Is the Sharing Economy a Myth?
The sharing economy is a system that is very young and where participants share access to certain products or services rather than having individual ownership. This is a concept that digital marketing has been familiar with for a good decade now, as digital media has made collaboration within these markets far more accessible.
The sharing economy is also referred to as collaborative consumption. The types of services offered include peer-to-peer travel or accommodation like Airbnb; dining experiences like Feastly; and task-sharing in the case of TaskRabbit or car-sharing like the famous Uber. You can see all types of sharing economies on this infographic. All of it is typically organized via an online system such as an app or a website. As such, the demographic is, in many cases, web savvy.
This is not the gift economy, which is about gifting or trading something; the sharing economy is actually a number of things. It can be:
- A product service system where products that are owned by an individual can be rented out or shared on a peer-to-peer marketplace e.g., Airbnb, Uber and Lyft.
- A redistribution market based on used or pre-owned goods being passed or sold to someone via a marketplace e.g., eBay, Freecycle, Swap.com, and Craigslist.
- A collaborative lifestyle where less tangible assets can be shared and sold such as design skills, money for personal loans and time e.g., TaskRabbit.
For this article, we will be discussing some companies that are within the ‘product service system’ and ‘collaborative lifestyle’ arena who have a tendency to flaunt some pretty astounding assumptions.
Assumption 1: The platforms behind companies like Airbnb and Uber are built upon communities.
Let us look at two definitions:
- A community is the condition of sharing or having certain attitudes and interests in common.
- A gathering of people for the purchase and sale of commodities and a place where commercial dealings are conducted.
The aptest description of these sharing economy “communities” is Definition B, precisely because they are marketplaces, not communities. When you take an Uber taxi or crash overnight at someone’s place in France through Airbnb, you are not a citizen of an idealistic society; you are simply a cog in a very well-endowed marketing wheel.
Noam Scheiber once commented in regard to Taskrabbit (an app that connects people who want chores done with people who can do them) that, “Under the best of circumstances, the chances of finding a soul-mate in the person who unclogs your toilet seem exceedingly small. In the worst of circumstances, the service can feel downright exploitative.”
The desperate battle between Uber and Lyft (another car-sharing service) isn’t over who has the friendliest handshake or whose cars have the chattiest drivers; it’s over who charges what.
It’s not hard to find compelling cases from owners of sharing economy businesses regarding their ethos as “community builders.” It is harder, however, to find cases of sharing economy employees and members reaping any real rewards, but we will discuss these a little later.
Assumption 2: The sharing economy creates conscious consumption.
It is not simply by chance that the sharing economy has risen up during times of financial crisis. Think about it for a minute.
Instead of using a restaurant which employs lots of people, you go to a chef’s house and pay him directly for the meal, thus bypassing the waiters, cooks and other staff who would naturally benefit from your payment for services at a restaurant.
Instead of booking a standard taxi, you might hire an Uber driver and pay him or her half what you would have paid the taxi firm, ensuring that a local taxi firm gets fewer fares and is more likely to go out of business.
Sounds a bit like every man for themselves. And I forgot to mention that these services are funded by venture capitalists that want a return on their investment, but share none of the customer data to their service providers (or any of the glory of the experience provided, for that matter).
Is this an opportunity for the everyman to rise up and grasp the economy for themselves? Or is it merely a way for the haves to exploit the have-nots—to offer services to those in the know and ignore those who are not?
Assumption 3: The sharing economy seeks to displace capitalism and empower the community.
When the sharing community started, consumers thought it was a rallying cry against excessive consumerism. Many people were very excited but, alas, those voices have turned critical and begun to use the word exploitation where empowerment once stood. Its beginnings are rooted in not-for-profits like Wikipedia and Freecycle, but today it’s far from these well-intentioned stirrings.
While the tech journalists collectively implode over sharing companies with excessive valuations (e.g., $50 billion for Uber, $25.5 billion for Airbnb and $8.75 billion for Kuaidi Dache) others ask the question, “What rights do these non-employees have?” The founders will tell you that these people are “micro-entrepreneurs,” but what exactly does that mean?
Look at the flipside where Uber drivers get paid as little as $10,000 a year and as much as 30 percent of payments are taken by Uber (Lyft and Sidecar drivers earn even less per fare). So, as far as empowering the car sharing community, it’s not looking good. All the perks associated with the normal labor market (e.g., minimum wage, social security, and health care) don’t appear to apply to the new economy, and where discord is heard it is quickly quenched.
We begin to wonder just how this model considers itself different from a capitalist marketplace. Is it that the traditional marketplace might actually offer workers more rights? One needs to consider why bidding down the value of the labor force and the canceling out of any protections for that labor force are being promoted as a good thing.
Is the Sharing Economy a Bad Thing?
Used moderately and with users in mind, allowing a few people to make a little extra cash is a positive thing. But this new economy must recognize that they cannot treat people like they are expendable assets.
The way the sharing economy works now means that those without access to certain apps or unaware of certain websites are at a serious disadvantage to those in the know. Using the company Monkeypark as an example, instead of leaving your parking space in a busy town center, you send out a message that you will hold the space for five dollars or as much as anyone wants to bid for it, thereby stopping people parking who can’t access that app or afford to pay over the existing parking charge to secure it.
Another example of a sharing economy company not playing by the rules is TaskRabbit, who recently changed its algorithm to dramatically alter its bidding system. Now, Rabbits (workers) are set an hourly rate, the site can only be accessed via a mobile phone and if Rabbits want the job, they have to be available within 30 minutes or it goes to someone else.
As many as 30,000 workers on TaskRabbit are now unable to access the site and are unable to search for jobs via the community they have been supporting, instead being forced trust the algorithm to match them up with the right opportunity. Many of them haven’t performed any work since the update, and don’t anticipate that changing soon.
For the sharing economy to work, there needs to be trust between the website or app host; the service or product provider; and the user. When trust breaks down as it does with Uber’s host and provider, you get massive discontent. You only have to look at the many picket lines of Uber drivers in cities across the globe demanding fair wages. This same loss of trust can be said of TaskRabbit who changed the goal post with their algorithm so drastically.
The balance to keeping all of these parties (or at least a large percentage of these parties) happy would inevitably lead to a better community cohesion, and quite likely more profit. I’m not talking about giving away everything for free, as this would in many cases also lead to unhappiness and possibly resentment. But I am talking about a fair environment where all parties could be seen to profit—whether that be financially or from a good experience.
Everyone involved in digital media are already able to make an impact when it comes to a brighter future for the sharing economy—whether that be by sharing news that ensures change, giving or voting on ideas for the betterment of an existing brand such a Uber or actually setting up a sharing economy business to challenge the likes of Airbnb. As a digital marketer, and given the information laid out here, what are your thoughts on the future of the sharing economy?