It was only a decade ago when the Nokia 1100 family of GSM phones was still the world’s best-selling handset (largely contributed by huge sales in developing nations). Nokia phones were known for their ruggedness and became the subject of many memes, my favourite being the one claiming that the phones “could only be destroyed in the fires of Mordor.” Mobile phones were fast becoming ubiquitous items. At the same time, a new generation of mobile telecommunication technology was also fast being deployed worldwide – 3G. Apart from providing wireless voice telephony, phones had long started to become “smarter” in their feature set, ranging from “digital assistant” features to basic emailing and fax messaging services. Yet, it was the marriage between 3G and Smartphones that established the bedrock for mobile Internet services to become more accessible to the masses. The dropping hardware costs, followed by increasing computational and processing power, rich support for third–party applications and access to GPS navigation technology all in ones palm was inadvertently leading to the shaping of a new type of economy – an economy that could only be conceived as Smartphone adoption reached a critical mass – the Sharing economy.
I first ordered a Taxi using Uber whilst I was in Seattle attending a conference last year; the fact that I didn’t have to look up the number of a local taxi service provider to pre-book a taxi, wave my hands to get a ride, wait in any form of queue, and even better –go through the hassles of a cash or card transaction at the end of the ride –propelled Uber to the top of the list of services I would be using again. Another sharing platform which I’m currently considering using is AirBnB to rent out an apartment for the trip that I’m currently planning to India. A decade ago, I would have probably flinched at the proposition of living, and even more so, letting out my apartment to a complete stranger. The recession that started in 2008 gave a huge boost to the sharing economy and collaborative consumption in general. More and more services built on the peer-to-peer sharing business model began to emerge and thrive. The marketplace is now brimming with services that allow you to rent out your home, car, parking spaces, goods, professional skills and even tap into your general knowledge of day-to-day things to make money in your spare time. Such technological innovations have caused a big cultural shift making it more acceptable to share and rent services. The essence of ownership that was strongly felt at one time has now given way to utilitarian and access based consumption.
Sharing economy has seen a growing trend in “micro-entrepreneurialism”. Take AirBnB, the poster boy of the sharing economy, for example – a relationship that may have begun as a “need to pay bills”, especially during the hard hit days of recession, soon gave way to opportunism. It’s estimated that almost a third of AirBnB’s revenue in the urban US comes from users who have at least three listings on the platform, taking full advantage of the rental price difference in short-term and long-term renting. An avid traveller and a gastronome comes back to London to start his own micro-enterprise by becoming a Vayable Insider, offering tours themed around the rich food culture in London. A construction worker laid off during the recession started providing handyman-type services on TaskRabbit earning $5000 a month, deciding not to go back to full time employment when the economy had improved. A highly rated freelance copy-editor makes his entire living renting his services at a price he sees fit on TaskRabbit.
Nevertheless, the online sharing economy has seen its fair set of critics; the services in this space have catapulted into existence and thrived because of increasing youth unemployment and stagnating incomes. Regardless, it appears that this emerging online business model is here to stay, not because sharing is greener – environment and resource friendly – and good for community building, but purely for the cost savings, accessibility and convenience brought about by these services. Whilst government policies and regulations still lag behind technological innovations, it’s becoming harder for regulatory bodies to ignore this growing trend. Regulations in some part of the world may be working against these disruptive business models, some for good reasons – take the closedown of Uber in India for example, but all this attention only means that the business model is further iterating and so are the regulations to accommodate these innovations. AirBnB now provides “host” insurance for its suppliers and, Uber, a more thorough driver check in the wake of regulatory rulings. Even traditional car rental companies are embracing the online peer-to-peer marketplace; see Avis Group takeover of Zipcar. The sharing economy that has been made possible through the digital medium is lending itself to wider cooperation, pretty much in the same way as the open-source movement did many decades ago.
Big byte, small byte 