The sharing economy: Caring or coining it?

Phil Johnston
By Phil Johnston | 14 August 2014

Last month Phil Johnston recently penned his thoughts on collaborative consumption. Here's part two on the sharing economy.

$26 billion. That’s the value The Economist puts on collaborative consumption, the sharing economy. It’s big business. And in an article on 21st century consumerism I wrote a few weeks back I pointed out it’s only going to get bigger.

28% of the population belong to a sharing service or expect to join one within the next year. 41% expect to belong to a number of sharing services in the future. Conversely only 8% claim to have no interest in the sharing economy. (All data, source: Havas Global research).

We asked people which things they’d be wiling to rent to a stranger through a sharing service. Appliance/tools at 42% was the thing most likely to rent, down to car (16%) and house (15%)

It’s not hard to understand why and it’s not just about money. When asked ‘what aspects of the sharing economy appeal to you?’ 69% of people answer ‘saving money’. But there are many other motivations. Feeling active and useful (51%), Reducing my consumption/carbon footprint (48%). Supporting individual/small companies (41%). Meeting new people (40%). Contributing to a broader move away from hyper-consumption (37%).

As you can see there are emotive, feel good reasons for sharing over just making money. A sense of community, connection and getting one over the man; a great collection of motivators to help us feel we’re doing a good thing.

I speak from experience. Through Airbnb we had a Swedish lady (Sofia) her husband, her husband’s ex-wife (don’t ask) and two kids in our house over Christmas while we were back in Ireland. And it worked for all of us. They got a three bedroom house for about the same price as one hotel room, we got some money out of an asset that was literally doing nothing. Everyone was happy.

Except not everyone is happy. The rapid growth of rental services like Airbnb and Uber is starting to cause waves. Regulators and legislators are starting to take notice. David Streitfield, of the New York Times, explains why,

“These companies represent a new stage for technology companies. They directly insert themselves into the physical world, arranging on-demand transportation, meals or even clean laundry in return for a sweet commission. Unlike Facebook or Twitter, which thrive in the safe confines of cyberspace, these start-ups live on the streets.

That is a much messier place. For example, regulators, courts and city halls are struggling to define Uber. Is it a taxi company or a technology platform? Are the drivers, who often use their own vehicles, employees, as some are arguing in court, or ’partners’- that is, freelancers – as Uber maintains?”

What are these businesses? How could/should they be regulated? What protection do consumers need when dealing with them? The traditional businesses, eg hotels and taxi services, these online upstarts threaten are subject to laws and regulations which sharing platforms are immune to. Until now. The tragic death of a 6 year old child, killed by an Uber driver sees Uber being named as defendant in a wrongful death suit. And closer to home Victorian Taxi Services Commission have fined drivers offering ridesharing services through UberX; NSW UberX drivers are facing the same treatment.

Make no mistake these platforms are threatening traditional businesses. Up until now they’ve maintained they often complement exisiting businesses. But as Citylab.com reported a new study from Boston University challenges this idea. The study’s authors write, “Our work is among the first to provide empirical evidence that the sharing economy is significantly changing consumption patterns as opposed to generating purely incremental economic activity, as argued in previous work”

All these issues become ever-more pertinent as these online sharing/renting platforms move from idealistic, community-minded service platfoms to serious revenue-generating businesses. They’re losing their warm and fluffy hippy-esque, caring/sharing ideals and becoming much more business-like.

Take Airbnb. Jacobinmag.com reports that Airbnb recently hired a 50 person ‘trust and safety’ team, headed by a former US intelligence officer. Jacobin postulates that these ‘actions show that their trust in decentralized, community-driven reputation is waning. Leading companies are moving rapidly away from peer-to-peer reputation to centralised systems such as validation and background checks’

And they need them. It is estimated that on NYE 2013, 141,000 people worldwide (including Sofia and extended family) stayed in Airbnb accommodation. That’s a lot of un-booked hotel rooms. The top 40 hosts in NYC have each grossed at least $400,000 over the last three years. That’s big business and as such it needs the systems and processes in place to protect its customers.

I started this piece by asking if the sharing economy was about caring or coining it. I think it’s increasingly moving from idealism to commercialism (to the extent that, ironically, brands like Avis are buying into car-share companies). That’s sad because the 60s-like, people-power values that were a core part of their appeal will be subsumed by sheer money-making intent.

Progress eh?

Phil Johnston
Head of planning
Havas

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