Mine, Yours, Ours: The Sharing Economy

From couches and apartments to bicycles and cars, all manner of personal items and possessions are now in circulation as part of the booming sharing economy.

Autor*in Anna Rees, 09.24.13

Built on a premise of peer-to-peer exchanges of personal items or services, the sharing economy is a platform that provides access to said items or services (sometimes for a set period of time) meaning users avoid having to procure them outright.  The online landscape is bursting with portals of so-called collaborative consumption where people can list items that they wish to rent out or borrow such as bicycles, cars, apartments and even parking spaces.

It All Began with an Airbed

The boom in the sharing economy was unofficially kickstarted in 2008 when Brian Chesky and Joe Gebbia decided to offer a place to sleep (on an air bed on their floor) in their San Francisco apartment to people attending an industrial design conference taking place in their city. Initially done to earn some fast cash to pay the bills, the venture proved popular and shortly after, Chesky and Gebbia set up a dedicated domain, Airbnb, allowing people from all over the world to offer accommodation in their living quarters for an affordable fee. Since then, more than 50 million people have used the site as a means of finding accommodation. A suite of like-minded businesses has sprouted since the advent of Airbnb, all of which respond to and facilitate the demand of paying for what you use on an as-needed basis.

The key driving force behind the sharing economy is perceived value, with price-conscious customers seeking out more wallet-friendly alternatives to items on offer in the standard retail market. Perhaps it comes as little surprise, then, that the sharing economy began to gather haste during the financial crisis of 2008. Some outlets of the sharing economy are free (such as Couchsurfing where travellers can stay on a host’s couch for free) while others are based on financial transactions (such as Airbnb). The advent and proliferation of technology has meant that providing or seeking access to goods to share or rent is cheaper, quicker and more traceable than ever before.

The ability to monetise the use of idle resources has led to a string of micro-entrepreneurs, people who have created an income stream by regularly hiring out their goods or services, including cars, bicycles, tools, clothing and even their spare time to run other people’s errands, via the sharing economy. According to PricewaterhouseCoopers, global revenue from the sharing economy is around 15 billion USD per year and could potentially climb to 335 billion USD per year by 2025.

Big players like Airbnb and carsharing company Turo (formerly RelayRides) certainly ushered in a huge growth phase in the sharing economy, however this market model has existed in some form or another for awhile. Back in the 90s, Ebay helped transform peer-to-peer selling, allowing people to create strong revenue streams simply by auctioning or selling items via Ebay’s online marketplace.

While the sharing economy is by no means a direct replica of the peer-to-peer selling model, it certainly finds some of its roots there with early players like Ebay helping mould a behaviour of users (rather than established brands) exchanging goods and services online.

Collaborative Consumption: Breaking the ‘I, Me, Mine’ Habit

Whether we are actively aware of it or not, the internet goes a long way towards creating, or at least supporting and facilitating, sharing and collaboration between unrelated parties. In 2009, Wired published an article arguing that the internet was helping to usher in a new kind of socialism (or “dot communism” as one commentator put it) albeit minus the ideology, pushing participants along a spectrum from sharing, cooperation, collaboration to collectivism. Quoting activist John Barlow, the article argues that the decentralised nature of the world wide web has given rise to a “…gift or barter economy where there is no property and where technological architecture defines the political space.”

As a flow on from this, perhaps one of the reasons that the sharing economy creates so much controversy among some theorists and strategists is that (on the outside at least) its snubbing of outright ownership hits at the core of capitalism, shaking off the bloated “greed is good” mentality in favour of something more balanced like “what’s mine is your is ours is good”.

The Verge took a look at this increased willingness to share trumping our desire to accrue large numbers of personal assets. Drawing what at first seems like a very long bow, the article compared falling murder rates in the USA to the rise of the sharing economy, arguing (somewhat audaciously) that the internet has gone some ways in breaking down fears and perhaps, thanks to things such as social media and online seller ratings systems, even (partially) renewing our trust in strangers.

As the sharing economy continues to grow, so too does the list of legal issues associated with it. The flexible, “loose-agreement” aspect that can make sharing so attractive is exactly what is landing some of the bigger fish in hot water. People renting out their properties via accommodation-sharing websites have run into contractual trouble with their landlords who state that such activities are not allowed as part of the rental agreement. Authorities in Amsterdam have been tracking down people sub-letting their apartments via portals such as Airbnb for breaches of the law (a permit is required to let rooms or apartments in the Dutch capital).

Similar cases of accidental rental contract breaches have also cropped up in the US and questions have also arisen as to whether (and what kind of) tax is being paid on accommodation fees and, more generally, on the income generated from peer-to-peer rental.

To demonstrate the financial worth of the sharing economy (in response to those decrying its overall economic value) Airbnb released figures in June 2013 that stated that guests and hosts in Paris contributed 240 million USD to the local economy. That figure was underscored by the finding that Airbnb guests had an average stay of five nights in the French capital compared to two nights for those staying in hotels. 

Other stakeholders in the sharing economy are having to navigate their way through murky waters, particularly any offering that could require an insurance payout in the case of damages. Carsharing companies have particularly felt the brunt of this with questions arising about who is liable in the event of an accident – the company, the owner of the car or the borrower driving it at the time? Some of the bigger carsharing companies will cover damages in the event of an accident up to a certain amount (1 million USD in the case of Turo) however, smaller operators do not provide insurance payouts, instead encouraging users to sort out the details of each exchange prior to entering into an agreement.

Benefits to the Environment

Though not primarily driven by environmental goals, the sharing economy poses manifold benefits to the environment, encouraging people to reuse or recycle goods rather than source new ones. Resources can be used more efficiently and having access to a good or service can often negate the need to take ownership of a product, thereby saving on materials and energy needed to produce a product from scratch.

Take books for example. A hefty amount of energy and water is used to produce one book. Producing a book requires about seven gallons of water while the process of creating one book and getting it to the stores can equate to about 7.5 kg of carbon dioxide. Loaning or selling your books significantly reduces the impact the printed word has on the environment.

Car pooling or loaning your car out also yields planet-friendly results. In 2010, consulting firm Frost & Sullivan found that car sharing helped reduce global greenhouse gas emissions by 482,170 tonnes in 2009 (check out this interactive infographic for a more detailed look at the benefits of carsharing).

To paint with a very broad brush, the sharing economy is also supported by sectors of the community more inclined towards sustainable and ethical consumption. A 2012 survey titled Re: Thinking Consumption analysed consumption patterns in India, Brazil, China, Germany, the UK and the USA and found that people are buying less and buying better. A survey undertaken by Airbnb in 2013 found that roughly a third of the 2,000 respondents take part in the sharing economy based on philosophical reasons (sharing is good, altruism, environmental benefits etc) rather than financial. 

Should I or Shouldn’t I?

For every pro, there is of course a con such as some of the key legal issues outlined above. Trust is also a key factor when deciding to take part in the sharing economy. Unlike established brands, individuals loaning or selling online don’t necessarily have the track record to prove that they are providing a quality service or product. To counter this, many sharing economy websites have adopted an Ebay-like ratings system where sellers or users are rated by those who have undertaken transactions with them in order to help build trust.

Check out our Act Now Guide to see what and how you can start borrowing or loaning.

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