NPR did a special series last week called The Sharing Economy: A Shift Away From Ownership. It covers the usual suspects - Airbnb, Lyft, Coworking, etc. and although there's not much new in the series, it does provide an excellent overview and summary.
It also covers several points about the sharing economy that are well known, but often misunderstood:
1. The sharing of assets as done by the sharing economy companies is not new, but has been around for decades. A good example is private aircraft rentals and sharing, which really took off in the 1980s when NetJets introduced their fractional ownership program.
What is new is the Internet, the cloud and analytical software allow for the sharing of much lower priced assets than in the past.
2. Access trumps ownership in a growing number of categories. NPR uses the example of a $3,000 dress that can be rented for $75 a night. This makes much more sense than buying the dress and only wearing once or twice.
We refer to this as the rise of the variable cost economy, but admit this doesn't have the same ring as the sharing economy. But regardless of what you call it, firms are looking to reduce their fixed costs and sharing is one way.
A point that often missed is that the same trends and drivers mean access is trumping ownership in a growing number of cases related to employment. Businesses are increasingly finding that use contingent workers (access) is better than owning (hiring traditional employees).
3. The sharing economy is more about selling than sharing. NPR talks about the sharing economy having a "warm and fuzzy, sort of kindergarteny feeling to it".
But anyone really digging into the sharing economy quickly realizes the successful companies are less about saving the planet and more about creating effective ways to sell under utilized assets.
This doesn't make them bad - selling under utilized assets is a good thing from a sustainability perspective. But while we're all singing Kumbaya, we need to keep in mind these firms are out to make money.
4. While the sharing economy creates peer to peer commerce opportunities, they're not always great opportunities. While not part of the NPR series, TechCrunch recently described the sharing economy as the servant economy. Key quote:
It mostly consists of people who have excess disposable income hiring those who do not; it’s pretty rare to vacillate across that divide. Far more accurate to call it the “servant economy”"
Don't get me wrong, we like the sharing economy and agree it's a powerful trend that's good for the economy and the planet. We just think it's easy to get carried away by the hype.
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