The sharing economy has gained much attention in recent months and years, as sharing platforms have started to allow people to rent out stuff that they do not use optimally, to those that might want to rent that stuff, rather than buy. For example, Airbnb allows its users to rent out spare rooms in their homes to those that might want a place to stay in a city they are visiting. However, as a recent report written by Brhmie Balaram for the RSA (2015) reports, the term “sharing economy” has become somewhat diluted. There are now a variety of different business models being used under this umbrella term, and not all of them are particularly sharing in nature. In fact, some “sharing” activities are really just renting, and nothing more.
Differences Between Different Business Models
It is helpful to understand the differences between varied business approaches to understand the sharing economy. As outlined in the report, in a traditional business model, the goal is resource extraction. Value is attained through products and services and neither consumers nor workers have much power over technology.
There is also the platform based model, within which value is created by users. In this case, extraction is not the goal. Content is shared via a network, and people who use the system have power over technology in their communications.
A sharing platform differs yet again from the previous models, because it takes under used assets and on demand labour. It is not based on resource extraction, but instead on helping the exchange of resources. Users create value. Both consumers and workers achieve this by sharing access to underused assets or human resources in an online network. Users do have some power over technology to change their lives and work.
The final approach outlined is the cooperative sharing platform. This is explained to be different from a sharing platform, but instead it is cooperative. There is no intermediary, and even though we are not there yet, this can come about sometimes due to the use of blockchain. Users, and especially workers have power over technology and they can leverage this to change how they work or live.
Challenges With the Sharing Economy
One challenge with the sharing economy is identified to be that some organisations have scaled up their businesses to the point where they are practically monopolies in their industry. Examples are Airbnb and Uber. These organisations have tremendous power. The RSA calls these “networked monopolies”. This has led to a position where sharing platforms are trying to dominate the market, and, as the RSA reports:
“To maintain their position these platforms must empower the very users they depend on to fight in their corner against tighter regulations.”
The RSA advocates for shared regulation as a solution to shaping the way that the sharing economy will develop. This is similar to self regulation, in that regulatory responsibilities are given to people who are not in the government, but it also includes businesses in constructing the regulatory framework. As well, users of platforms such as consumers and workers are encouraged to take part in coming up with solutions for issues. It is believed that using such an approach would help to be more protective of workers and their welfare, among other benefits.
The sharing economy has much to add and offers great potential in many ways to the economy. However, it is believed by some that power has to be redistributed so that it is fairer. This will, it is argued in the report, lead to a more genuine and fairer sharing economy, creating transformation that is positive for all, rather than for just a few at the top of a monopoly. This is important, especially when it is considered that there are currently 80 million people involved with the sharing economy in the United States, and 23 million in the United Kingdom. It is only projected that these figures will rise.
It is anticipated that by 2025, global revenues from this industry will be approximately £230 billion. As explained, sharing platforms have scaled up, but during the course of doing so have found it to be a challenge to maintain the social value that they initially had. By taking a fairer regulatory approach, as presented in the report, this could be protected against, allowing more people to really benefit from a more genuine sharing economy.