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23rd Jun 2017

Magazine

The 'sharing economy' lacks a common definition

  • Sharing has "a positive and progressive connotation", which is why companies prefer the label "sharing economy". (Photo: Thomas Hawk)

The sharing economy is a noticeable trend shaking up traditional sectors, but the phenomenon is ill-defined and empirical evidence about its impact is scarce.

“It's always more fun, to share with everyone,” Jack Johnson sang in The Sharing Song, on the soundtrack of the 2006 animation film Curious George.

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  • An Airbnb advertisement representing the host and guest relationship. (Photo: Airbnb)

The singer-songwriter proposed that a ball, a sandwich, a secret, a drum stick, time, milk, and cookies, are enjoyed exponentially when shared with others.

However, the song made absolutely no mention of whether those cookies and sandwiches should be shared in exchange for financial compensation.

To share, according to the Oxford English dictionary, means "have or give a share of", or "have or use jointly with others".

That is why the name 'sharing economy' is somewhat unsuitable for the plethora of online platforms that see themselves as a part of that trend.

For Airbnb, which allows its users to sell temporary accommodation, and Uber, which allows its users to sell rides, it is a gift from public relations heaven to be categorised as part of the sharing economy. It allows them to pursue their core goal – making a profit by getting a percentage of the proceedings – beneath a thin veil of altruism.

“Because sharing has a positive and progressive connotation, more and more companies have started to claim that they are part of the ‘sharing economy’,” said a report by the European Commission's in-house think tank, the Joint Research Centre (JRC).

It noted that while many policymakers and media outlets – including this magazine – have a sense that the sharing economy is a trend worth watching, it is not clear that everyone is talking about the same thing.

No consensual definition

The JRC conducted an extensive literature review, which was published last year. The JRC called the sharing economy a “broad umbrella term” for which there is “no consensual definition”.

There are even different words being used for it.

Sometime in 2015, the European Commission started to use the phrase 'collaborative economy' instead of 'sharing economy'.

The commission paper A European Agenda for the Collaborative Economy, published exactly one year ago, on 2 June 2016, defined the concept as “business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals”.

The Organisation for Economic Co-operation and Development describes the sharing economy as “new marketplaces that allow services to be provided on a peer-to-peer or shared usage basis”.

The UK House of Commons has recently investigated what it called the “gig economy”, and the perceived problems related to it: “the hours, pay and conditions of workers in large online courier and cab services like Hermes, Deliveroo, Amazon and Uber”.

The gig economy is arguably only the for-profit part of the phenomenon. Professor Arun Sundararajan, who wrote an analysis of the collaborative economy for the European Parliament's Committee on Internal Market and Consumer Protection, prefers to speak of crowd-based capitalism.

The JRC has also identified the synonyms collaborative consumption and access-based consumption. However, many of the terms are used interchangeably.

As recently as October 2016, the EU commissioner for the digital single market, Andrus Ansip, spoke of the sharing economy instead of the collaborative economy. A December 2016 commission press release used both names.

At EUobserver, we speak mostly of the sharing economy, because this is the phrase that is most often and widely used by the general public.

Lack of empirical evidence

The lack of a common definition also makes it difficult to quantify how much the sharing economy is worth, even though several reports have tried to do so.

“Available empirical evidence to date is very partial and inconclusive - in many cases, it is simply anecdotal and often presented by stakeholders in the current controversies,” the JRC said.

The EU-funded scientists wrote that while Uber and Airbnb have released dozens of reports, the methodologies of the companies' research is kept confidential, making independent validation impossible.

They also argue that most of the available evidence relates to situations in the United States. “In the EU, the lack of evidence is more pronounced and there are few scientific articles,” the JRC stated.

It also noted that much of the debate is normative instead of fact-based, and that the phenomenon carries connotations with it “from anti-capitalist social narratives to ecological themes, libertarian thinking, and management rhetoric”.

Several online platforms have argued that their technological solutions are so superior, that they can replace traditional regulations.

In 2015, Antoine Aubert, director of public policy and EU strategy at Uber, argued in the European Parliament that some regulation can be replaced by Uber's own checks and user reviews.

While that raises all sorts of questions about the separation of powers, technological solutionism is not immediately dismissed by the European Commission, which sees self-regulation as a possible alternative to “unnecessary regulatory burdens”.

In its 2016 strategy paper, the EU executive said that “rating and reputational systems” common to the sharing economy can “potentially reduce the need for certain elements of regulation, provided adequate trust can be placed in the quality of the reviews and ratings”.

The paper said that Europe should embrace the new trend, because it offered “innovation, competitiveness and growth opportunities”. But it also warned member states to ensure fair working conditions and that consumers were protected.

The paper was envisaged as a guidance to member states, but often said that a case-by-case approach was the best way forward.

This article is part of EUobserver's annual Business in Europe magazine, which can be read in full here. This year, the magazine looks into how Europe manages the sharing economy. If you would like to receive the e-version of the magazine, please register for the newsletter.

Stakeholder

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The size of the sharing economy has doubled between 2014 and 2015, according to the European Commission. Along with it are new business models that EU legislation have yet to keep up with.

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Sharing economy: Lobbyists educate EU officials

The European Collaborative Economy Forum, a trade association, has recently started doing advocacy work, while Uber increased its spending on EU lobbying significantly.

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Airbnb's change of heart toward Strasbourg

The accommodation platform has begun to cooperate with the French city because it saw negative side-effects were damaging its reputation, says Alain Fontanel, Strasboug's vice-mayor.

Money causes schism in sharing economy

The sharing economy started out with a few people opening their homes, lending some tools, sharing cars - all for free. Monetising sharing practices has created a giant that some "original" sharers refuse to associate themselves with.

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