The "Sharing Economy": is sharing really caring?

The ‘sharing economy’ is on the rise and it might just revolutionise the way we buy and sell things.  It’s a fascinating new development, which one one hand may be seen as empowering and anti-corporate, or alternatively, as a threat to existing small businesses; a means for deepening existing inequalities of ownership; or something which appears vulnerable to the very corporations it seeks to replace. It’s also known as ‘collaborative consumption’ or the ‘peer-to-peer economy’, but whatever you want to call it, it’s pretty likely that you have already been a consumer or maybe even a ‘provider’ in this emerging marketplace. If like me, you’ve used a car-share website, or rented out a room in a stranger’s house, you’ll know what I’m talking about.

Recently I went on holiday to Germany and stayed a few nights in Hamburg and Berlin, each time in a privately-owned apartment which I found online through airbnb, a hugely successful online service which allows people to rent out a room or their entire house/apartment for paying guests to stay in, usually for a few nights at a time. Airbnb was set up in 2007 by two enterprising housemates in San Francisco, who, in the run-up to a big international conference taking place in the city, noticed that all the local hotels were fully booked. Seeing this as an opportunity, they set up their own ‘Airbed B’n’B’ within their house for visiting conference delegates to crash in (for a price).  Now, valued at a staggering $10 billion (more than the Hyatt hotel chain) and with hosts in 192 countries, airbnb is a big deal which is getting investors very excited. As for my personal experience in Germany, both my apartments were well-located, slightly cheaper than a hotel, and… considerably cleaner than my own house.

I’ve also started using a carshare website called Blablacar, which, like similar US firms Uber and Lyft, allows drivers to advertise spare car seats for a particular journey, and potential passengers like me can, if our journeys match up, jump in – usually at a fraction of the cost of taking public transport. Blablacar was initially started in 2004 in France (where it’s now huge), and now operates in 12 countries in Europe, with plans to move into Asia and America as well. My personal experience? It’s always cheaper and almost always quicker than taking public transport, and you often have the benefit of getting the driver to drop you off somewhere more convenient than a station. However, unlike taking the train or coach, it’s harder to avoid talking to the driver or your fellow passengers, no matter how little you might have in common.

There’s far more to this sharing economy than just renting rooms or car seats. Going on holiday? Why not swap houses with someone from another country using lovehomeswap.com? Got a spare car collecting dust? Why not let someone borrow it using Easycar Club? Wardrobe of clothes you hardly ever wear? Try Rentez-Vous. Parking space you don’t use? There’s Parkatmyhouse.com.  Need a handy man, or just someone to feed your pets? TaskRabbit!

How has this all happened? In a recent BBC interview Debbie Wosskow, head of Lovehomeswap, gave three reasons. Firstly, the global recession of recent years has made people eager to try and maximise the assets that they own and make money from them; secondly, the internet has made it easy and cheap for customers and providers to find each other; and thirdly, there is a growing desire among consumers for ‘authentic experiences’ with a personal touch – why stay in an identikit hotel room when you can stay in someone’s ‘real’ lived-in home?

Rachel Botsman, author of ‘What’s Mine is Yours’, notes the sharing economy’s benefits in terms of sustainability, in that we might reduce the wasteful consumption of new goods by sharing old ones instead.  She also praises the way these markets are ‘re-localising’ trading relations and bringing customers and providers closer together through what we might call a ‘virtual neighbourhood’.

Indeed, perhaps the most attractive part of this new economy is the fact that it seems to circumvent large companies (car parks, hotel chains, transport and clothing firms etc.) in favour of more personal peer-to-peer transactions. It also seems to threaten the twentieth-century notion of the importance of ownership in forming identity, a line of thought associated with the likes of Bauman and Baudrillard, or with Thatcher’s vision of Britain as a ‘property-owning democracy’. Why own something when you can just rent it, as and when you need it?

However, as with any new development, there are winners and losers. What about hotel owners and their staff who have to comply with strict tax, licencing and hygiene laws not expected of airbnb hosts (who don’t have to pay tax on the earned income from letting out a room); or of taxi drivers who have to comply with strict safety and insurance requirements, yet whose income might be undercut by car-sharing drivers who don’t?

And as with every good idea, the sharing economy might become a victim of its own success. So far, airbnb claims that many of its hosts are self-employed or freelancers for whom hosting guests is a way to make ends meet. However, their own research shows that 20% of their UK hosts do not live in the home they rent out, implying that they are already wealthy enough to own two homes and make a nice extra tax-free income from hosting. In the UK, it’s already incredibly hard to get on the housing ladder, whilst those who already own their home watch their investments swell at eye-watering rates (in London, at an average of £500 a day). How long before we see property tycoons and property management companies take over the ‘airbnb sector’, further enriching home-owners through hosting guests, while first-time buyers continue to find it almost impossible to get a mortgage?

Aside from airbnb, however, other companies are making efforts to maintain the small-scale, personalised spirit of the sharing economy. Blablacars ensure that drivers do not charge passengers more than a certain price so that they remain under the tax threshold and are not classified as a commercial vehicle for insurance purposes, and other ventures such as Freecycle or Street  Bank don’t allow people to charge anything at all.

One might argue that, in any case, there is nothing wrong with people making a bit of extra cash from their assets: clothes, cars, spare rooms, whatever. Perhaps the surge in the sharing economy also mirrors a huge increase in the numbers of self-employed workers in the UK over the last few years. For some people this might be a symptom of precarious, insecure work; for others it might be a sign of an increasingly independent and entrepreneurial workforce.

So far, the sharing economy is a very interesting development, providing profitable opportunities for providers, and unique and personalised experiences for customers. As this sector develops, let’s see if it continues to live up to its benign, caring name.

@RogerTyersUK

Further reading

Botsman, R. (2010), What’s Mine Is Yours. HarperCollins: New York

www.collaborativeconsumption.com