The term “sharing economy” gets thrown around quite often and I was trying to make sense of the definition, and the types of service providers it covers. Is borrowing a book from a public library, buying a gadget on Ebay, booking a ride on Uber, buying a gig on Fiverr, selling my used DVD’s on Amazon or hiring a freelance logo designer all features of the sharing economy?
Here’s my thought in a short article with key excerpts from various people who have tried to define this notion, and my take on what it means.
With the advent of the Internet, connecting service providers or asset owners with people in need of specific services has become much easier. The term “sharing economy” has become quite popular in the past few years, thanks to service providers like Uber and AirBnB. Like many people, I had grasped the concept of the term “shared economy”, but wasn’t sure if the terminology was appropriate.
Bredd Scott, Author of The Heretic’s Guide to Global Finance states: “There’s nothing resembling a “sharing economy” in an Uber interaction. You pay a corporation to send a driver to you, and it pays that driver a variable weekly wage. Sharing can really only refer to one of three occurrences. It can mean giving something away as a gift, like: “Here, take some of my food.” It can describe allowing someone to temporarily use something you own, as in: “He shared his toy with his friend.” Or, it can refer to people having common access to something they collectively own or manage: “The farmers all had an ownership share in the reservoir and shared access to it.”
None of these involve monetary exchange. We do not use the term “sharing” to refer to an interaction like this: “I’ll give you some food if you pay me.” We call that buying. We don’t use it in this situation either: “I’ll let you temporarily use my toy if you pay me.” We call that renting. And in the third example, while the farmers may have come together initially to purchase a common resource, they don’t pay for subsequent access to it.
“Sascha Lobo, a German technology blogger for Der Spiegel suggests we drop the notion of “sharing” in the digital economy and call it “platform capitalism” instead.
On the other hand, Benita Matofska from the site site peopletoshare.com states: “The ‘Sharing’ in the Sharing Economy refers to the use and access of shared physical or human resources or assets, rather than the fact that there is no monetary exchange.It encompasses the following aspects: swapping, exchanging, collective purchasing, collaborative consumption, shared ownership, shared value, co-operatives, co-creation, recycling, upcycling, re-distribution, trading used goods, renting, borrowing, lending, subscription based models, peer-to-peer, collaborative economy, circular economy, on-demand economy, gig economy, crowd economy, pay-as-you-use economy, wikinomics, peer-to-peer lending, micro financing, micro-entrepreneurship, social media, the Mesh, social enterprise, futurology, crowdfunding, crowdsourcing, cradle-to-cradle, open source, open data, user generated content (UGC) and public services.” I think that this definition may be too broad and encompasses almost ALL forms of transactions that can be performed online.
In her article titled “Defining The Sharing Economy: What Is Collaborative Consumption–And What Isn’t?”, Rachel Botsman says that we can’t group all these P2P services in the digital economy under a single umbrella termed “sharing economy”. Rachel divides the services we’re seeing into 4 categories:
- “Collaborative Economy: An economic system of decentralized networks and marketplaces that unlocks the value of underused assets by matching needs and haves, in ways that bypass traditional middlemen, e.g. Etsy, Kickstarter, LendingClub, Transferwise, Taskrabbit
- Sharing Economy: An economic system based on sharing underused assets or services, for free or for a fee, directly from individuals, e.g. Airbnb, Cohealo, BlaBlaCar, JustPark, Skillshare, RelayRides, Landshare
- Collaborative Consumption: 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, e.g. Zipcar, Yerdle, Getable, ThredUp, Freecycle, eBay
- On-Demand Services: Platforms that directly match customer needs with providers to immediately deliver goods and services, e.g. Instacart, Uber, Washio, Shuttlecook, DeskBeers, WunWun”
I agree with Rachel’s view. Peer to Peer services in the digital economy must be split under a number of categories. Just one of them is “sharing economy”, and if a person shares something, that person can decide to charge for sharing that item or not. Sharing (to me) is a means of making the most productive use of an under-utilised asset.
Why am I trying to deconstruct the terminology and classify the various service providers? That’s what an Enterprise Architect does and how my mind works. If you can’t decompose and differentiate between different components of a system then you can’t effectively design for a modularized, service oriented and agile solution that can be reused with little modification for other purposes. As an example, if you want to build your own P2P digital platform with Sharetribe, their service marketplace works for various categories of P2P services which primarily differs by these 3 dimensions in the booking process flow: time, location, and price formation.
I’m also (passively) learning about Blockchain technologies (the immutable distributed ledger) and trying to figure out if there are any valuable opportunities when applied to the various categories of P2P transactions. Can smart contracts with Blockchain eliminate the need for escrow. Can trust in the reviews and ratings between parties in a marketplace be enhanced? I think so…