The concept of the ‘sharing economy’ – a world where access to goods and services trumps ownership – now has major traction. The concept is being proved by the success of numerous organisations that are using innovative platforms to change the way people consume assets and resources. Notable examples of the ‘sharing economy’ include accommodation site Airbnb and ride sharing platforms such as Weeels in NYC, BlaBlaCars across Europe and ZipCars worldwide. But sharing isn’t new – there are much older forms of common ownership and mutualism such as co-operatives and credit unions or skills banks and time banks.
Yesterday, TEPSIE and the Social Innovation Exchange (SIX) hosted a discussion on the sharing economy and social innovation. The event brought together leading practitioners and academics to discuss what’s next for the sharing economy? What are the emerging trends? What are the greatest challenges? What is the role of cities and governments in supporting and enabling the sharing economy? And – what can be done to accelerate the growth of these new forms of consumption?
Participants reflected on the potential and promise of the sharing economy. For Shareable’s Neal Gorenflo, sharing promises greater sustainability – using idle resources and slack capacity reduces consumption. And, by providing access to rather than ownership of goods and assets, it helps to promote social equity. For Cait Lamberton of the University of Pittsburgh, sharing platforms enable consumers to make better decisions; sharing isn’t just about realising social values, it’s also a way of making and saving money – an important tonic in times of austerity, recession and high unemployment. This was echoed by Cristobal Garcia, of OuiShare Barcelona – for him, people’s primary motivations aren’t the social and participatory benefits of sharing; they’re saving or making money.
Javi Creus from Ideas for Change provided some context for the emergence of the sharing economy in Catalonia. He explained how the region had a long standing history of entrepreneurialism and mutualism. The sharing economy in Catalonia builds on this tradition – but importantly, integrates three new dimensions: openness (open data, open business models, Creative Commons, the Open Knowledge Foundation etc) collaboration (with food banks, skills banks, local currencies as well as sharing in housing and transportation), and mobile technology. These three dimensions are coming together to create a new collaborative and creative class in Catalonia. The economic situation in Catalonia has also played its part - according to Garcia, the emergence of the sharing economy has been enabled by new technologies and ‘pushed’ by the economic crisis - a heady combination of extremely high levels of unemployment, especially among the young, massive government retrenchment, crippling levels of debt and a lack of trust in government.
What are the challenges?
As the sharing economy develops, there is a growing divide between the reality and rhetoric of sharing platforms. In a recent article Neal Gorenflo argued that sharing platforms are starting to lose some of their magic – “as collaborative consumption goes mainstream, it risks losing the very thing that attracted people in the first place, the unique and even transformative social experiences made possible when you interact with helpful strangers.” So for example, ZipCar has been bought by care rental company Avis, couchsurfing.org has changed status from a non-profit to a for-profit and so on. This was reiterated by Gorenflo who sees these changes as symptomatic of the fact that venture capital firms are now investing heavily in sharing platforms – and that these venture capital firms are more focused on growth than maintaining the social benefits, such as social capital, which accrue from sharing. Can these platforms keep the social experience as they scale? Cameron Tonkinwise argued that sharing platforms had to commoditise their services in order to attract venture capital funds. That is, the services themselves have to be less socially embedded to scale (and warrant investment). But this discrepancy between rhetoric and reality is really an issue of framing more than anything else – sharing platforms do want to maintain the social value as well enable people to save and make money.
At the same time, these services fundamentally rely on two or more individuals – rather than the roles they represent - interacting. When we’re buying goods and services we interact with people as roles (e.g. sales assistant and consumer) each of us reading our respective scripts. These ‘roles’ dissolve within the sharing economy – and we interact as individuals. This will inevitably create tension or as Tonkinwise explains, ‘social friction’. As much as sharing platforms will try and reduce this ‘social friction’ it will never be removed altogether and will remain an inevitable part of sharing platforms. The questions then are - how do you reduce ‘social friction’, what are the new conventions which enable people to collaborate and how do you compensate for this friction?
Others highlighted legal and regulatory challenges. Garcia mentioned that in his discussions about sharing, many people often asked whether this was a legitimate form of consumption or whether it was in some way part of the ‘black market’. Another challenge is geography. Sharing platforms work best in densely populated areas – they’re more problematic in rural and suburban settings where there are fewer people to create sharing communities. Participants raised another concern: that sharing platforms would encourage people to gravitate towards people like them – excluding those who are different or come from different communities, cultures and backgrounds. Trade Unions were also mentioned as an impediment to sharing platforms. Participants noted examples of unions objecting to and then blocking the introduction of sharing projects or platforms – often because of perceptions that such projects would threaten union jobs.
Show me the money
It’s often said that the currency of the sharing economy is trust. But increasingly, as sharing platforms try to scale, they are reverting to cash transactions between sharers. As Tonkinwise explains, however, this isn’t necessarily about ‘making money’. Money also performs a function in relation to trust – in fact, money is often used instead of trust. For example, taking a deposit, or asking for a symbolic financial contribution, can enable collaboration where there is no existing social relationship and therefore no trust. As Frédéric Mazzella from BlaBlaCar explained – when you put down your cash, you are committing yourself to a certain course of action. This was echoed by Tonkinwise who argued that in these cases, money creates rather than alienates social relationships.
Never trust a stranger?
All participants agreed that trust was fundamental to well functioning sharing platforms and that trust functions (ratings, references, reviews etc) were an important part of such platforms. Interestingly, these functions have a significant impact on our ability to trust strangers. Mazzella shared the findings of a recent survey conducted by BlaBlaCar which examined levels of trust between members of the car-sharing scheme. Out of a score of five, members give a total stranger a ‘trust score’ of 2.2, neighbours 3.3, friends 4.71, family members 4.68 (slightly less than friends!) and other BlaBlaCar members with a photo, a verified number and positive reviews a score of 4.2 – only slightly less than friends and family.
For many participants, the sharing economy is the next stage or the natural evolution of capitalism – we’re on the cusp of monumental transformations in the way we consume resources, produce content and connect with each other. For Javi Creus it heralds a new economic system – based not on firms and governments but on individuals. But what is needed for the sharing economy to reach its full potential?
- Andrew Hoppin called for a progressive and entrepreneurial insurance industry. What would insurance look like where we’re insuring people rather than property?
- Federica Pelzel emphasised the important role played by cities and governments and argued that cities need to play a greater role in facilitating, enabling and encouraging sharing.
- Cait Lamberton called for a greater understanding of the psychology of sharing. There are significant psychological benefits to ownership – owning cars and other material goods can be status symbols – will people be willing to give those up?
- Garcia suggested that we focus on the impact of sharing rather than the motivations of those who share.
- David Maufouda suggested that we think not only about collaborative consumption but also collaborative production – and how we diversify and distribute production at scale.
- Benjamin Tincq called for greater education to raise awareness about the need for sharing and advocated more sharing spaces – such as fab labs and co-working spaces.
- Frédéric Mazzella talked of the need to start a trend and make sharing cool – it should be a conventional wisdom that having idle resources is neither cool nor responsible.
Will Norman, Young Foundation (TEPSIE)
Anna Davies, Young Foundation (TEPSIE)
Julie Simon, Young Foundation (TEPSIE)
Louise Pulford, SIX
Kine Nordstokka, SIX
Anna Seravalli, University of Malmö
Cinna Gärdenfor, City of Malmö
Bjarne Stenquist, City of Malmö
Benjamin Tincq, OuiShare
Frédéric Mazzella, BlaBla Car
Javi Creus, Ideas for Change
Cristobal Garcia, OuiShare Barcelona
David Maufouda, Weeels
Andrew Hoppin, New Amsterdam Ideas
Federica Pelzel, New Amsterdam Ideas
Neal Gorenflo, Shareable
Cameron Tonkinwise, Carnegie Mellon School of Design
Cait Lamberton, University of Pittsburgh