The sharing economy seems big and growing fast. In 2015, PricewaterhouseCoopers estimated that, from $15 billion in global revenue in 2014, car and room sharing, crowd-funding, personal services, and video and audio streaming would reach $335 billion by 2025.1 These numbers extrapolate from the growth rates of Uber and Airbnb. Are these growth rates sustainable and is the economic activity really new? It is time to ask these questions.
The sharing economy depends on digital platforms that enable people who do not know each other to access underutilized assets (see my previous column "How Established Firms Must Compete in the Sharing Economy," Communications, Jan. 2015). We often associate these ventures with "peer-to-peer" (P2P) technology, like Napster in the late 1990s. However, the recent estimates include two very different business models. Sometimes individuals own and share the assets, like extra rooms, household tools, music files or movie videos, their own free time and skills, and even their pets. Prominent examples include Airbnb, HomeStay, Uber, Lyft, Rover, TrustedHousesitters, and Taskrabbit (recently purchased by Ikea). In other cases, companies own and lend out the assets, like automobiles, bicycles, scooters, or even basketballs and umbrellas. Prime examples here are Zipcar, now owned by Avis, and Car2Go, owned by Daimler-Benz. Asset sharing that is P2P seems new but B2C (business-to-consumer) sharing is another version of the traditional rental business, and may be substituting for that activity. Even Airbnb may not be totally new economic activity, as it substitutes for traditional bed-and-breakfast revenue or hotel and vacation home rentals.
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