Twitter should not crush the idealists and their co-op dream

 13 February 2017

Twitter is a broad church. Its congregation includes autocratically inclined presidents sounding off to millions, and friends indulging in online banter. It should not come as a shock, then, that one pew is occupied by evangelists for a radically different ownership model.

Two shareholders want the social media platform to quit the stock market and turn itself over to “democratic user ownership”. As a co-operative, they argue, Twitter could tap new revenue, spur innovation and better handle the tide of hate speech and abuse that threatens to swamp it. Twitter counters that the plan is “impermissibly vague” and should be kept off the ballot at its next shareholder meeting.

Fans of co-operatives have often been accused of dreamy utopianism. In 1900, retailer Bradford Peck published a novel, The World a Department Store. It imagined a rosy near-future in which the co-operative movement had transformed the US, “making life . . . a delightful existence” and eliminating “wasted energy and social and commercial dishonesty”.

Twitter addicts know plenty about “wasted energy”. But they also know about the world-changing potential of the service, a powerful weapon in popular uprisings and still an indispensable tool for movements and marketers.

Whether that makes user ownership an ideal, or even feasible, structure is a different matter. Twitter’s fortunes are already in the hands of its users. Their 140-character contributions are Twitter - and that is both an asset and a liability. Prolific tweeters are highly devoted but the noise and chaos on which they thrive deters newcomers, unsettles advertisers and drives away occasional users.

The co-op plan echoes the misguided assumption that changing the form of a business will automatically change its fortunes. Since the financial crisis, UK politicians have obsessed about the John Lewis Partnership - the high-end retail chain owned by its employees - as a model for public-sector organisations. Yet while the John Lewis philosophy of fairer, kinder capitalism may be repeatable, its precise model probably is not.

Co-ops, mutuals and employee-owned organisations, for all their ideals, are still prone to volatile business cycles, venality and common-or-garden mismanagement. The UK’s Co-operative Group has only just recovered from near collapse in 2013. Lurid management scandals and capital shortfalls at its banking subsidiary shone a harsh light on the group’s top-heavy governance.

Mondragon, the much-lauded and studied Spanish co-op group, ran into harsh commercial reality in late 2013, when it had to let its Fagor manufacturing arm go bust, a victim of the general economic downturn. In the US, United Airlines’ well-publicised stint as an employee-controlled business in the 1990s deteriorated into us-and-them acrimony between staff and management and ended in the bankruptcy courts after seven years.

Yet the monstrous, costly and systemically important scandals regularly spawned by the listed company sector are on a different scale. And this is why the Twitter proposal, however “vague”, deserves a hearing.

Many co-ops thrive. The International Co-operative Alliance says 250m people are directly employed by them. Johnston Birchall, emeritus professor at the University of Stirling, found co-ops generally proved more resilient and stable through the recent financial and economic crisis - provided they stuck to their original conservative, low-risk style.

“There are [economic] peaks that co-ops, employee-owned and mutual businesses won’t see,” adds Pushkar Jha of Northumbria University, “but they also won’t see the troughs.”

A Twitter co-op would have to reflect and manage its many user-owners. Firm governance would be essential. Happily, technology and internet companies already offer a variety of such structures. Wikipedia and Firefox-creator Mozilla are open-source, collaborative organisations overseen successfully by non-profit foundations, despite periodic crises of control and conscience. At the other extreme is the winner-takes-all approach of the founders of Snap, owner of Twitter rival Snapchat, which upset US pension funds with its plan for an initial public offering of shares with no voting power.

The over-optimistic Mr Peck imagined a world in which co-ops had finally confounded sceptics who believed “men [would] never give up their selfish ambitions”. He was well off the mark. In fact, the financial crisis showed that when a single ownership model starts to dominate the economy, systemic risks increase. Which is why I say to the backers of the Twitter co-op proposal: don’t give up on your dream.

andrew.hill@ft.com

Twitter: @andrewtghill

Copyright The Financial Times Limited 2017

 

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