lowering transaction costs, this digital economy seems to be successful and working very efficient. This thesis will make the claim that there exists a utopian discourse about this new emerging digital economy. This discourse exists of promises, for example that the digital platform economy enhances

communality, creates economic opportunities and offers flexibility in the way we work and live. There is the enticing image that we are to be liberated from the constraints of a permanent career and given new, entrepreneurial opportunities (Srnicek 1). Also, in this discourse the digital platform economy is lauded for its ability to usher in a new phase of capitalism which is more democratic, participatory, and de-‐alienating for individuals (Fischer 229).

This thesis will examine this discourse in relation to Airbnb, since it is an important figurehead of this emerging digital platform economy. It will do so through the lens of the (cyber)utopian visions on new digital technologies, which stem from the 1990s. In this period the Internet was still in its infancy and was regarded as the means for achieving an “ideal” society. For example, in the early 1990s Nicholas Negroponte, founder of MIT Media lab, declared that the Internet was about to “flatten organizations, globalize society, decentralize control, and help harmonize people” (Negroponte in Turner, From Counterculture 1). Media scholar Ethan Zuckerman argues that these ideas about the Internet, which place it at the center of visions of a world made better through connection, are so abundant that this is coined the neologism “cyberutopianism” (30). In cyberutopianism, a new paradigm shift on the web is not only conceptualized as a technological innovation, but is also a “rhetorical move” that

consecrates a new genre of technology (Stevenson, “The cybercultural moment” 1089). According to Zuckerman, this cyberutopian perspective offers us the reassurance that technological innovations are both essential and sufficient to ensure the public good (31).

However, despite Arjen Lubachs enthusiasm at first, when looking at the political

economy of the digital platform economy it appears not as auspicious as it is often presented (of course, Lubachs enthusiasm turned out to be feigned). Sharing economy critic Sebastian Olma summarizes the exaggerated buzz around emerging digital platform economy: “under flashy headlines such as ‘sharing is the new owning’ it is heralded as the solution to the current financial crisis, the path towards a more sustainable economy or even the harbinger of a post-‐ capitalist society” (“Never mind the” n.pag.). It is arguable that the peer-‐to-‐peer rentals facilitated by Airbnb help people earn some extra money and therefore create economic

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opportunities but contrary to the euphoric thoughts about the advent of the digital platform economy, there is controversy arising in both scholarly research and media outlets.

Specifically for Airbnb there are concerns that “home-‐sharing” causes pressure on the housing market and creates problems related to the liveability of popular Airbnb areas in a city (see for example Benjamin Walker’s take on the “Airbnb Economy”). Besides these criticisms, there is a countermovement arguing that contrary to the belief in entrepreneurial opportunities and flexibility brought by the platform companies, these so-‐called opportunities in reality entail a new precariousness of work. Furthermore, there are concerns with regards to redistribution of risk, the commodification of human interaction and the amplification of inequality. In other words, while the digital platform economy increases participation through lowering

transactions costs and seems to be working very efficient — as celebrated by many scholars — looking at the political economy of this digital economy it cannot be denied that it operates by exploitative mechanisms.

Despite these negative aspects of digital platforms, the platform economy does not show signs of slowing down. Airbnb has grown extremely rapidly, with more than three million accommodation listings worldwide and 150 million users and a total valuation of $31 billion the company is one of the biggest successes of the digital platform economy. Arguably, there is a mismatch between cyberutopianism and a reality, which seems to be fairly dismal. How can this be explained? This is the question that functions as a starting point for my investigation of cyberutopianism in this thesis. More specifically, my research question is: what makes the cyberutopian discourse celebrating the digital platform economy sustainable despite the exploitative mechanisms in this new economy?

By answering this question I will contribute to the new media field by using a history of cyberutopianism to reflect on and critique a contemporary phenomenon – the digital platform economy. So far, the concept of cyberutopianism has primarily been used in relation to the early days of the Internet in the 1990s and its conceptualization as a “cyberspace” (e.g., Streeter, 2010; Turner, 2006) and pronouncements of web 2.0 (e.g., Stevenson, 2016; Dahlberg, 2011). My research is new in that it applies the concept to the discussion of platform economies. Throughout this thesis I hope to provide an insight in or bridge the (on the first sight) strange gap between the exploitative, “dystopian” side on the one hand and the utopian, attractive side of the digital platform economy on the other hand. I will show that cyberutopianism functions as a legitimation for the less rosy-‐colored side of the platform economy. Moreover, this thesis illustrates that this utopian way of thinking about new digital technologies is regenerative, as I will show the utopian discourse of the platform economy is nothing new, but is a recurring phenomenon.

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Methodology & justification

Due to its novelty and diversity there are various, ambiguous observations on the new platform economy in scholarly research. The recent paradigmatic shift on the web has been dubbed “the sharing economy” (e.g., Lessig, 2008) or “collaborative economy” (Botsman & Rogers, 2010), whereas scholars less convinced of its beneficence have named it “the gig economy” (e.g., Smith, 2016; Kessler, 2014; Scholz & Schneider, 2016) or “platform capitalism” (e.g., Lobo, 2014; Srnicek, 2016). According to business academic Russell Belk there are two commonalities in the descriptions of the new digital economy: the use of temporary access, non-‐ownership models of utilizing consumer goods and services and the reliance on Web 2.0 technologies to enable this (“You are what you can access” 1595). Henceforth, I will refer to this new emergent economy as the “digital platform economy”, as it is a more neutral term that encompasses the diversity of the (often) unrelated digital phenomena enabled by the platforms (Kenny and Zysman, “The rise of” 61-‐69). More importantly, I will concentrate on for-‐profit platforms, which function as online intermediaries between transactions mediated by money, rather than non-‐profit organizations facilitating more genuine sharing practices such as foodswapping (Thuisafgehaald) or

ridesharing (Toogethr).

In order to unravel the tenacity of cyberutopianism in relation to the digital platform economy and its cultural underpinnings, I will provide a theoretical analysis throughout this whole thesis, which is situated in the field of critical media studies. This thesis is build up in four main chapters, aiming to form a dialectical structure. As a starting point for this thesis, I will attempt to bring some clarity to the success of the digital platform economy from an economic perspective. Here I will use Ronald Coase’s (1907) early notion of transaction costs, as this is a central concept to the understanding of the success of the digital platform economy.

Furthermore, I will shortly address the idea of the network effect in relation to the success of the digital platform economy. Although this thesis will primarily focus on the cultural

underpinnings of the digital platform economy, I will not ignore the economic dimension since it is useful for both reflecting on the success and the darker side of the digital platform economy.

In the second part of this thesis I will discuss the ideological component that is at play relation to the success of the digital platform economy. Here, I will examine the concept of cyberutopianism throughout its more than two centuries spanning history and its

countercultural roots. I will approach the concept genealogically, taking into account that the story I am delineating in this thesis is just one narrative in a bigger network, without a very clear-‐cut origin or endpoint. As for Foucault, genealogy is the alternative to the linear

development of history so conceived and “opposes itself to the search for origins” (qtd. in Prado 33).

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The analysis of cyberutopianism forms the basis for answering my research question on why this discursive tradition remains appealing while it has disappointed us in the past . In this chapter I hope to clarify that cyberutopian thinking is a recurring phenomenon and still very present in the digital platform economy. I will develop my argument in three steps. The contemporary cyberutopian discourse is difficult to analyze without going back to some of the cultural history of the technology and innovation hub Silicon Valley. The San Fransisco Bay Area is widely regarded as one of the most significant geographical and intellectual homes of the information technologies (Zandbergen 32). So first, I will address cyberutopianism during the 1990s and its ideological touchstone, the 1960s counterculture in the San Fransisco Bay Area. Then, I will discuss the dot-‐com collapse at the end of the 1990s and the resurfacing of

cyberutopianism with the emergence of web 2.0. Finally, I will provide a discussion of the rearticulated cyberutopianism within the digital platform economy. Here I will show that it is noticeable that there was not only utopian thinking about new digital technologies and the Internet when it was still a novelty in the 1990s, but that there is a regenerative belief in digital technology as a transformative force throughout recent history.

In order to do so, I will build on the work of various scholars, mainly using Fred Turners (2006) and Thomas Streeters (2011) historical critiques of the Silicon Valley (US) culture and ideology. Silicon Valley functions as a geographical metaphor, which marks a global, digital industry with its own practices and ideology (Turner, From Counterculture 149-‐151) and therefore is an important key in the understanding of cyberutopian thinking. Additionally, Turners work illustrates how this utopian thinking stems from the 1960s counterculture and how these (countercultural) ideals are still existent today. The first part of the second chapter will discuss this argument, which is reaffirmed by Richard Barbrook and Andy Cameron’s notion of the “Californian Ideology”. Using this term Barbrook and Cameron describe the amalgamation between post-‐hippy counterculturalism and neoliberal determinism. In order to illustrate the echoing of earlier promises of the web during the mid-‐2000s, after the dot-‐com collapse, I will focus on Tim O’Reilly’s understanding of Web 2.0. Here, I aim to show that the promises of the early Internet and web 2.0 again very much echo in the descriptions of the digital platform economy.

The historical outline of cyberutopianism forms the basis for the final part of the second chapter, in which I jump to the present in order to discuss the digital platform economy and the belief in its transformative potential. I will argue that a (rearticulated) cyberutopian rhetoric can be detected in the descriptions celebrating the revolutionary potential of the digital platform economy. The digital platform economy in this cyberutopian discourse is heralded as the “anti-‐corporate, utopian answer to twentieth-‐century discontentment”, potentially

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and economic impact of new Internet technologies resonates in the descriptions of the digital platform economy. I will examine the revival of this new, somewhat toned down,

cyberutiopianism using Michael Stevensons notion of “web exceptionalism” (a term explaining how a the web is conceived as a source of change) (“The web as an exception” 3-‐26).

To underpin my argument, I will use both advocates of this emerging economy such as Arun Sundarajan, Rachel Botsman and Roo Rogers as well as statements by digital platform Airbnb. I will do so in order to point out the limitations of the cyberutopian discourse and in order to problematize this thinking. The work of Evgeny Morozov (2011) and Ethan Zuckerman (2013), both critical of the cyberutopian strain of thought, is useful here. Although Ethan

Zuckerman points out that the term cyberutopianism tends to be used in the context of critique, mostly because of its alleged naivety, he also asserts that is useful to consider its appeal. This thesis is set out to do so. Subsequently, this thesis will bring together both aspects of

cyberutopianism: what it overlooks (the “naïve” side) and its appeal.

The third chapter of this thesis deals with cyberutopianism and its claims about democratization, entrepreneurial opportunities, empowerment and flexibility in the digital platform economy. As mentioned before, from a political economy perspective it can be argued that the digital platform economy operates by exploitative mechanisms. In terms of

methodology this chapter will determine that the digital platform economy has a darker side. In this chapter I will argue that a critical perspective on the digital platform economy is important, because the cyberutopian discourse is used by platforms such as Airbnb as a way to legitimatize the evasion of existing regulations and protections – creating an exploitative mechanism. Or, to put it differently, I will first address cyberutopianism, to then show how this (ideological) discourse is used as a legitimation of more problematic aspects. This critical approach to the digital platform economy will consider aspects, which are mainly situated within a Marxist critique of contemporary capitalism (commodification, exploitation, inequality) (Fuchs, Marx in the age 399-‐400) without sticking to one specific theory. This third chapter is divided into four subparagraphs, which will address four critiques of the digital platform economy: it disrupts through evading regulation, it redistributes risk, draws on commodifying daily life and privileges few. These claims are predominantly underpinned by scholarly work situated in a Marxian tradition, including Paul Mason, Maurizio Lazaratto, Martin Kenny and John Zysman, Nick Srnicek and Douglas Rushkoff.

Following the first three chapters, this leads up to a discussion on why we sustain committed to the exploitative modes of the digital platform economy. In the fourth chapter of this thesis I will consider the attractiveness and tenacity of cyberutopianism in a deeper sense. Here, I want to go further than just arguing that this utopian rhetoric is produced and sustained solely as a marketing technique in order to attract attention from venture capitalists and users

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and legitimize the exploitative mechanism I discussed in the third chapter. I would like to argue that the appeal of cyberutopian discourse employed by the digital platform economy is

threefold.

First, cyberutopianism partially describes a utopian, ameliorated future engineered through technology, rendering cyberutopianism attractive. New technologies, digital platforms more specifically, are imbued with these promises of “creating a better world”. This belief suggests that any social problem can be subject to a “technological fix” (Weinberg 41-‐48). In what follows I will elucidate this technological determinism using a framework consisting of Alvin Weinberg’s notion of the technological fix, Evgeny Morozov’s critique on these quick technological fixes to social problems using the term “solutionism” (2013) and Fred Turners notion of Silicon Valley’s prototyping culture.

Second, I will argue that cyberutopianism epitomizes the desire for the reversion of an enchanted, non-‐alienated condition that makes us committed to this cyberutopian belief, here I will mostly draw on Thomas Streeter’s work The Net Effect: Romanticism, Capitalism, and the

Internet. Within this context, the Internet becomes a “myth” (Mosco, 2004), or a “social

construction” (Streeter, 2011). Sociologist Vincent Mosco argues that myths about the Internet are more than simply lies that exploit people, he argues that this myth-‐making matters greatly (3).

Concluding, I will argue that these cultural processes of romanticization and

mythmaking underlying cyberutopianism help it to sustain despite the exploitative dynamics of the digital platform economy. These deeper understandings of cyberutopianism will show that cyberutopianism is more than solely pro-‐business talk and is needed as a legitimation for the exploitative side of the digital platform economy, which I addressed in the third chapter.

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1. Economics 101: transaction costs

Before I move to a discussion of the ideological component that is at play in the cyberutopian configurations of the digital platform economy, I would like to consider another way of looking at the success of the digital platform economy: from a basic economic perspective. In this part of the thesis I will address these basic economics of the digital platform economy from a

transaction cost perspective, as this is a crucial aspect for the understanding of its success. Airbnb, as the platform that exemplifies the digital platform economy, will be used as an illustrative example.

The Airbnb platform portrays itself on the website Airbnbcitizen.com as an alternative to large, corporate hotel chains but remarkably, the platform today is so successful it has more listings than the top three hotel chains combined and is still growing (“Airbnb 2016

highlights”). The question is: how can the success of Airbnb, since the platform was founded in 2008, be explained while renting out (underutilized) rooms and homes is hardly something new? To start with, it has been noted that the financial crisis in 2008 marked the advent of the digital platform economy. In his book Platform Capitalism (2016) Nick Srnicek examines the rapid growth of platform based businesses. He explains the trends that allowed the digital platform economy to emerge:

Plagued by global concerns over public debt, governments have turned to monetary policy in order to ease economic conditions. This, combined with increases in corporate savings and with the expansion of tax havens, has let loose a vast glut of cash, which has been seeking out decent rates of investment in a low-‐interest rate world. Finally, workers have suffered immensely in the wake of the crisis and have been highly vulnerable to exploitative working conditions as a result of their need to earn an income. All this sets the scene for today’s economy (35).

However, this crisis and the advent of technological advances, such as cloud computing,

algorithmic techniques, wireless Internet access, the rising capabilities of the Internet and social networking just partly explain why the digital platform economy (just recently) came to rise (Horton and Zeckhauser 2).

To cover the whole success story we have to go back to the concept of transaction costs, first introduced by Ronald Coase in his article “The Nature of the Firm” (1937). Not specifically naming transaction costs as such, Coase discussed the “costs to using the price mechanism” for coordinating economic activity (390). With this understanding the idea of transaction costs was born: “costs that stand separate from and in addition to ordinary production costs” (Langlois 6). Thus, those are the costs that are associated with market exchanges. Decades later, Coase’s transaction cost theory can be used as a way to shine a light on the fast growth of the digital platform economy from an economic perspective. In his article Coase explains the importance of transaction costs: “In order to carry out a market transaction it is necessary to discover who it is

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that one wishes to deal with, to inform people that one wishes to deal with and on what terms, to conduct negotiations leading up to a bargain, to draw up a contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on” (15). Coase used the concept of transaction costs to explain the existence of firms: if many people cooperate they can capture efficiencies individuals cannot by lowering transactions costs which occur in a transaction between the agents in the market (Henten and Wildekinde 2).

Anders Henten and Iwona Wildekinde use this transaction cost theory as a basic framework to explain the development of the digital platform economy. They explain: “The lowering of transaction costs facilitated by Internet-‐based platforms allows for the exchange of goods and services between people that would not otherwise have been possible – simply because of the very high costs of searching, contacting and contracting that this would require” (12). As the connecting power of the Internet allows for considerable decreases of transaction costs, the Internet provides a foundation for new businesses, such as Airbnb, to emerge. Carl Dahlman crystallizes these costs by describing them as search and information costs, bargaining and decision costs, and policing and marketing costs (148). These businesses provide services which overcome transaction cost barriers. Sebastian Olma adds to this: “What companies like Uber, AirBnB, TaskRabbit or Postmates have in common is that they are platforms coordinating supply and demand of products and services that in their present form were previously unavailable on the market” (In defence of 167).

The importance of transaction costs in understanding the success the digital platform economy is best illustrated in an example. Imagine a situation where you are willing to pay someone 150 euro’s for a one night stay in their studio in Amsterdam. However, there may also be someone who is willing to rent his or her studio for less money. In this lies a potential for a more beneficial trade. Before platform companies such as Airbnb emerged, finding that one person willing to rent their studio for less than 150 euro’s, making up an agreement and bargaining the price would take time and would potentially cost money. Transaction cost barriers are thus preventing this more beneficial trade from taking place. Noticeably, this is where Airbnb jumps in: it makes it easier for users of the platform to find potential guests for their Airbnb listing, it draws up a contract and terms and conditions for the exchange and therefore prevents from high transaction costs to occur (Horton & Zeckhauer 8).

In addition, Airbnb, and other platforms alike, has made it possible to provide

individuals tools, which were previously only available to firms such as reputation systems. For example, the Airbnb reputation system, which allows guests and hosts to voluntarily review and validate members of the Airbnb community, is an aspect of the market that individual hosts would find too costly (or even impossible) to build and maintain. Also, Airbnb offers “host protection insurance”, which provides coverage for Airbnb hosts and landlords during the stay

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of their guests. It would be more costly if an individual would get such insurance. According to Coase, the decrease of transaction costs by joining up in larger economic entities (firms) instead of functioning as an individual economic agent is a crucial approach for the explanation of industrial structures; it is the most efficient way of organizing things. Ultimately, in line with Coase’s argument, platforms within this new digital economy are the new kind of firms.

Besides this notion of transaction costs, understanding the basic functioning of platforms is helpful for explaining the success of the digital platform. Platforms are often described as intermediaries, connecting different actors (Gillespie 353) and making it easier for people to connect. Economists Jean-‐Charles Rochet and Jean Tirole describe platforms as “multi-‐ sided markets”: these markets consist of (more than) two different kinds of users (providers, users, advertisers) who are served by the same platform (990). Nick Srnicek explains the basic functioning of platforms:

At the most general level, platforms are digital infrastructures that enable two or more groups to interact. They therefore position themselves as intermediaries that bring together different users: customers, advertisers, service providers, producers, suppliers, and even physical objects. More often than not, these platforms also come with a series of tools that enable their users to build their own products, services, and marketplaces (43). The affordances of digital technologies, which make it possible to lower transaction costs, create new opportunities for providers of services, such as Airbnb hosts, to enter the market. Airbnb speaks of this in terms of “entrepreneurial opportunities”. This allows people to earn some extra money and arguably offers flexibility in live and work. As a platform, Airbnb is able to facilitate the connection between accommodation providers and users of the platform, eliminating the so-‐ called “middleman” and reducing the trust and reputational barriers for providers to enter the digital platform economy. The elimination of this middleman is one of the reasons why Airbnb is lauded as an alternative to distant, large hotel chains: it enables the direct interaction between peers. Digital platform economy proponent Arun Sundararajan argues in his book The Sharing Economy: The End of Employment and the Rise of Crowd-‐Based Capitalism (2016) that the

“crowd” within the digital platform economy replaces the corporation at the center of capitalism and is therefore often envisioned as a return to older days free from corporate dominance (2). To follow Sundararajan, Airbnb is thus about more than money exchange. Because of this direct exchange between peers there is also intimacy associated with renting accommodation through Airbnb. Sundararajan explains this intimacy as an important factor in the success of the digital platform economy. He notes that whilst staying in a house through Airbnb “One sees family pictures, trinkets from travel to other countries, the choices made of linens and towels, spices in the kitchen” (40).

Another aspect of the success of the digital platform economy is that the software of the platforms creates the ability to coordinate economic exchanges on a large scale. Since Airbnb

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does not own any property itself, the success of Airbnb thus lies in that they are facilitating connection and coordination of exchanges between large numbers of users and providers (recent statistics shows that there is an average of 500.000 nightly Airbnb stays) (“Inside Airbnb”). Airbnb then takes a percentage of each exchange through the platform in order to make profit. Airbnb explains this exchange on a large scale as follows: “Hosting itself is centuries old, but hosting through a digital platform at a volume of 1 million guest arrivals per night is new” (“Policy Toolchest 2.0").

Although enabling hosting on such a large scale is key to the success of Airbnb, I will shortly digress from my main argument to address that this is also central to concerns related to the livability of popular Airbnb areas (due to nuisance and the consequences of real estate speculators in residential areas of popular Airbnb cities). Also, these concerns conflict with Sundararajan’s notion of intimacy. The open-‐source data tool “Inside Airbnb” shows that many Airbnb hosts are renting out residential properties permanently as “hotels”, as opposed to "occasionally" sharing the residence in which they live. This is clearly not a case of “ordinary” people making some money through the platform, as Airbnb and its advocates suggest.

Along with the lowering of transaction costs and technological affordances, a network effect reinforces the strong position of platforms such as Airbnb and influences the constant growth of users (Mason 25). This network effect works as follows: every time a new

accommodation provider joins the Airbnb platform, the value of the network increases because there is more for the Airbnb user to choose from. Therefore it will be more like that other users join the Airbnb platform. Of course, it works the other way around as well: every time a user joins the platform it makes it more attractive for an accommodation provider to join Airbnb. In conclusion: the network effect explains that the more people join Airbnb, the more valuable and profitable the platform becomes. According to Srnicek this leads to platforms having a natural tendency towards monopolistic dominance (Srnicek 45)

In this chapter I considered the (basic) economic reasons for the success of Airbnb. Seen in terms of these economics 101, Coase’s notion of transaction costs is still very relevant today for the understanding of the success of platform companies within the digital platform economy. Essentially, platforms are the new firms and are the most efficient way of organizing things. Due to the lowering of transaction costs, platforms lower the barriers for people to join the market and offer tools, which would be inefficient and too costly for individuals to maintain.

On top of that, the success of digital platforms is reinforced by a network effect. This term explains that services such as Airbnb become more valuable when more people use it. Also, this creates a strong monopoly position for the platforms. I consider this basic notion of transaction costs crucial for the understanding of the success of the digital platform economy, but of course there is more to it. In the next chapter I will discuss the success of the digital

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platform economy in terms of ideology. In order to do so, I will first draw a historical outline of ideas that show how the web was framed in cyberutopian terms, to then jump to the present phenomenon of the digital platform economy.

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2. Cyberutopianism

A cyberutopian discourse about the Internet’s transformative potential has been around since its heydays in the mid-‐1990s. During these years, the utopian speculations about the Internet’s economic, political and social impact were at its strongest. This belief in the transformative potential of Internet technology stems from the early 1990s when creatives, designers, hackers and hippies in Silicon Valley built their cyberutopian vision of reality (Olma “Never mind the”). For example in Wired’s March 1993 very first issue, founder Louis Rossetto declared that “the Digital Revolution is whipping through our lives like a Bengali typhoon,” bringing with it “social changes so profound their only parallel is probably the discovery of fire” (qtd. in Turner, From counterculture 207). In this period Internet was presented as a non-‐hierarchical network free from exploitation, which would empower citizens, stimulate economy and enhance democracy. This chapter will explain the emergence of cyberutopianism during the 1990s and how this discourse about technology is rooted in the counterculture of the 1960s. It will show how this discourse resonates in the contemporary discourse about new digital technologies. Even after the burst of the dot-‐com bubble in 2001, which shattered the hopes about the Internet of the 1990s, cyberutopianism resurfaces within the rise of web 2.0 in the mid-‐2000s and the digital platform economy more recently.

Whereas the previous chapter discussed the success of the digital platform economy in economic terms, this chapter will address its success in terms of ideology. The first two

subparagraphs of this chapter will have a historical approach. Here I will illustrate how the web was framed in utopian terms since its emergence in the 1990s. Following this history of

cyberutopian ideas, the concluding paragraph will jump to the present in order to examine how the digital platform economy-‐related euphoria very much echoes preceding cyberutopianism. As such, I would like to approach the euphoria about the digital platform economy today as a continuation of the discursive tradition of cyberutopianism. Finally, in the last paragraph I will explain how cyberutopianism is at the centre of criticism due to its alleged naivety. In more general terms, this overview of cyberutopianism over its more than two decades spanning history, functions as a first step in examining its deeper underlying themes.

1.1 The 1990s: utopian speculation about the Internet

On December 1st 2015, Facebook CEO Mark Zuckerberg and his wife Priscilla Chan welcomed their first child into the world by announcing the philanthropy organization “Chan Zuckerberg Initiative” in an open letter on Facebook. In their letter, titled “A letter to our daughter”, the couple describes the current problems facing the world and how their foundation will address “advancing human potential and promoting equality ” by focusing on “personalized learning, curing disease, connecting people and building strong communities”. In the lengthy letter,

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pledging to make the world a better place for their daughter Max to live in, Zuckerberg and Chan express their belief that “we must build technology to make change”. Further on in the letter they state: “many of the greatest opportunities for your generation will come from giving everyone access to the internet”.

This cyberutopian thinking and speculating about the transformative potential and cultural, economic and political impact of new digital technologies, which is central in

Zuckerberg’s and Chan’s letter, has been around since the early 1990s. In this period the Web – created by computer scientist Tim Berners-‐Lee in 1990 (Turner From counterculture 213) – was still in its infancy. It started off with only a few Internet pages, which were tended by

enthusiasts. Those adhering the Internet in its early years as a space for democratic culture with unlimited possibilities and freedom from state and other authoritarian forms of control cheered the coming of a “cyberutopia”(e.g., Dyson et al. 1994; Grossman 1995; Barlow 1996). In the early 1990s, scholars and investors had the vision of a decentralized, harmonious, free and egalitarian society all induced by the power of the Internet (Turner, From counterculture 1). The argument being that information technologies would have cultural, economic and political impact that would “empower the individual, enhance personal freedom, promote democracy and radically reduce the power of the nation-‐state” (Barbrook & Cameron 46).

During this period the air was filled with talks of revolution telling that a digital, self-‐ sufficient generation would appear, gathering into collaborative networks of independent peers (Turner, From counterculture 4). This idea is rooted in the conceptualization of the web as a “cyberspace”. Cyberspace was envisioned as a disembodied world, a space symbolizing a radically different future that would free individuals from “real-‐world” physical, social, cultural and economic constraints on identity, gender, geography and race (Stevenson, “The web as exception” 3). In the combination between the words cyberspace and utopia, a term first used by Thomas More in his novel Utopia in 1516, lies the direct meaning of cyberutopia. Utopia means by its Greek etymology “no place” (outopia), a place that does not exist. However, More came to define it as a perfect, ideal place . These two meanings of utopia have become conjoined and it has come to refer to a “non-‐existent good place” (Yar 5). In these cyberutopian terms the web was claimed to enable the construction of new sorts of community, linked by commonality of interest rather than location (Robins 88). There was a belief in transcendence, that the new technology would free people from the limitations and imperfections of the world (Robins 78).

The cybermanifest “A Declaration of the indepence of cyberspace” written by John Perry Barlow can be considered a foundational text for these utopian visions. Barlow wrote the text in 1996 as a response to the Telecommunications Act in the U.S.. He declares that computer-‐ networked communication will enable individuals to recreate themselves and their communities and to free themselves from their bodies and constraints of the government.

Through rose-colored glasses: On cyberutopianism and the digital platform economy

The tenacity of

cyberutopianism

in the

digital platform economy

Through

rose-­‐colored

glasses

The tenacity of

cyberutopianism

in the

digital platform economy

On

cyberutopianism

and the

digital platform economy

Abstract

Keywords

Table of Contents

Introduction

1. Economics 101: transaction costs

2. Cyberutopianism

rose-‐colored