The Sharing Economy

Posted by kdow on May 20, 2016 11:44:57 AM

One of the interesting things that has developed as technology matures and evolves in the current age is that we no longer have a desire to own anything. We’re more than happy to rent it for a nominal, reoccurring fee.

How I identify with services

When I was a young teenager I was a huge internet user, but very few of my friends had a connection, let alone understood the concepts of the internet. But here I was, with blazing speeds up to 28.8kbps that got derailed if someone called the house phone. That 28.8k connection was absolutely perfect when browsing websites with animated cursor effects & skull-and-crossbones gifs, using IRC to plan internet hijinks or to build basic websites on GeoCities.

But where that 28.8k connection really got pushed was downloading songs. I loved music, and still do. It’s likely something I inherited from my parents, who had a large connection of vinyl that I’ll gladly inherit one day in the future. I downloaded music from warez bots on IRC, Napster and sometimes even standard web servers. It was a way to sample a song before dumping my hard earned cash into a full album.

A few years into my career of music listening and I had a pretty serious CD collection that still sits somewhere, gathering dust, in my parents’ house. But the advent of broadband and CD burners removed the need to buy CD’s altogether. I had a Sony Discman that served me well between skipping songs as I walked to school.

My music habits are still unchanged. But between my Discman and my iPhone I had the iPod (I even rocked an iPhone and iPod at one stage, because my iPhone didn’t have anywhere near the capacity of my iPod Classic). Today, I have an iPhone with Apple Music (beforehand I did have Spotify). The iPhone’s disk capacity makes no difference. But my music habits haven’t changed.

My point here is that I have always rented media. I’m part of that generation that spearheaded the idea of renting music. I illegally obtained samples of songs because radio was already obsolete to me as a form of music discovery. If I liked the song, I would buy the CD. Once broadband came along, I ditched the trip to the shops. I moved from music sampling-before-buying to full on piracy because the industry didn’t adapt. Then, when it was forced to adapt I went back to paying for the goods & services I was using.

‘The sharing economy’

Apple Music, Netflix, Airbnb, Uber, Hailo… it’s all the same. These services fit into the habits of modern buyers. We don’t buy things, we use them. No one wants to take up space anywhere; their hard drives, driveways, etc. People are happier renting that space temporarily to free themselves from the burden of ownership. Owning a CD costs money, takes up space and takes up time. Opening an app and hitting play has no perceived time or monetary burden. The same goes for hailing a cab in Dublin. You used to need cash in your wallet and to — god forbid — extend your arm out to a random cab on the street to get home after a night out. Now I just open an app, select what type of cab I want and within a few minutes a car will arrive to bring me to my destination. Moreover, I can pay by card so there’s a lessened perceived cost in my mind.

We don’t buy things, we use them

And that’s the crux of the sharing economy. Users are the drivers of this economic shift into not owning things. I don’t own a car: I use Hailo/Uber. I don’t own any music: I use Apple Music. I don’t own a DVD player: I use Netflix.

The trade-off is often not that obvious from a user perspective. All of these companies get to charge our credit cards small, regular fee’s for use. Added-up these fee’s aren’t cheap. But in isolation it’s not that bad. There’s also data. All of these sharing economy companies build up huge data stores of information on users. It’s a terrifying prospect to think that a company owns that much of my information. But it’s a trade-off I, and all other users, accept. The other big trade-off is that these services aren’t owned by the users, and can be shifted/changed/updated quickly. Apple crossed a line by injecting a U2 album into anyone who owned iTunes. People were angered because they felt their personal systems were violated. But iTunes isn’t your property; it’s Apple’s. You just own a timeshare.

The flip side

There’s another side to this: the people who work to share their stuff with us. For Apple, Spotify, Netflix and services in the media space, the sharing economy is just a new playbook in the digital economy. Instead of selling goods & services in a traditional way, they shift their businesses to a SaaS (Software as a Service) model and aim it at consumers. No big deal. Business as usual (unless you’ve been disrupted, like HMV).

But then there’s Joe Soap who owns a car, works in a shitty job and is struggling to keep up repayments on his mortgage. His job as a janitor doesn’t pay enough to upkeep the car or mortgage payments, so Mr. Soap decides to take up extra income opportunities by renting a room out on Airbnb, and using UberX to be a part-time cab driver at nights.

Airbnb, Uber and similar services will advertise their services to the owners as an opportunity to earn supplemental income. But for someone using it to pay bills, this isn’t supplemental. It’s necessary to survive income.

So, while the sharing economy benefits me to rent music, movies, apartments in new cities and car journeys — there is a flip side that involves a human that may be struggling as a result of this weird, new, digitised economic outcome. Uber & Airbnb are great little apps for me, but for someone else, they’re terrifying, faceless owners of their fate. And that’s the crux of the negative sentiment towards many sharing economy services. This is a two way street. But one side of the road has far more lanes than the other.