Written by: Frederique Krop
I rent an apartment in Copenhagen through Airbnb, I do a course in Swedish through Coursera and I let people couch surf. I have a few apps on my phone and through these I can access many resources. Do I need a ride to school today because it is snowing? I will check my apps and will find many opportunities for a ride. I am a big user and ambassador of the sharing economy, there are many benefits in the sharing economy. However a lot needs to happen to make the ‘sharing economy’ long-term beneficial. I will ask the question here, ‘Is sharing everything really a good idea’? Issues like reputation and intermediators (e.g. Lyft) will be discussed.
So let me start with explaining what the ‘sharing economy’ is. The first mentioning of 'sharing economy' was in 2008 and denotes 'collaborative consumption made by the activities of sharing, exchanging, and rental of resources without owning the goods' (Lessig 2008, pp. 143). Collaborative consumption is the: ‘reinvention of traditional market behaviors—renting, lending, swapping, sharing, bartering, gifting —through technology, taking place in ways and on a scale not possible before the internet’ (Botsman, 2010). It is built on using and sharing of products and services. It is not a new thing, it is just more widely used now through internet access (Puschmann and Alt, 2016). The sharing economy is part of the collaborative consumption and consists of B2C and P2P (Botsman, 2010). It has seen an expansion to C2C transactions and this resulted in a new business model (Puschmann and Alt, 2016). According to Botsman (2010) it is a form of activities or platforms as reaction on hyper-consumption. We trust people more than companies, especially after the recent economic downturn (Botsman, 2010). Botsman (2010) mentions the motivation for sharing as ‘we are wired to share’. Botsman (2010) states that collaborative consumption was born out of a coincidence of wants. We are like monkeys; born to cooperate and share.
However for the marketers to reap the fruits from this they created the platforms as an intermediate. What happens if the marketer comes in? Will the sharing economy still be so romantically described as Botsman (2010) does? Companies see the sharing economy more as an opportunity than as a threat. The sharing economy is based on a few key principles:
· Access over ownership,
· Trust & transparency,
· Unlocking the value of unused and under-used assets,
· Mutual benefits for businesses and communities (Botsman, 2010).
Some say that everybody reaps the fruits of the sharing economy, the consumer, providers and intermediaries (Puschmann and Alt, 2016). Consumers see increased convenience in the 'access' of product instead of owning. Furthermore there is an economic benefits as there is need for a lower capital investment when you use a good instead of buying it (Puschmann and Alt, 2016). The sharing economy requires systems for the C2C transactions. For example for bookings and payments (e.g. of a bike and using the bike). This is where the intermediaries come in play. For intermediaries they can position themselves as platform where consumers share good and services or provide additional services such as insurance or payment services (Puschmann and Alt, 2016). Intermediaries role is made up out of three process categories (Puschmann and Alt, 2016). They provide market transparency (listing of services), a transaction infrastructure (billing, contracting) and regulation (ratings, governmental regulations) (Puschmann and Alt, 2016).
However there seems to be an utopian idea about the sharing economy (Sacks, 2013). Is the name ‘sharing economy’ even right?. The sharing economy is factually very right winged, but is masked as a progressive, environmental friendly, small economy. It pretends to be very left winged.
There are many critics on the sharing economy, one is Eckhardt and Bardhi who feel that the 'sharing economy' is not the right term to use. It is more an 'access economy'. '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' (Harvard Business Review, 2015). Moreover some argue that the sharing economy is a form of capitalism where even the community is exploited (nrc.next., 2014). There are more and more initiatives who want to go against the hyper-consumption movement, these are platforms where you can share and borrow all sorts of goods and products from the community – the share economy. However the share economy is actually an example of an extreme form of capitalism. In reality it is not about making friendship and solidarity, it is about making money and earning good reputation. Therefore virtues like friendliness and hospitality are completely economized, for branding and marketing purposes of yourself. Capitalism is at its highest now when it even annexed the community, the commons, the foundations of communism (nrc.next., 2014). So the fundamental, utopian idea however of collaborative consumption is that when I let you borrow something. It will give a good feeling, knowledge, networking, recognition and more intrinsic values (Sacks, 2013). When I let you couch surf for free on my couch, I will build up an reputation, a status or credit which I can later use. We can call this social capital. However this is not how it works. In almost every case, what compels people to open up their homes and cars to complete strangers is money, not trust or goodwill.
Sharing to earn more money is not sharing (Roose, 2016; Belk, 2014). Companies who understand that monetary drivers are more important and their marketing department makes this a focal point are more successful compared to companies whose focal point is on the social benefits (e.g. Lyft) (Harvard Business Review, 2015). Instead of old times, standing next to the highroad trying to hitchhike, you now just order your driver at home. You grade each other after the ride. Then you build a reputation, so others know what kind of person they are up to next time want to hitchhike. The technological innovation ends the downsides of hitchhiking, such as waiting time and the change to meet a complete psychopath. At the same time the benefits remain, making friends and have good conversations, or the social capital. The American company Lyft uses the slogan ‘’your friend with a car’’. With this philosophy the customer is your friend and drivers put a pink hipster moustache on their car as a recognition. They are trained to meet their ‘customers’ aka ‘friends’ with a ‘fist bump’.
Picture 1: Hitchhiking then and now (nrc.next., 2014).
It is all theatrical. It is a show. To market and brand yourself for a good reputation and review. The sharing economy is nothing more than a well-organized, more accessible sharing way with the help of the internet than in an internet less time. Where the reputation and reviews of a person is the trust and ‘worth’ of the person. Where in old times you asked your neighbour and judged him by looks and attitude. We now have the reputation and reviews. The internet is a replacement of the ‘ask your neighbour for some milk’ magnified way of thinking. However the downside is that instead of actually giving and sharing, we ask money for it, pseudo-sharing sometimes called (Belk, 2014). And where there is money, business will thrive and marketing comes in play. You market and brand yourself through good reputations and behaviour. A big downside is that the sharing economy is spreading to services that were non-commercial before, such as doing grocery shopping for your sick neighbour.
Hitchhiking for an intermediaries point of view (e.g Lyft) (nrc.next., 2014).
A form of exploiting the sharing economy is that people can become ‘small companies’ or ‘micro-entrepreneurs’ themselves. They are the brand, and these platforms on the internet help people to profit from their fallow assets. However they also attract ‘big business’, people will buy new houses to only rent out. These big business initially will in turn help the ‘sharing’ business grow. But is this really sharing? Or exploitation (Cova, Dalli and Zwick, 2011)? Furthermore another downside is that that most providers such as Uber and Lyft drivers are actually underpaid compared to old-fashioned companies (Kosoff, 2016; Roose, 2016). Real technological refreshment would be if the middle man would be skipped, the intermediaries. With cases like Uber and Airbnb a lot of money is left at the middle man. Which actually makes them more old-fashioned than an innovative refreshing company.
So concluding, we shouldn’t capitalise everything we do for each other. Some things, such as helping your sick neighbour out should remain non-commercial. It is going to be a challenge for this ‘new’ economy to find the right balance in a mix of different values. In a world of abundance the worth of money becomes less, and the feeling to matter becomes more. The sharing economy is more a way for micro-entrepreneurs with low start-up costs or for intermediates to thrive. While these intermediates are needed to provide market transparency, transaction infrastructure and regulation they should not be exploiting (Puschmann and Alt, 2016). Where no real friendliness and honesty exists, where you market and brand yourself through reviews and reputation. The community becomes artificial and exploited. It is important to find a right balance for the ‘new’ economy, but what is the balance? And how are we going to regulate this? Governmental regulations? Where does sharing end and commerce begin? We have to think critically about the main question here: ‘should we share everything?’ Probably not, but what not?
References:
Belk, R. (2014). Sharing Versus Pseudo-Sharing in Web 2.0. Anthropologist, 18(1), pp.7-23.
Botsman, R. (2010). The case for collaborative consumption. [Blog] TED. Available at: https://www.ted.com/talks/rachel_botsman_the_case_for_collaborative_consumption?language=en [Accessed 20 Feb. 2016].
Cova, B., Dalli, D. and Zwick, D. (2011). Critical perspectives on consumers' role as 'producers': Broadening the debate on value co-creation in marketing processes. Marketing Theory, 11(3), pp.231-241.
Harvard Business Review, (2015). The Sharing Economy Isn’t About Sharing at All. [online] Available at: https://hbr.org/2015/01/the-sharing-economy-isnt-about-sharing-at-all [Accessed 20 Feb. 2016].
Kosoff, M. (2016). UBER DRIVERS SPEAK OUT: We're Making A Lot Less Money Than Uber Is Telling People. [online] Business Insider. Available at: http://uk.businessinsider.com/uber-drivers-say-theyre-making-less-than-minimum-wage-2014-10?r=US&IR=T [Accessed 20 Feb. 2016].
Lessig, L. (2008). Remix: making art and commerce thrive in the hybrid economy. New York: Penguin Press.
nrc.next., A. (2014). Vriendschap met de chauffeur? Laat me niet lachen Bij UberPOP en Airbnb blijft veel geld aan de strijkstok hangen. [online] nrc.nl. Available at: http://www.nrc.nl/next/2014/09/03/vriendschap-met-de-chauffeur-laat-me-niet-lachen-1415969 [Accessed 20 Feb. 2016].
Puschmann, T. and Alt, R. (2016). Sharing Economy. Bus Inf Syst Eng, 58(1), pp.93-99.
Roose, K. (2016). The Sharing Economy Isn’t About Trust, It’s About Desperation. [online] Nymag.com. Available at: http://nymag.com/daily/intelligencer/2014/04/sharing-economy-is-about-desperation.html [Accessed 20 Feb. 2016].
Sacks, D. (2013). Peer-to-Peer Learning: How successes and failures of the recent past are reshaping the utopian dreams of sharing startups. fastcompany.com, pp.40-42.