Why own it? Share it!

The so called sharing economy is said to be one of the 10 Ideas that will change the world according to Time Magazine. Rachel Botsman, one of the thought leaders of this concept, expects that collective consumption transforms the way we live, work and consume. Besides that the world’s largest computer expo ‘CeBIT’ in March 2013 has selected ‘Shareconomy’ as keynote theme.

But what is really innovative or even revolutionary about this upcoming trend?

First it should be mentioned that the idea of sharing itself is not new at all. Probably it exists as long as human beings have social interactions with each other. So before the Internet got invented there were already neighbors sharing their lawn mowers, travelers sharing a car and students sharing a flat. What distinguishes these older forms of collective consumption from the new-emerged culture of sharing is that it is online-based. The Internet functions as a platform that enables people to organize their deals easier and cheaper than ever before. It brings together owners and borrowers even if they never met before and puts the relationship between demand and supply on a new groundwork. The emergence of social networks (especially facebook) and the mobile Internet promoted the development of the sharing economy. The rise of social media got people used to share experiences, thoughts, pictures or videos online with friends, followers or even strangers. By this people became more comfortable with the concept of meeting new people and sharing content with them using technology. Smartphones on the other hand flexibilize and mobilize the act of sharing. To illustrate how the ‘shareconomy’ works, there should be given some examples:

One of the most prominent sharing services is Airbnb. It is a marketplace, where people can rent their accommodation to travelers – from a spare bed to an entire mansion. Anyone looking for a place to stay can enter their dates and destination and browse matching offers. The advantages for the owner are quite obvious: He receives a rental fee. So he can make money with his accommodation even when he is not using it himself, for example when he is out of town. The motivations of the renters are more diverse: On the one hand they can save money, because in most cases a stay in a private offered place might be cheaper than one night in a hotel. On the other hand it may also be part of the lifestyle of young, urban hipsters who prefer paying money to online-peers rather than to a big hotel company.

The case of Airbnb not only shows, how the concept of sharing on the Internet works, but also that companies can make a lot of money by applying it as a business idea. Since the establishment of Airbnb in 2008 about 4 Million People found places to stay – 2.5 Million alone in 2012. With every rent the company receives 9-15% of the rental fee. Forbes Magazine calculates that this produced revenue of estimated 150 Million US Dollar in the last year. Besides that other big business players discovered the economic potential of ‘shareconomy’ and try to participate. For instance Daimler offers Smarts in big cities in Germany and North America for sharing. The conventional car-rental firm Avis recently acquired the American carsharing-company ZipCar for more than 500 Million US Dollar. Forbes Magazine estimates 3.5 Billion US Dollar will flow through the sharing economy this year. All this illustrates that ‘shareconomy’ already has become and will increasingly be a relevant economic factor.

The sharing economy is not only restricted on the share of material objects. The Internet also provides a marketplace for people to offer their manpower to anybody who needs it. This is what the online platform TaskRabbit is dealing with. Busy people that are short on time or just not talented enough can post their tasks that need to be done. Others can offer their special abilities and take care for these jobs by earning some money the same time. The tasks can vary from pet sitting or house cleaning to the assembly of IKEA furniture. 

Airbnb, Carsharing and TasRabbit are only three examples for a bigger development in general. Especially after the start of the global financial crisis in 2008 there seems to be a new Zeitgeist evolving that promotes the business model of the sharing economy. Consumers no longer want to stay in their passive role and get exploited by the big players in global economy. This development gave rise to a big number of start-ups in the last few years. Nowadays it seems like there is a platform on the Internet for simply all kind of things that can be shared, swapped or lend:

“We are sharing our cars on WhipCar, our bikes on Spinlister, our offices on Loosecubes, our gardens on Landshare. We are lending and borrowing money from strangers on Zopa and Lending Club. We are trading lessons on everything, from sushi-making to coding on Skillshare, and we are even sharing our pets on DogVacay” (Rachel Botsman)

However Rachel Botsman, co-author of the book “What'sMine Is Yours: The Rise of Collaborative Consumption”, claims that the biggest impact of ‘shareconomy’ on society is a social one. By sharing things people get in contact and build up trust in each other. According to this Botsman prognosticates that reputation will be a more powerful currency than our credit history in the 21^st century. This is the case because all sharing platforms are based on the idea that their participants trust each other. If you want to share your flat on Airbnb for instance, you want to make sure that it does not look like a Rock ’n’ Roll-band was partying in there. And your IKEA-shelf should not break down after it got assembled by a TaskRabbit. So reviews made by other users are important and reflect the trustworthiness of owners or borrowers.

 Conclusion 

Sharing assets seems to be one of the biggest recent trends on the Internet. Especially in the United States it already has become a big deal and the sharing economy is a profitable business for many innovative start-ups. Still the question remains, if ‘shareconomy’ leads to a higher degree of sustainability. This is empirically not validated and maybe the rise of the sharing economy also motivates people to consume even more. This can be the case if people invest money in things which they expect to be highly valuable on the sharing market. Platforms like RabbitTask carry the risk that people in need for the money undercut themselves and so a modern form of slavery emerges. To avoid this there needs to be some regulation by the platform or even the state to protect the "rabbits" from getting exploited.

In general I presume the positive aspects of collective consumption outweigh the potential disadvantages. So start becoming a part of the online sharing society: "Stop owning, start sharing!"

Businesses in the Internet

How to earn money in the landscape of new media?

As in every market, the business model need some time to get maturation. This is even a more determinant factor in the context of new media, where the constant evolution and the changes are the engine of progress. Internet embraces two main business challenges, the ones related to the enterprises that emerge after the apparation of the Net and inside this medium, and the entrance of old communications companies which try to diversify their services and adapt themselves to the new media environment.

In many aspects, not only in the economic one but also in the social and creative, and in all the sides concerning the ways of production (creation of contents), distribution and consumption, old models usually doesn't work, is the case, for instance of the newspapers that tried to make the users to subscribe to their websites as the only way of reading their news and articles. Internet brings a new paradigm, where the citizen participation is farther bigger than in previous media. Manifestos about this topic like Wikinomics (Trapscott and Williams, 2006) and We-Think (Leadbeater, 2007) talk about the importance of collectivism, creativity (added value in production in a crowded market) and participation like the keys of business in the Internet. Van Dijck explains the economical theories of these two books: "these mantras (collectivism, creativity and participation) not only inform the new business models of the digital economy, but their declared cultural roots suggest and ideological paradigm shift that is about to restructure postindustrial societies and post-service economies."

The main problem in the business of new media is the huge expectations about the possible profits on it; these expectations don't use to become true, so the investment of the producers become big monetary losses. During the first and second year of the current decade, many businesses, result of the merging of 'traditional' media companies with new media enterprises, failed. This phenomenon was called the popping of the dot-com bubble: in a few years the valuation of the stock market of these enterprises increased enormously, producing a great overvaluation; as a result the value of the shares was unbalanced.

One of the best exaples of the collapse of dot-com enterprises is represented by the telecommunications company, Time Warner, with businesses in television broadcasting, filmed entertainment and publishing, which after two years of merging with the Internet service enterprise, America online (AOL), in 2002 had to face the greatest economic losses in the history of the company.

The failure of the management in the businesses on the Net caused a radical change on the speech of many academics about the possibilities of a great social and economical shift due to the digital technologyes of communication. Henry Jenkins points out in his essay, Convergence Culture, that after the general disappointment caused by the dot-com crash and the first reaction of skepticism avout the possibilities of digital revolution is based on the cooperation and interaction of old and new media in more complex ways than was supposed to be at the beginning, that is simply the absorption and displacement of old media by new media. "The digital revolution paradigm claimed that new media was to change everything. After the dot-com crash, the tendency was to imagine that new media had chenged nothing. As with so many things about the current media environment, the truth lay somewhere in between".

Most of the current successful businesses have to do with the collectivity and the participation of users. This is for instance, the case of Youtube or social networks like Facebook, whose young creators are now multimillionaire. In many ocassions this websites don't have a particular business model, apart from the value that are used for millions of people, and even if they have advertisements (banners or any other kind of publicity) obtain the greater profits, when they are acquired by bigger groups. The aforementioned firm Youtube, was bought in 2006 by Google for 1.650 millions of dollars.

On the other hand, we are doomed to repeat past mistakes, and some sectors of the industry of new media still has to crash in order to improve the management. Some analysts have predicted the popping of the Tablet bubble for this year. Maybe Apple with the iPad will not be really who lose out, because it has a preminent position in this market. However, the fact that the supply will be propably much greater than the demand (almost the double according to the predictions) means that other companies like Motorola or RIM will have to face important losses.

As Pierre Lévy says referring to Collective Intelligence, "the more we are able to form intelligent communities, as open-minded, cognitive subjects capable of initiative, imagination and rapid response, the more we will be able to ensure our success in a highly competitive environment", and this is completely applicable to the new media. The possibilities of success are greater here than in old media, make a business is accessible to anyone who has an idea.

Henri Jenkins, Convergence Culture

Pierre Lévy, Collective Intelligence

VanDijck and Nieborg, Wikinomiks and its discontents: a critical analysis of Web 2.0 business manifestos.