Legitimacy Lost

-Ownership and portability of data: Next-generation platforms have already begun shifting to more data-portable models. Substack, for example, gives writers total ownership over their audiences and allows them to take their email list of subscribers with them if they ever decide to leave the platform; furthermore, writers use their own Stripe accou... See more

Ultimately, legitimacy derives from trust: trust that the governing order is just, trust that agents establishing and enforcing that order are doing so in the interest of the greater good. Legitimacy crises happen when that trust is eroded—when the governed no longer believe that those in power are exercising that power with the collective good in ... See more

What are changes to platform monetization policies but a form of taxation without representation? What are creators if not a new category of labor, not unlike platform gig workers or factory workers from before, seeking protections for an emerging type of work that had previously never existed?

The platforms have made efforts to regain legitimacy with creators via the first route, by increasing the variety of monetization avenues available through their platforms. Twitter and YouTube have both added tipping functions to their sites. Facebook recently announced plans to pay $1B in “bonuses” to creators through 2022. But these efforts at re... See more

In the earliest days, their legitimacy was largely charismatic: founders like Mark Zuckerberg and Jeff Bezos built auras around themselves as technological geniuses and philosopher kings by painting compelling visions of the future their creations would make possible. There’s a strong traditional bent to platform legitimacy as well. Platforms are f... See more

There are three areas in particular where founders looking to power the next generation of the platform economy should focus their efforts:

There are two ways that a legitimacy crisis can resolve itself: either the regime re-establishes legitimacy by realigning their rule with the interests and norms of the community (as factories in the Industrial era did by instituting fairer work policies); or, the system is overthrown, and a new one is put in place that better aligns the values and... See more

Vitalik Buterin, the co-founder of Ethereum, wrote that “Legitimacy is a pattern of higher-order acceptance.” When enough people within the system question the system’s fairness it threatens the system's ability to continue to function, and you get a legitimacy crisis.

The first generation of these companies is already on the scene. Products like Patreon, Cameo and Substack have gained traction over the past several years by zeroing in on the monetization component of the problem, offering creators pathways to generating revenue directly from their audiences rather than relying solely on platform-controlled adver... See more