The U.S. Commerce's department report Digital Matching Firms: A New Definition in the “Sharing Economy” Space is, in our opinion, a pretty balanced view of sharing/digital matching firms and their growing economic role.
The report attempts to accomplish two goals.
First, it tries to provide a new name and definition for the sharing/on-demand/gig economy, or at least part of it. Second, it provides an overview of the sector and how at least one government agency views the good and bad of these firms.
In terms of the definition, Commerce defines "digital matching firms" as firms that meet these criteria:
- They use information technology (IT systems), typically available via web-based platforms, such as mobile “apps” on Internet enabled devices, to facilitate peer-to-peer transactions.
- They rely on user-based rating systems for quality control, ensuring a level of trust between consumers and service providers who have not previously met.
- They offer the workers who provide services via digital matching platforms flexibility in deciding their typical working hours.
- To the extent that tools and assets are necessary to provide a service, digital matching firms rely on the workers using their own.
This is pretty similar to what Spend Matters analyst Andrew Karpie calls "Work Intermediation Platforms".
Naming has been tough in this area and no one really likes any of the current names.
While I like Commerce's definition, I doubt "digital matching services" will broadly catch on. Fortune even calls it "infelicitous phrasing".
I also think the word "work" needs to be in the definition. After all, Tinder, OKCupid and Match.com are well known digital matching firms, yet they don't seem to fit in this category.
Perhaps we should combine Karpie's and the Commerce Department's terms. How about "digital work matching platforms"? OK, so the search for a good moniker continues.
In terms of what Commerce sees as the pluses and minuses of the rise of the "digital matching firms", I'm going to use the excellent summary from Fortune's 5 Things to Know About How the Feds See the 'Sharing' Economy. Key quote:
- The new style of economy has big benefits
- Lower prices for consumers
- Flexible employment and extra income for workers
- Better use of idle assets and new forms of business
- Better consumer experience
- But there are some real problems
- On-demand work means income instability and fewer benefits compared to traditional jobs
- Lack of company oversight means untrained workers can pose a danger to consumers
- Privacy dangers arising from the companies collecting a huge amount of personal information
- A failure to get services to poorer consumers who lack smartphones or internet access
I was encouraged by this report and the way it presented both benefits and problems. In the past, government agencies have mostly been quite negative on independent work and digital matching firms.
I was also recently on a panel with a senior policy person from the Department of Labor. He too provided a more balanced view of this sector than I had heard from DOL folks in the past. All in all, I think the government is starting to get it.
What they do about it is still uncertain, but progress is being made.