Would you share your car with a stranger? For an increasing number of people, the answer is a definitive “yes”. A host of online platforms, from Airbnb for flats to Uber for vehicles, has turned everything we own into a product to be shared with others.
Tiago Pires Marques, a 36-year-old Portuguese entrepreneur, recently quit a well-paid job at a multinational corporation to become his own boss. He now rents out his two flats in Lisbon to tourists via Airbnb, a US home rental platform that claims more than a million listings worldwide and a market valuation approaching US$ 20bn.
Others would see this as a misguided career move. For Mr Marques, it was a life changing decision. The idea dawned on him after failing to land a job with Airbnb: “It made me think about sharing as an opportunity. I wanted to feel free and empowered and do what I like to do, such as decorating apartments, and get paid for it.”
He is no longer prepared to work for big corporations, an experience he likens to slavery: “When you are working for someone else you are not necessarily fulfilling your own goals. You just stay because you get paid.”
Mr Marques could be the poster boy for a global movement of like-minded people who engage in peer-to-peer transactions, creating a niche market known as “the sharing economy”. Benita Matofska, a global sharing expert and founder of Compare and Share, a comparison marketplace for the sharing economy, calls this new breed of people “generation-share”: young and tech-savvy, they reject the idea of ownership, preferring to access products and services when they need them and ditch them afterwards. “There are 2.6 billion of them worldwide, a sizeable market that everyone setting up a business should take into account,” says Ms Matofska.
Generation-share is the key driver behind the rapid growth of the sharing economy, also known as “collaborative consumption”. A recent survey report by PwC estimated its current size at £10bn, expected to rise to £225bn over the next decade. Nearly three out of four respondents saw themselves as potential sharers.
As it often happens with technology, a combination of hardware and software innovation paved the way for a shift in business. Smartphones allowed sharers to connect with peers on the go and enabled sharing platforms to offer speedy customer service. The explosion of social media and open data reduced transactional costs and facilitated collaborative consumption on a global scale.
But Mr Marques thinks that there is something more than technology behind the sharing revolution: “People want something genuine and honest – an individualised experience that only peer-to-peer can offer. When you stay at a hotel chain the customer experience is always the same no matter where you are, Morocco or New York. When you stay at a local’s apartment there is added value.”
The credit crunch has also been a catalyst. 3RD HOME, a luxury home swapping platform, was founded by Giles Adams at the peak of the financial crisis. Mr Adams saw an opportunity due to the large number of property owners who had acquired holiday homes in the boom years. “It would have been much more difficult to set it up in 2007. The crisis gave the sharing economy a kick by creating the need to use property in a more effective way,” he says.
The platform’s members confirm that: “As the financial crisis came in, I stopped making money for a few years and got fewer bookings for my properties, so I was looking for a way to save money and rent homes at places where I wanted to go,” says Michael Holmes, a 3RD HOME member who owns and often swaps with fellow members two properties in Barbados.
For many Europeans, sharing is more about the past than the future. Their grandfathers formed co-operatives to exchange goods and scale-up production and distribution; modern sharers see themselves as guardians of this tradition. Mr Marques, whose parents own a winery, mentions Portuguese olive oil and wine co-operatives as an inspiration for his involvement in the sharing economy.
Pieter van de Glind is co-founder of shareNL, a Dutch platform for the collaborative economy, and a member of Amsterdam Sharing City, a sharing network set up by Amsterdam’s local government. He thinks that sharing is second nature to Dutch entrepreneurs: “Working together to increase individual benefit is part of our culture. This is how the city of Amsterdam was born: people worked together to battle the sea. Once the land was clear, everyone got his own piece of it.” However, Mr van de Glind draws a line between what he calls “the front stage” and “the back stage” of the sharing economy: “On the front stage many sharing platforms look similar, but only a few of them are co-operatives, which means that people who use them own them as well. Airbnb seems like a marketplace, but if you look at the back stage it is a start-up backed by venture capital firms.”
The new age worker
As the sharing economy grows, the boundary between entrepreneurs and workers becomes blurred, believes, Ms Matofska: “We are leaving behind the idea that you have a job for life. People can now choose what and how much they want to do. One example is parents who pick up tasks on TaskRabbit – a marketplace for small-job outsourcing. This allows them to organise their work around childcare.”
Debbie Wosskow, founder of the home swapping platform Love Home Swap, recently led an independent review of the sharing economy for the UK government. She thinks that the UK can become a nation of “microentrepreneurs”, citing numbers that testify to the strength of the sharing economy: 20,000 UK property owners rent out their driveways via JustPark, making an average of £465 a year; those renting out vehicles through easyCar Club earn an average of £1,800. As for Airbnb, a typical London host earns around £3,000 a year.
But what about the perks that come along with a full time job, such as health insurance and holidays? Critics, such as Stanford University’s Evgeny Morozov, assert that sharing platforms deliberately skip regulation applying to old fashioned businesses, such as minimum wages. The result is a new class of paupers who cannot afford to buy their own house or find a proper job, being perennially trapped in poverty. In other words, sharing is capitalism’s latest trick to convince us that the system works.
Mr Van de Glind, shareNL co-founder, although a sharing aficionado himself, shares these concerns: “Many people make a living through sharing but do not have insurance or benefits. Perhaps we could use technology to set up new trade unions and social insurance schemes more relevant to our times.” He pins his hopes on e-learning: “You are now able to take online courses or learn a language. People can educate themselves and get a better job.”
How far should regulation go?
Policymakers have responded in various ways to the challenges posed by collaborative consumption. Uber, a ride-sharing platform, has been banned in several EU jurisdictions, while Airbnb has been fined by the Catalan regional government.
Free-market pundits, such as Darcy Allen from Melbourne-based Institute of Public Affairs, claim that over-regulation could kill innovation. “Occupational licensing”, the government’s right to decide who can be a supplier, increases costs, distorts competition and is too rigid to adjust to technological change; bottom-up self regulation, such as customer reviews work better according to an influential report by Mr Allen.
This approach has been adopted by Amsterdam’s local government, which recently legalised home sharing for a maximum of 60 days a year, although property owners have to pay a tourist tax. It is now planning to map out in a public inventory its own assets and share them with Amsterdam’s denizens.
In the same vein, the UK government has pledged to release government buildings to be used as workspace. It will also adjust public procurement regulation so that civil servants can use sharing platforms to book accommodation and transportation. The government incorporated in the 2015 budget some of the recommendations of the Wosskow report, making it easier for individuals to rent out a room or parking space, while job centres are encouraged to promote job opportunities in the sharing economy. But more has to be done according to Ms Wosskow: “There is a discussion around tax breaks, which allow individuals to earn up to £4,250 tax free per year for letting a room in their house. This should be widened to apply to other verticals, such as driveways and ride-sharing.”
In Portugal, things became easier for Airbnb hosts last November when the government passed legislation allowing individual owners to rent out property. But as Mr Marques points out, regulation can be inconsistent. Uber is still illegal in the country due to legal action by the taxi association. An online petition asking for its legalisation has collected 11,000 signatures.
No matter what policymakers do, sharing will be so common in the future that it will pass unnoticed, Ms Wosskow thinks: “Fifteen years ago online travel agencies disrupted the travel industry by creating a smarter way of accessing customers. What followed was integration of this new tool in existing distribution channels. The same will happen with the sharing economy – there will be more integration and less suspicion. In ten years’ time we may not need the term ‘sharing economy’ anymore.”