The Sharing Economy - What’s mine is yours (for the right price)
Just as you've got to grips with the Cloud, Big Data and the Internet of Things - there's a new digital trend that you need to get to grips with - the 'sharing economy'.
Recently listed as one of the '10 ideas that will change the world' in Time Magazine, the sharing economy is being touted as one of the most disruptive economic and social movements of our time.
Often referred to as the 'peer economy' or 'collaborative economy', the sharing economy is an economic model based on individual's sharing underutilized assets - ranging from spaces to skills to possessions- largely for monetary benefits. As a concept it's currently in the early stages - with its growth being driven largely by new peer to peer exchanges (P2P) launched by tech savvy start-ups, but there are hundreds of new ventures springing up every day.
Some of the more well-known players in the sharing economy, who have been grabbing the headlines, include Uber - an internet taxi app which connects car drivers with passengers, Airbnb, a portal which allows people to rent out spare rooms to strangers for short stays, EasyCar club (part of the Stelios Easy empire) which lets owners rent out their cars when they aren't using them and JustPark which claims to be the world's largest online parking market place -connecting home and business users who would like to earn money from renting out their parking space or driveway.
Many of these start-ups have caught the eye of venture capitalists looking to back the winners who will become the market leaders - Airbnb has raised over $800 million in funding whilst Uber has raised an eye watering $1.8 billion since 2010. Proof that the sharing economy isn't another flash in the technology pan.
Of course, sharing isn't a new concept. As a student in the 1990's I spent some time at a German University where we'd regularly gather around a large map covered in drawing pins and bits of paper with names and telephone numbers of people offering lifts to different cities around the country, in exchange for contributions towards their petrol costs. It was a great way to travel long distances very cheaply whilst meeting some interesting characters along the way. Not that I told my parents that I was, in effect, hitchhiking around Germany (sorry Mum!). Isle of Man residents have been participating in the sharing economy for a number of years - renting out their rooms, or entire houses, to grateful motorcycle race fans who visit the island to watch the TT races.
So what's driving the sharing economy? There are a number of factors but, undoubtedly, the greatest enabler is technology - seamlessly linking supply and demand in a way that wasn't possible before. Social media has helped too, especially Facebook - people are generally more comfortable connecting and meeting new people using technology. Add to the mix payment and online identity systems and smart phones with location aware apps and you see how the stage is set for sharing on a national and international level.
Commentators have also pointed to the fact that the sharing economy really began to take off just as the credit crunch set in. The financial crisis has had a serious impact on many household incomes and as a result people were looking for new creative ways to make ends meet - whether that wasby making or saving money. Renting out your assets to boost your income or hiring instead of buying - both have an impact on the money in your pocket.
easyCar Club claims that UK households could make £650 a month (or just over £7,800 a year) by sharing assets. For example, one car that sits idle for an average of 2.69 days a week could make its owners £3,200 per year, while 33% of homes have space in a drive or garage that could earn the owners £630. Apparently a church in London's King's Cross, using the JustPark service, has made £200,000 to date from Eurostar passengers wanting a safe place to park their cars.
Others are citing a value shift which is taking place amongst a more connected society - with people much more open to sharing and more accepting of renting in the digital age - and happy to make these arrangements online too. In fact, Rachel Botsman, one of the leading commentators and advocates of the sharing economy, goes as far as saying that sharing things with strangers allows us to make meaningful connections - as peer-to-peer sharing "involves the re-emergence of community".
This means that trust is vital for ventures operating in the sharing economy. A lot of the services rely on ratings and reciprocal reviews to build trust among their users. We've been exchanging billions of items on eBay for over a decade and we are used to giving and leaving feedback and basing our purchasing decisions on the trustworthiness of the seller based on the review of others. Travelling half way across the world to stay in a stranger's house is much less daunting when you can read positive testimonials from previous guests.
There's also a green element to sharing and renting - it promotes re-use of our finite resources which means less production and less wastage - all good news for the planet.
The sharing economy has really taken off in America but it seems that we Brits may be just a little bit more reticent to share in the UK than our European or American counterparts. According to a recent major study by Nielsen - more than a third of British consumers are willing to embrace the sharing economy and hire out their personal possessions, yet they trail significantly behind 54% of Europeans and 68% of people globally who would do the same. The survey also revealed that younger people, who have grown up with Smart Phones and Facebook, are much more willing to embrace the idea of sharing than the older generations
As with all new disruptive technological advances, there will be losers as well as winners. Critics have emphasised the impact on traditional industries, who have to abide by rules and regulations, which they claim, are being unfairly undermined. You may have heard about the taxi drivers, in major cities across the globe - from Paris to San Francisco, protesting against Uber. They claim that it's unfair competition as they have to pay for plates and licences and then there's the issue of insurance.
Some of the regulators are unimpressed too but they are having to deal with laws that were enacted when the concept of "on-demand ride sharing" didn't exist. Uber and other companies are facing bans, fines and court battles in cities across America. Back in the UK, some councils wanted to fine householders up to £20,000 for renting out their driveways if they had not secured planning permission for a change of use. The Communities Secretary put a stop to this with new regulations that allow people to make a bit of extra money from renting out their driveway.
Loss in tax revenues is also causing a dilemma too - as many municipalities, particularly in America, rely on tax funds for the provision of basic services. For example, hotel taxes contribute greater to the public coffers but they are being eroded when people elect to stay at a private house they've found via Airbnb. The trade unions aren't happy either - putting forward the argument that the sharing economy converts unqualified labour into a rival workforce, made up of workers doing an inferior job on the cheap. Others believe that it's sharing without caring - it's micro-capitalism with individuals and the platform providers, effectively the intermediaries, making money.
So what's next for the sharing economy? It's a trend which is going to build momentum and diversify into a wide range of areas. There are already a growing number of online lending services - matching people who need to borrow money with those willing to lend it, cutting out the banks altogether. Many of the platform providers are looking to make additional revenues beyond their transactional revenues (the cut they make for matching up supply and demand), by providing added value services. For example, DogVacay--which is targeting the estimated $8 billion pet services and boarding market in the USA, by connecting traveling dog owners with temporary hosts--provides $4 million in liability coverage, has developed an app so hosts can share pictures of the dog with its owner, and is exploring providing GPS collars so pups can be tracked.
The sharing economy movement is now making inroads in the Business to Business sector too. Floow2 allows you rent out or hire high-end equipment such as forklift trucks or earth moving machines - allowing businesses to earn extra money from expensive assets which would otherwise cost them money. Operating in the healthcare sector, Cohealo helps hospitals share expensive medical technology - it has over 200,000 clinical devices available for use in Operating Rooms across various health systems in America.
On the Isle of Man, now that we have to find extra money to pay the unpopular 'toilet tax' and given the diminishing number of public conveniences, maybe we should embrace the sharing economy and offset the expense by renting out our toilets!