The world is changing. That is a fact that no one can discuss. If we look back 10, 20 and 30 years we can see different economic cycles. The dotcom bubble has been the gateway to the world how we know it today. Imagine the world without internet? No google? No Facebook? I don´t think so.
In this change of era there is a strong trend happening in households and companies. People are starting to own less and experience more. In this new world, the sharing economy is something that is changing human life: Sharing Economy
The sharing economy is an economic model often defined as a peer-to-peer (P2P) based activity of acquiring, providing or sharing access to goods and services that are facilitated by a community based on-line platform. Sharing economies allow individuals and groups to make money from underused assets. In this way, physical assets are shared as services. *1
Take for instance car sharing services like Lyft and Uber. According to data provided by the Brookings Institute, private vehicles go unused for 95% of their lifetime. The same report detailed Airbnb’s cost advantage over the hotel space as homeowners make use of spare bedrooms. Airbnb rates were reported to be between 30-60% cheaper than hotel rates around the world. *2
Now that we know what sharing economy is, how should we distinguish among the various “new economy” models in the headlines? Here is a summary list that will clarify the confusion and provide guidance to companies, policymakers, individuals and investors alike:
Sharing economy: focus on the sharing of underutilized assets, monetized or not, in ways that improve efficiency, sustainability and community
Collaborative economy: focus on collaborative forms of consumption, production, finance and learning (“collaborative consumption” is closest to the orthodox sharing economy definition)
On-demand economy: focus on “on-demand” (i.e. immediate and access-based) provision of goods and services
Gig economy: focus on workforce participation and income generation via “gigs”, single projects or tasks for which a worker is hired (limited overlap with skill sharing)
Freelance economy: focus on workforce participation and income generation by freelancers, also known as independent workers and self-employed (limited overlap with skill sharing; freelance engagements are often longer and/or deeper than gigs)
Peer economy: focus on peer-to-peer (P2P) networks in the creation of products, delivery of services, funding and more
Access economy: focus on “access over ownership” (overlaps with sharing, though sharing is by no means requisite)
Crowd economy: focus on economic models powered by “the crowd”, including but not limited to crowdsourcing and crowdfunding
Digital economy: focus on anything powered by digital technologies
Platform economy: focus on anything powered by tech-centric platforms
It is entirely possible that one platform can fall under multiple definitions. For example, TaskRabbit is arguably part of the on-demand, gig, collaborative and sharing (assuming the Tasker’s skills were previously underutilized) economies. Airbnb’s homesharing inventory is clearly part of the sharing economy, while full-time short-term corporate rentals are not necessarily so, and more likely are in the access economy.*3
People can be skeptical about this new trend in the understanding of economics and property. But there is an intrinsic value to it. The Sharing Economic is not something that only a few privileged can have access to. This new trend can be access by the richest and the poorest. Airbnb, Uber or Alibaba are the giants of the industry, but there are many other companies following the same model:
- Co-working Platforms – Companies that provide shared open work spaces for freelancers, entrepreneurs, and work-from-home employees in major metropolitan areas.
- Peer-to-Peer Lending Platforms – Companies that allow for individuals to lend money to other individuals at rates cheaper than those offered through traditional credit lending entities.
- Fashion Platforms – Sites that allow for individuals to sell or rent their clothes
- Freelancing Platforms – Sites that offer to match freelance workers across a wide spectrum ranging from traditional freelance work to services traditionally reserved to handymen.
The sharing economy is not black and white: it is a spectrum, and it is increasingly crucial to understand its different shades. Ultimately it will become simply part of the economy, without special terminology, but we are not there yet. Entrepreneurs, journalists, governments, and (perhaps most of all) users of and participants in these new-economy platforms have a duty to be clear about whether and what we are, and are not, sharing.
*2 The current and future state of the Sharing Economy https://www.brookings.edu/wp-content/uploads/2016/12/sharingeconomy_032017final.pdf
*3 World Economic Forum https://www.weforum.org/agenda/2017/12/when-is-sharing-not-really-sharing/