What is the sharing economy?

The sharing economy may have been an active force in a number of strong markets for some time, but for many 2014 has been the year that it went mainstream...

You are reading an article in the Understanding the sharing economy series, to read more head over to the series homepage.

Services such as Airbnb and Uber have been continually making headlines over the past few months, as authorities attempt to effectively regulate a raft of peer to peer services which operate outside the traditional confines of more established organisations.

But what is the sharing economy? For many people – even those who work inside it and regularly use its services – it can be difficult to define. “I’m frequently asked to define the sharing economy,” explains Benita Matofska, Chief Sharer at The People Who Share. “The Sharing Economy is a socio-economic system built around the sharing of human and physical assets. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations."

For many, their first encounters with the sharing economy will be through travel, with the likes of Airbnb, Wimdu and Roomorama allowing people to put up their spare rooms or property up for rent – a service which has proven to be an extremely popular alternative to staying in hotels for travellers. Apps such as Uber and Hailo have revolutionised the way we use taxis, while Lyft and BlaBlaCar have taken this one step further and re-introduced car-sharing to a whole new generation. Bicycles can be shared through Spinlister, images through miPic, wireless network coverage through Fon, office space through Spacious and even pets through DogVacay. There is seemingly no aspect of our lives which has been forgotten by the collaborative consumption revolution.

"The sharing economy has existed for a long time on a small scale, as part of the ‘informal economy’. Simple examples are multiple parties sharing a car to a party, borrowing your friend’s DSLR camera for a special event or letting a friend crash on your sofa," observes Tushar Agarwal of Spacious, a platform for locating co-working office spaces.

“The rise of the formal sharing economy as we see it today has been enabled by the ability of technology to give us real-time information on the availability of under-utilised assets that exist outside of our immediate network, and build trust around who you are transacting with and the quality of the goods or services in question. This has been formalised into the business models of some of the largest technology sharing economy companies, formerly start-ups, which we see today such as Airbnb and Lyft.”

I don’t think the average person would identify directly with sharing when they ask questions on a social network or post their photos, and therefore do not see this as a fad - it’s a way of life now.

The sharing economy may have been borne some years ago out of the embers of a dwindling economy and a desire to pool assets in order to save money, however many of its advocates are now looking past financial gain as a reason to participate in the space. Such as Matt Proud, who is one of the founders of Creative Commission – a platform that allows creatives in the music industry to showcase their talents and companies to recruit resource for new projects. “One of the biggest aims with Creative Commission is to achieve greater transparency, both in terms of making it easier to unearth talent and also with fairer payment,” explains Proud.

"We dislike the increasing trend of free-pitching, whereby many individuals spend hours creating work prospectively for clients without the vast majority ever being commissioned. For example, 30 people could slave over a logo for a company and only one, at most, will be selected and paid for their work."

This move into commissioning and recruitment, rather than just acting as a portal to find a spare room, is an interesting one for the sharing economy – but will it last? “I don’t think the average person would identify directly with sharing when they ask questions on a social network or post their photos online, and therefore do not see this as a fad — it’s a way of life now,” points out Proud. This assertion that the sharing economy is here to stay is backed up by a recent state of the sharing economy report, with UK consumers benefitting from £4.6 billion pounds of savings and earnings in 2013 from the sharing economy.

It’s also important to remember that within this figure we will see a fair chunk savings offered up by established companies, as initiatives such as ‘Shwopping’ at Marks and Spencer, B&Q’s ‘Streetclub’ and the Marriot Hotels workspace programme in conjunction with LiquidSpace proving that it’s no longer a domain purely built around clusters of well-performing start-ups.

June 1st saw the second annual Global Sharing Day take place, with sharers from countries including the UK, the US, India, Brazil, Australia, South Africa and Sweden coming together to celebrate the sharing economy. The day once again demonstrated the truly global nature of the sharing economy, with many viewing it as a way to solve some of the more serious problems being faced across the world.

While food shortages and homelessness are two issues that instantly spring to mind when thinking of how to put the sharing economy to good use, a number of inventive non-profits have come up with creative ways to provide support networks for those who need it most. Projects such as GoodGym connects groups of runners with physical tasks which benefit their communities, such as paying a visit to an older, isolated neighbour. The added dimension of helping people within the community adds greater motivation to complete runs, while the presence of expert fitness advice ensures that the physical exercise has the desired effect.

Sharing businesses aren’t just creating new income streams from nothing...  the glory of the peer economy comes at the expense of other workers’ livelihoods.

However not all aspects of the sharing economy are viewed through such a positive lens. Websites such as TaskRabbit allow users to post up jobs to be completed by their directory of ‘Taskers’ in return for cash. These jobs may be as simple as putting up a set of shelves or fetching milk from the corner shop, things that many would associate with the sort of behaviour friends and neighbours should be displaying without the motivation of financial gain. This has led to criticism from some corners, with accusations of unnecessarily monetizing the performance of tasks which have previously never been linked to personal profit.

"The sharing economy has painfully noble goals. But a society and an economics that truly values civic engagement, the commons, and trust between people is one that invests in the protection of those people so they can really prosper, even when something goes wrong," argues journalist Susie Cagle, one of the sharing economy’s harshest critics. "Sharing businesses aren’t just creating new income streams from nothing. In ‘disrupting’ even troubled markets  -  the taxi industry has had this coming for a long time  -  the glory of the peer economy comes at the expense of other workers’ livelihoods."

Whatever your opinion, it’s clear that the sharing economy is set to expand rapidly. If you delve deeply enough, you’ll more likely than not find that you have already had a first-hand encounter with it. So if there’s a question you want answered or a burning issue you want explored then let us know, as for the next month we’ll be doing our best to get under the skin of the sharing economy and find out what makes it tick.

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