A Fairer Way Forward for Short-Term Rentals

Imagine you’re planning your next vacation or mapping out a business trip. Chances are, browsing through Airbnb for that perfect stay is your go-to move. This platform has become almost synonymous with travel accommodations, seamlessly fitting into our lives. But pause for a moment—have you ever peeled back the curtain to ponder the machinery ticking away beneath its user-friendly surface? What drives this digital giant’s operations, and what ambitions are coded into its very DNA? Let’s dive into the unseen world of Airbnb, exploring the intricacies of its technological framework and the objectives shaping its global footprint.

The concept we’re exploring isn’t entirely new; it builds on the observation that digital platforms have developed a kind of autonomy, making decisions and facilitating connections on their own. It has its own agency. This autonomy represents a significant shift. In the past, technology promised to cut out the middleman, a process known as disintermediation. However, what’s become evident is that these platforms haven’t removed intermediaries; instead, they’ve become the new intermediaries themselves. This transition to what might be termed ‘neointermediation‘ highlights an intriguing change: the underlying technology of these platforms now plays a crucial role in mediating our interactions, altering the way we communicate, do business, and connect with each other online. They introduced a new “materiality” of the infrastructure.

Over the last decade there has indeed been a significant effort to delineate the role of such a materiality of mediation. It seems as though these digital platforms and technologies, often referred to as “technical” or “digital artifacts,” are endowed with their own decision-making capabilities. Acting as modern intermediaries, they are far from impartial; they actively influence the fabric of our social relationships. These digital tools shape the way we work, interact, exchange goods and services, and consume content online, with effects that ripple out into the physical world. Essentially, they mold the invisible structures that underpin our daily lives, both online and off.

Moreover, the field of Platform Studies delves deep into how the digital economy works, focusing on the influential role played by its building blocks—protocols, standards, and the platforms and algorithms themselves. This research uncovers the intricate ways these components contribute to creating value and distributing power within the new realm of platform capitalism. It’s a fascinating exploration of how digital foundations not only support but actively shape the economy, deciding who gains and who loses in the digital age.

This critical perspective has paved the way for exploring alternatives to the traditional, profit-driven models of digital platforms. Building on this research, Trebor Scholz introduces the concept of platform cooperativism. This approach champions a different kind of business model—one rooted in solidarity, shared ownership, and democratic governance. It’s a shift towards valuing community and collaboration over mere capital accumulation, offering a fresh blueprint for how platforms can operate in harmony with their users and stakeholders.

But the real question we’re grappling with is: do examples exist of platform cooperatives that offer a genuine alternative to the capitalist framework dominating short-term rental markets?

Comparing Platform Models
This blog essay centers on Fairbnb, an Italian initiative launched in 2019, designed as a cooperative alternative to Airbnb. Drawing inspiration from the tech giant, Fairbnb seeks to offer a more equitable solution, staying true to cooperative principles such as collective ownership, democratic governance, local sustainability, transparency, and accountability. Unlike the extractive model of its counterpart, Fairbnb champions a non-extractive architecture, connecting hosts and guests for tourism purposes like Airbnb but with a key distinction: it reinvests a portion of each booking’s earnings into local social projects.

Returning to the initial discussion on “technical artifacts” and the questions it raised, this analysis compares the socio-technical frameworks of Airbnb and Fairbnb. By interviewing Fairbnb’s co-founders and board members, we aim to explore the landscape of the platform more deeply, contrasting it with Airbnb to highlight their differences and how Fairbnb aligns with platform cooperativism principles.

We examine their foundational elements—business models, ownership relations, user agreements, data handling, algorithms, and interfaces—as identified by van Dijck and colleagues in “Platform Society.” This examination seeks to understand how these elements contribute to or challenge the processes of datafication, commodification, and selection, shedding light on the unique characteristics of these two short-term rental platforms.

Community-Powered Tourism
The first aspect to analyze is the business model adopted by the two short-term rental platforms. In this regard, and like Airbnb, the co-op is a lean or connective platform, with a capital-based asset. Nevertheless, Fairbnb is oriented towards a people-based logic, fostering an innovative form of what they call Community Powered Tourism.

Airbnb retains on average of 15% (and up to 20%) of fees from every booking and monetizes also through the selling of user data for commercial and marketing purposes. On the other hand Fairbnb does applies a fixed 15% fee, the half of which is however retained as service costs by the platform, and the other half being donated to community projects, selected by the guest among a list of alternatives based on the needs of local communities, through the mediation of a local ambassador —a member of the cooperative’s team who acts as an intermediary with hosts in a specific area— and a scout, who identifies and evaluates concrete possibilities for the development of the area with local communities and stakeholders.

Towards a Multi-Stakeholder Co-op
Regarding ownership, a key distinction between Airbnb and Fairbnb lies in their ownership models. Airbnb is owned by its shareholders, including several Silicon Valley venture capitalists, as van Dijck and colleagues note. On the other hand, Fairbnb operates as a worker’s joint-stock cooperative, although, currently, this doesn’t include hosts. According to Alessandro Rocchi, the Admin Lead at Fairbnb, this approach was chosen to ensure stable governance during the initial launch phase. The plan is for Fairbnb to evolve into a multi-stakeholder cooperative owned by all participants, including the hosts. This cooperative will be governed by a board representing all stakeholder groups—hosts, platform developers, and shareholders, among others. This structure aims to ensure that every member has an equal voice, adhering to the ‘one person, one vote’ principle of the International Cooperative Alliance, thereby ensuring collective ownership and democratic governance.

In contrast, Airbnb’s User Agreements are known for their complexity and legal jargon, often deterring users from thoroughly understanding them. Furthermore, Airbnb distances itself from any responsibility regarding the management of host services, whether online or offline. This approach leaves hosts solely accountable for their services, facing penalties in visibility on the platform if they fail to meet its standards.

On the contrary, as specified by its Legal Admin, Fairbnb has clearer and shorter Terms of Use, and delegates the responsibility to the already mentioned local ambassadors, to ensure that accommodations comply with local laws and that hosts adhere to both hard rules, such as the “one host, one home” principle, which imposes a limit on the number of accommodations per individual host, and soft rules, related to the fairness of the host, such as their commitment to sustainability issues.

Concerning the users’ privacy, data storage and processing differ significantly between the two platforms. Airbnb has not only been collecting and selling data for user profiling since 2016, but also reserves the right to “perform background checks on public databases” collecting data ranging from criminal records to the health status of users, with “no obligation to unveil what it learns about its users”.

Fairbnb adheres strictly to the principle of necessity, meaning it only gathers essential data needed to identify users and facilitate their interaction on the platform, specifically for arranging living space rentals. Jan de Bock, Fairbnb’s Product Manager, emphasizes that the cooperative neither collects nor sells user data for marketing purposes, whether internally or externally.

Additionally, Fairbnb employs cookies, pixels, and other third-party tools for user profiling sparingly. Its policies clearly detail the type of data collected, the reasons for its collection, how long it’s stored, and importantly, how users can opt out of their data being processed. This approach is grounded in the principle of transparency, ensuring users are fully informed and in control of their personal information.

From Competitive Pressures to Collaborative Opportunities
An increasing body of literature shows how the secret algorithm hidden in Airbnb’s black boxes, enables forms of surveillance and pushes hosts to high levels of competition. Subject to “new forms of social dramatization“, the latter are bound to the logic of the reputation economy and exposed to social pressure and to forms of “invisible work“.

Fairbnb, as highlighted by its Product Manager, employs an open-source algorithm that encourages a collaborative rather than competitive atmosphere among hosts. This algorithm avoids pressuring hosts into the extensive management of care work or social reproduction activities, like housekeeping, customer service, or “digital self-care.”

The platform utilizes a user-based review system to gather feedback for collective improvement discussions. It’s set to introduce features aimed at ensuring equitable visibility for all hosts, regardless of their experience level. This includes a private host review system, visible only to Fairbnb and the individual hosts, to reduce social pressure and competition. Additionally, Fairbnb plans to adopt a level-based reputation system, where hosts are categorized by levels instead of numeric rankings, and to launch tools that ease the hosting duties, such as automated updates for prices and calendars or enhanced visibility options for various accommodations.

Contrasting with Airbnb’s complex disclosures regarding its use of third-party APIs and the development of proprietary APIs, Fairbnb opts for simplicity and transparency. It uses a select few APIs, including a cost-free option powered by blockchain for compliance certifications and a Google Maps API, which it plans to replace with Open Street Map services. Fairbnb is also exploring the development of its own API to support white-labeling efforts with prospective partners, further distinguishing its approach to platform management and host support.

A F(airer) Airbnb
In summary, this overview reveals a stark contrast in how Airbnb and Fairbnb operate, highlighting the significant impact of technical components on shaping our social structures, echoing the insights of van Dijck, Poell, and de Waal. Fairbnb stands out for its commitment to prioritizing user needs and rights, underpinning its operations with principles of transparency, shared ownership, and democratic governance. By adopting a user-centric approach, Fairbnb not only safeguards user data but also fosters social and professional well-being. Its transformation into a multi-stakeholder cooperative further exemplifies a commitment to collective ownership and governance. Moreover, Fairbnb aims to mitigate issues like overtourism and gentrification, showcasing a model that not only respects its users but also cares for the broader social and environmental context in which it operates.

Furthermore, Fairbnb’s open-source algorithm plays a critical role in reducing the burden on hosts by lessening social pressure and the often invisible workload involved in care and social reproduction activities. This technological approach aligns well with the core tenets of platform cooperativism, offering a solid alternative to the neoliberal tendencies of traditional platform capitalism.

Fairbnb’s design and operational framework also aim to dismantle the foundational processes of datafication, commodification, and selection that underpin many digital platforms, presenting a fresh take on how technology can serve society differently.

However, it’s important to acknowledge that no initiative is without its challenges. As the proverb goes, “all that glitters is not gold,” and the path Fairbnb is on is strewn with obstacles that need to be navigated carefully. This journey into reimagining how digital platforms operate is complex and fraught with difficulties. Yet, the potential for a more equitable platform, akin to a fairer version of Airbnb, remains a compelling vision.

As we consider these innovations and their impact, the question then becomes not just one of feasibility, but of collective will and support. Do you see value in the idea of a more equitable, cooperative approach to digital platforms? Your belief and participation could help turn a concrete utopia into a tangible reality. What are your thoughts on creating a Fair(er)Airbnb?

Looking forward to hearing your perspective! Contact me.