Monday

23rd Oct 2017

Money causes schism in sharing economy

  • Peerby is a Dutch platform through which neighbours can borrow each other's appliances and other things. It started with no fees attached, but in 2015 the company added Peerby Go, a rental platform. 25 percent of the proceeds go back to the company. (Photo: Peerby)

For Anja Kuhner, sharing is a lifestyle. She shares her Duesseldorf apartment and her knowledge about the city, free-of-charge, with strangers from all over the world, who might eventually become lifelong friends.

The journalist and executive director of the non-profit home sharing service BeWelcome says it is about the experience, not about money.

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  • Couchsurfing has existed for years, and was originally free. (Photo: Open Minder)

She argues that hosting people from around the world helped her to better her understanding of different cultures. “Each person brings something to your life, a story, pictures, experiences,” she says.

The once laid-back approach of opening a home became an industry in the late 2000s, with smartphones becoming a convenient access point to sharing services. Businesses started to make billions under the umbrella of sharing.

Some, like Kuhner, still stick to the original philosophy and are frustrated with the new, profit-making phenomenon.

As many researchers in this area tend to do, she distinguishes between the “fake” and “real” sharing economy.

Kuhner, who has written a book on free hospitality services, argues that the real sharing economy is in fact a niche. As soon as it gets out of this niche, it becomes a real business.

“The real sharing will never be mainstream,” Kuhner told EUobserver.

The app revolution

Experts put the birth of the so-called sharing economy - sometimes also labelled the "gig", "platform" or "collaborative consumption" economy - in 2008, when Apple introduced its app platform that made it simple for anyone to create apps and services.

Apps acted as amplifiers and sharing services got an immense boost.

Airbnb, the home sharing service, was founded in 2008. It now has 150 million users, and is valued at over $20 billion USD (around €18.8 billion).

Uber, another company that has become a household name, was launched in 2009, and now has an eye-watering valuation of $60 billion USD (around €56.5 billion).

Couchsurfing, one of the biggest home-sharing services launched in 2004 also decided to go for-profit in 2011. It currently has around 14 million users.

While the idea is still based on people sharing their own property, car or home, it is no longer solely based on generosity, but instead on profit. In a sense, it is not primarily for sharing anymore, but rather appears more like renting.

Still, people do get to meet each other, and might be able to learn about different perspectives, which has been the basic philosophy held by the "original" sharers, along with sharing instead of owning.

Positive social impact

That is why Benita Matofska - a global expert and speaker on the sharing economy, and founder of The People Who Share, which aims to “mainstream the sharing economy worldwide” - does not believe in the dichotomy of the “fake” and “real” sharing economy.

She says the benchmark on making a judgement on a business should be whether it has a positive social impact.

Matofska defines the sharing economy as "a socio-economic ecosystem built around the sharing of human, physical and intellectual resources”.

She argues that there are different types of sharing resources, but that the media has been focusing on the business side of the sharing economy, distorting its image. “They are just a small part of the story,” she told EUobserver, hoping to re-balance the image.

But not everybody is convinced.

Kuhner’s organisation, BeWelcome, follows the more “traditional” way of sharing. It was founded in 2007, is a non-profit, and now has 100,000 members.

Everyone at the organisation is a volunteer, and it makes use of donations to cover its administrative costs, for things such as internet server payments, banking fees, and trademark registrations. Last year they had expenses amounting to around €260,000.

Kuhner admits their 100,000 membership is “nothing” compared to Couchsurfing's numbers but she argues, for her, that is not the point.

“It’s not about the number of members, but the number of encounters. That is what has value for us,” Kuhner says, adding: “We do our thing, we don’t think about numbers."

She admits to being “disappointed” with sites like Airbnb misleadingly using sharing for their business. She went on to call the site: “just a bed and breakfast with a different platform”.

She was also "negatively surprised" by the fact that people think Airbnb and Uber are the real thing, while she refers to them as the “fake sharing economy”.

“We will never be mainstream,” she said.

People benefit

But the changing business model is altering how businesses look at communities.

Matofska argues that even the impact of Airbnb, which has been criticised and regulated in various cities due to it inflating property prices, has been positive. It enables people to access cheaper accommodation, to travel, to stay in areas where they usually would not, and spend more money on the local economy.

She also highlighted several social enterprises that work with shared resources, which aim to have a positive impact on society. The UK project and registered charity, FareShare, is working to save food that is still good, but is normally thrown away and wasted. They send it to community groups who create meals for people in need.

Another example from the UK, Streetbank, is a community of over 50,000 neighbours sharing things, such as kitchen equipment, to help communities get to know each other. Similar initiatives exist in other countries, as well.

“All of this has value, as it is a part of a culture-shift to enabling people to access shared resources,” Matofska says.

The fact that the sharing economy has disrupted the traditional economy is a good thing, she argues, as traditional business are trying to up their game by giving access to their resources, for instance, hotels reaching out to local communities.

Matofska says people are increasingly looking for companies that share, or participate in the sharing economy with a positive social impact. This acts as a positive push for traditional companies, and the experience becomes more personal even if the initial choice is based on the prospect of spending less money on a service.

She argues that companies need to be encouraged to create more of a social impact while the sharing economy is still young and evolving.

In June, she will spearhead the Global Sharing Week, where people get together to share experiences and participate in the sharing economy.

“I believe people are benefiting much more,” she argues.

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.

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