What is the Sharing Economy, Anyway?
A trusted friend from grad school recently asked me to send him a brief email summarizing the sharing economy so I decided I’d just write a blog about it.
Access over ownership. Experience over possession. Adventure over security. All used to celebrate the sharing economy. According to an industry survey done last year, 44% of US consumers are familiar with the sharing economy. That number is no doubt over 50% by now. A Wikipedia search tells us the sharing economy is, “a hybrid market model (in between owning and gift giving) which refers to peer-to-peer-based sharing of access to goods and services (coordinated through community-based online services).”
That’s pretty good. By using the term “sharing” the definition encompasses selling, renting and non-monetary transactions like swapping or bartering.
Let’s try a couple more:
The sharing economy can take a variety of forms, including using information technology to provide individuals, corporations, nonprofits, and governments with information that enables the optimization of resources through the redistribution, sharing and reuse of excess capacity in goods and services.
Companies like Postmates connect people who want goods and services—whether it’s a meal from a restaurant that doesn’t deliver, a bedroom to stay in for the night or someone to help move a piano—with people who will provide them for a price. These peer-to-peer transactions, numbering in the hundreds of thousands each day, bypass the traditional employer-employee relationship in ways that are befuddling regulators in cities and states across the country.
- Time Magazine (2016)
Furthermore, these “peer economy” marketplaces transcend the simple trade conducted on eBay, and are instead inventing an entirely new asset-light supply paradigm. They enable the disaggregation of physical assets in space and in time, creating digital platforms that make these disaggregated components — a few days in an apartment, an hour using a Roomba, a seat in your drive from Berlin to Hamburg — amenable to pricing, matching, and exchange.
- Harvard Business Review (2013)
I’m glad our friends at Harvard referenced eBay, maybe the OG sharing economy brand in the world of peer-to-peer using the internet. Most people today probably associate the sharing economy with platforms like Airbnb and Uber but eBay has been doing this since 1995. The sharing economy has been and will continue to be a major part of your life.
Price Waterhouse Cooper values the sector at $15B in revenues in 2015. That number is projected to be $335B by 2025, a 2,000% growth in just 10 years.
Of course, for all the societal benefits proponents of the sharing economy advocate (resource efficiency, community development, micro-entrepreneurship) it also has its critics.
Start with the Harvard Business Review clarifying, “the term, sharing economy is a misnomer, and that the correct word for this activity is “access economy.” The authors say, “When “sharing” is market-mediated — when a company is an intermediary between consumers who don’t know each other — it is no longer sharing at all. Rather, consumers are paying to access someone else’s goods or services.”
Then the criticism steps up with Shareable calling Uber and Airbnb Death Stars, arguing they aren’t the transformational, utopian business models people were hoping for in the new economy. They’re just another example of venture-capital funded, grow-at-all-costs, big corporations with power and profits centralized to the few, while the many that make it possible barely scrape by. According to resilient communities expert, Ehsan Zaffar, the sharing economy is causing inequality and social harm. Visionary social investor, Lisa Gansky, argues platform cooperatives are the future of sharing. They share value with the people who make them valuable.
So, there’s the sharing economy. It’s simple but complicated. Old but new. Good but bad.
I tend to agree with the Economist, “the core of the sharing economy is people renting things from each other.” I’m all for it. Own Less. Do More.