A Safe Alternative To Facebook & Google+ : Consumer Cooperative Social Networks

Facebook is a landslide internet success. An elite group of investors are hoping that it will remain so, because they are investing billions of dollars in the company and its business model. Even Google, which has launched a rival social network, Google+, will have a tough time competing because of Facebook’s dominance of social networking. So surely they are onto a sure fire winner? Don’t be so sure, this could be a far greater debacle than Rupert Murdoch’s $500m loss on MySpace, and not because of Google+. I think both models are vulnerable to something that is not on the radar yet.

For the record, I think that Google have a chance against Facebook. but in my view even Google is not the main threat. There is a far more more powerful and compelling business model that is a threat to both Facebook and Google+.

I’ll go even further, and predict that the business model I outline in this blog post is bound to devastate Facebook, and Google+ for that matter.

The threat I’m talking about is a consumer cooperative social network. Watch out all you investors in Facebook!

A consumer cooperative is a simple, tried and tested centuries old business model that would compete against even Facebook and Google in this market. Once started, there will be nothing they can do to stop it.

This bold claim is not the only reason I won’t be investing in Facebook shares, but it is the most compelling for me.

A Consumer Co-operative Social Network

A consumer cooperative shares the benefits amongst the consumers purchasing from the business. Benefits might be bulk purchase discounts, or even profits.

In a consumer cooperative social network, the users or members would be treated like shareholders. With any commercial profits distributed amongst the users. I don’t mean some token amount fo the profit, but all profits that are in excess of the revenue needed to fulfil the aims of the cooperative. All the profit goes to the service users: you and me!

In my post about the rather clever way Facebook and Google make money by acquiring valuable data from users for nothing, I pointed out that their business model was vulnerable. (More here: What Can Google Do With Your Copyright Content & Photos?)

The reason that the Facebook and Google+ business model is vulnerable is because it relies on factors that are both weak and hard to defend.

Firstly they rely on the ignorance of their users as to the value of the data they own, and which those users give to these companies for virtually nothing in exchange. Secondly, for the few who are aware, these companies rely on apathy and inertia to deter users from doing anything about it. Finally, the lack of a viable alternative prevents even those users who would be bothered from migrating elsewhere. However..

I believe that there will very soon be a viable alternative: in the form of a co-operative social network.

A cooperative social network will be a viable alternative because once it exists, it provides users with a powerful incentive to move and to spread the message to others. Once this kind of alternative exists,  it will be very hard for Facebook or Google+ to retain users purely on the basis of ignorance, apathy and inertia. In fact, the Facebook and Google+ networks will surely become the means by which people raise awareness of the alternative and provide sufficient initial users for an alternative to gain critical mass. The only defence will be to offer similar incentives, cash and respect for data, and to confuse their users sufficiently to undermine awareness.

For the time being this kind of social enterprise only exists in my imagination. So until a cooperative social network arrives, Facebook and Google+ are safe. However, there’s a good chance that its arrival is inevitable and only I believe it is only a matter of time.

Let’s look at why I think it is only a matter of time before a co-operative social network comes along. Some precursors are needed, and these will need to come together to create a cooperative social network.

Precursors To A Cooperative Social Network

The precursors necessary for a cooperative social network are:

  1. A team of people with the knowledge, motivation and administrative resources to create a co-operative social enterprise around a social networking service.
  2. A technical solution and the experts needed to set-up and administer the service.

Cooperative enterprise is not new. Cooperatives have been around for centuries and today there are many modern examples. The most relevant kind are “consumer cooperative enterprises”, for example the British Co-op, a retail group which provides a wide range of consumer services throughout the UK. This means there are lots of people with the necessary knowledge and experience,  and so I believe that the team (precursor 1.) will arise spontaneously once there is sufficient awareness of the idea itself and its practicability: i.e.  the near readiness of the technical solution. So how close is the latter?

Potential “technical solutions” are already available in prototype form because several social network projects are being developed within the open source community. Business hasn’t been interested because of the dominance of Facebook so such projects lack commercial support and motivation. Only Google has dared to try and take Facebook’s market directly. Development has therefore been reliant on small bands of enthusiastic developers who have little or no funding, and will struggle to provide users of Facebook to migrate to their alternative services.

The most promising such project to date has been diaspora which is an open source project to develop a social network that overcomes the copyright objections raised in my earlier post (What Can Google Do With Your Copyright Content & Photos?). This has in fact secured funding from other enthusiastic investors who want to support an open source social network alternative.

Such projects already demonstrate the feasibility of creating a “technical solution” from scratch (through open source development), or could adopt a consumer co-operative business model and thereby overcome their greatest hurdle: providing the incentive for Facebook users to jump ship.

Either way, such projects demonstrate clearly the method and feasibility of creating the technical solution (precursor 2.).

All That Is Needed Is Awareness

So I think the main thing that is needed is awareness of the idea! Once people understand that it is possible to create a consumer co-operative social network, I think the benefits are obvious and the motivation for one or more projects will be created.

In fact, I would expect not just one, but probably several rival social network co-operatives to arise and to compete to provide the most attractive solution.

Nothing will stop this because it will be so attractive to users. They will stampede from Facebook to a service that is operated in their interests, makes billions of dollars just like Facebook, and distributes all the profits directly back to them, the service users.

Even though such a happening would have the potential to devastate multi-billion dollar businesses, I can’t see what those businesses can do to prevent this.

Time To Spread The Idea!

If you like the idea of a consumer co-operative social network, please spread the idea to help it reach people who will make it happen.

Perhaps you are one of those people? If so, and you want to connect with others who might be interested let me know and I will interested people in touch with each other.

Spread the idea: Share this on Facebook,  Twitter and Google+ (use the “SHARE THIS” buttons below this post).

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8 comments to A Safe Alternative To Facebook & Google+ : Consumer Cooperative Social Networks

  • Mark,

    Great post. Venessa Miemis (author of the fabulous The Future of Facebook project) sent a link to your post to the VRM (Vendor Relationship Management) mailing list.

    Have you heard anything about the Respect Trust Framework?


    • Drummond,

      Thanks for the heads-up & info – much appreciated. This is a new area for me so I didn’t know about these projects and am pleased to see others appreciating the need for trust and respect around online information, as opposed to seeing it as a commodity. I guess this is history repeating itself so I look forward to someone bringing that in too!

      Best wishes,


  • Frank

    It is good to see awareness being built around this issue.

    The fact is that social network services are technically a commodity – vendors like Ning make it clear. The value is and has always been in the people. Early twentieth century business models based on broadcast analog networks are not aligned with the technical efficiency and power of the internet’s peer-to-peer capabilities. The peer-to-peer framework of the internet dis-intermediates vendors that seek to monetize the consumer power of individuals.

    Microsoft’s Steve Ballmer was correct when he said “ I do not fear technology – I fear business models”

    Markets are not purely efficient and FB and Google and Linkedin and all the vendors that currently enjoy the fruits of that inefficiency will continue with their success. However, as you recognize here – markets evolve. Technology empowers new business models. When consumers can readily realize the value of their attention, and information they will respond accordingly.

    Disclosure: In 2006 several colleagues and I built a service to enable consumers to protect and monetize their online presence. Unfortunately we did not have the required resources or attention of enlightened investors to appreciate the significance of the sea change that will occur.

    Maybe it’s time to bring the service out of hibernation?

    Frank Ramirez

    • Hi Frank,

      Intrigued and grateful for your comment, and pleased that it has woken the entrepreneur in you. Good luck and if you’d like to say more or share in a guest blog post let me know.


  • James

    Your idea is similar to what I’ve been considering for a few weeks now. I began considering this after I started using Diaspora*. I signed up through one of the public nodes, and it occurred to me that I have no better reason to trust the person running the node I’m using than I have to trust Google or Facebook. That’s when the idea of owning the node came to mind. If all the users owned the node, then we would know that it was behaving. But your idea and mine differ in the fact that I would simply like to see a cooperative Diaspora* node. It doesn’t have to be its own unique network, but simply a unique node in this already existing network, and it would open the usefulness beyond just the people who sign up to the cooperative. The other thing that comes to mind though, is why stop at social networking? I use email, an rss reader, google docs, etc all online. Why not have the cooperative be to Google what a credit uinion is to say, Chase Bank? Provide all the services, not just one or two. The other cool thing, is that by using open source software and open protocols, the cooperatives could compete with each other, while still working with each other. The cooperatives could even be limited to geographical areas. Imagine an Ohio web cooperative working alongside an Oklahoma web cooperative. The cooperatives could also get funds several different ways. This one might have a $25 annual fee, whereas this one might be funded through ads. Another one might use secondary investments and services to fund it’s activities. Some might be non-profits with any profits being donated to worthy causes and others still might be LLCs with any profits going to their members. I’m really excited about this idea, now I just need a few people to help me start one 🙂

    • James,

      I love your ideas. Diaspora offers the potential to do all of this in time – or to inspire people to develop ideas just like these. Shall we hook up on Diaspora? Find me as “theWebalyst@joindiaspora.com”


  • Jeremy Green

    It seems bizarre to be responding to this by posting a Like in FB and sharing on Twitter. I’d really like to support this, though I don’t have buckets of cash to contribute and I can’t code to save my life. But I think that this is a really important project – why should FB be valued at so much when the value is us?

    Let me know if there is a way for non-rich non-techies to contribute.

    • Jeremy, it may seem ironic to use Facebook, Twitter & Google+ to spread the word about Diaspora but I hope that won’t stop anyone. Its only like standing on the shoulders of our ancestors to create a better world!

      There most certainly is a way for you to contribute. Obviously spreading the word, but also joining the community. Its actually a great community already and I am getting way more engagement and sharing of what I post on Diaspora than on any of the other networks.

      So please join me at http://joindiaspora.com and seek me out by searching for thewebalyst@joindiaspora.com (The Diaspora search will find me whichever pod you sign up to). I’d be very interested to hear from you because I see from your LinkedIn profile that we have quite a few connections in common from different groups. I guess you’ve worked with some of my old colleagues and that we also share other interests. I wonder if we might have met.

      Thanks for posting and for sharing this post. I hope to hear from you on Diaspora soon!


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