The sharing economy is a model based on sharing (or renting) assets not currently being used—a car, a spare bedroom, a vacation home. While there is a lot of interest in the sharing economy right now, the idea itself is not new.
“Sharing economy” is a relatively new term and is very trendy. But you can point to older instances— vacation rentals by owner (VRBO), for example. They’re based on the principle that there is stored value in expensive assets and by making them available to others when we don’t use them, we can unlock that value. It’s a sustainable economic system built around peer-to-peer sharing of underutilized assets. Examples include Airbnb, RelayRides, and Napster.
Many of the most successful sharing economy businesses depend on the Membership Economy. A feeling of membership infrastructure is needed so that people can extend trust beyond the people in their physical communities. In my view the sharing economy is a subset of the Membership Economy. When people talk about the sharing economy, they’re talking about people sharing stuff that belongs to other individuals and not to an organization. For example consider RelayRides. You might come to San Francisco where I live and need to rent a car. Meanwhile, my car is just sitting in the driveway most of the time because I can walk to work. You can rent my car for less than the cost of a traditional rental. In contrast, Netflix has a membership business where consumers share access to a wide selection of content, but the content belongs to the company and not the individuals. It’s not me sharing with you—it’s Netflix providing access to its content to all of us.
Changes in technology have enabled sharing to take off. What enables a large- scale sharing business is trust. The Internet makes it possible to build trusted systems. Always-on mobile devices that enable us to connect at any time make it more efficient to share. Ten years ago if you and I had wanted to share a car and didn’t know each other, it would have been hard to impossible to broker that situation. But with today’s technology—big data evaluating in real time your trustworthiness and mine as well as locating my car—it is relatively easy to identify my unused asset and your unmet need. S
haring makes the most sense in areas where the assets are expensive, varied, and underutilized. Vacation homes, cars, collections of content, and special-occasion clothing are all assets that are generally underutilized and are, not surprisingly, some of the early successes of the sharing economy.
Want to know more about the sharing economy? We’ve partnered up with ShareNL: