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Wednesday, May 04, 2022

Platforms vs Users

 Obviously, but worth a thought:

Platforms Need to Work with Their Users – Not Against Them

by Ethan Bueno de Mesquita and Andrew Hall, May 04, 2022  in HBR.org

As online platforms have become dominant, many have leveraged their power by raising fees and changing rules. In the short run, this hurts the producers they work with — software developers, small retailers, game designers, content creators. In the long run,...more

As we write, thousands of online communities created for a wide variety of purposes — everything from providing crypto financial services to crowdsourcing art collecting — are building new democracies rapidly evolving systems for discussion, debate, voting, and representation. This movement, often known as Web3, has created an explosion of interest in giving ownership and decision-making power to community participants rather than to a small number of business executives.

This phenomenon highlights a critical challenge for traditional platforms like Amazon, Meta, Google’s play store, and Apple’s app store, gaming platforms like Roblox or Steam, and even for newer centralized crypto platforms like Coinbase and OpenSea. Historically, as platforms became dominant in their domain, they have raised fees and changed rules to their benefit and their producers’ loss. They could do so because those producers — be they software developers, small retailers, game designers, or content creators — had nowhere else to go. But once learned, twice a fool: How can platforms keep producers making new investments in building for environments whose undemocratic governance systems cannot credibly promise to reflect their interests in the long run?

There is a way. By granting governance tokens to producers that give them the unbreakable right to vote on key decisions about fees and rules, platforms can give producers the ownership and assurances they need to unleash their innovation — to the benefit of the platform, its users, and its creative partners.

We are academics who study democratic systems of governance, and we are also advisors in the tech sector who think about the future of decentralized governance. In this essay, we’ll explain the challenge platforms are facing in maximizing the efforts of their producers, we’ll show how insights from blockchain governance can help, and we’ll discuss some specifics of how to implement a governance-token system that avoids common pitfalls that democracies have been grappling with for thousands of years.

The Lock-in Problem

In the early days of Web 2.0 — the movement that gave us mega platforms like Amazon, Facebook, and Uber — producers flocked to build for new platforms because that’s where the users, and thus the profits, were. But as some platforms failed and others became dominant in their spaces, the producers’ outside options dwindled, and so did their market power.  ... ' 

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