The Sharing Economy Lacks A Shared Definition

This excerpt is reposted from Co.Exist

RB headshotWritten by Rachel Botsman

You may have noticed the terms “sharing economy,” “peer economy,” “collaborative economy,” and “collaborative consumption” being used synonymously. Ideas like “crowdsourcing,” the “maker movement,” and “co-creation” are being thrown into the mix. The space is getting muddy and the definitions are being bent out of shape to suit different purposes. So, do I think these terms have different meanings? Yes. Are their common core ideas that explain the overlap? Absolutely.

People have asked me why I have not publicly clarified this earlier. To be honest, it is hard to do so without being accused of trying to “defend” a term. The words used concern me less than how they are being defined, and the core meaning of the space being misunderstood. Definitions are hard, especially when they are trying to capture new ideas never expressed before. As Bertrand Russell famously once said: “Everything is vague to a degree you do not realize until you have tried to make it precise.” When I first began writing about this space nobody knew how big it might get. Its growth and expanding nature are, for the most part, a good thing but we need clear definitions that will enable us to move forward with a common understanding.

I have attempted to break down, define, and visualize the most commonly used terms. It’s a starting point, and I welcome your thoughts.

COLLABORATIVE ECONOMY:

An economy built on distributed networks of connected individuals and communities versus centralized institutions, transforming how we can produce, consume, finance, and learn. It has four key components:

Production: Design, production, and distribution of goods through collaborative networks

E.g. Quirky is an online community of inventors that submits product ideas and then votes on the ones they love. The company then picks the best ideas to take to market, covering the costs of manufacturing and distributing the finished products, making innovation accessible to all.

Consumption: Maximum utilization of assets through efficient models of redistribution and shared access.

E.g. Airbnb matches people who have a place or space to rent (and that could be literally anything from treehouses, to a spare room, to holiday homes to an igloo) with people looking for a place to stay.

3. Finance: Person-to-person banking and crowd-driven investment models that decentralize finance.

E.g. Zopa is leading peer-to-peer lending platform that works by connecting individual savers and borrowers, without big banks in the middle.

4. Education: Open education and person-to-person learning models that democratize education.

E.g. On Coursera millions of people are taking classes taught by faculty from the best universities around the world, creating open access to education that used to be just for the privileged few.

COLLABORATIVE CONSUMPTION:

An economic model based on sharing, swapping, trading, or renting products and services, enabling access over ownership. It is reinventing not just what we consume but how we consume.

It has three distinct systems:

1. Redistribution markets: Unwanted or underused goods redistributed

E.g. The company thredUp buys unwanted consignment-quality kids and women clothing and then resells it online, paying the supplier 40% of the resale value.

2. Collaborative Lifestyles: Non-product assets such as space, skills and money are exchanged and traded in new ways

E.g. Taskrabbit is like “eBay for errands” matching individuals and businesses that need tasks done with “runners” who make money helping people complete their to-do lists.

3. Product Service Systems: Pay to access the benefit of a product versus needing to own it outright.

E.g. BMW’s “Drive Now” is a car sharing service that offers a viable alternative to owning a car. Members can use their driving license (with embedded electronic chip) to access a car when and where they need them and pay for their usage by the minute.

SHARING ECONOMY:

An economic model based on sharing underutilized assets from spaces to skills to stuff for monetary or non-monetary benefits. It is currently largely talked about in relation to P2P marketplaces but equal opportunity lies in the B2C models.

E.g. Lyft is an “on-demand” ridesharing platform that matches ordinary drivers–students, retirees, stay-at-home parents–who can earn extra money by giving rides to people who need them.

Read more on Co.Exist

View full presentation on Slideshare

6 thoughts on “The Sharing Economy Lacks A Shared Definition

  1. Two other very dynamic aspects of the sharing economy are community engagement. One is around issues (the aggregation of voices across distance) and organising localised activities. The other is quicker, cleverer ways to gather and advance knowledge. In neither of the above does money get exchanged but value is definitely created

  2. Rachel,
    Excellent article and I also agree about the need for precision. For me, the important aspect is the difference between these new collaborative ideas and the formal economic systems. The formal economy has the profit motive as its foundation. Goods and serviced are offered on the market only if they serve the private interests of the vendor. All these new ideas are founded on the public interest or that they further the public interest. So in this sense we can refer to the public interest economy as opposed to the private interest economy.

  3. Excellent presentation about the mostly exchange-based peer economy, but it misses what is in my opinion the most important commons-based peer production economy, i.e. the open knowledge economy (1/6th of us gdp according to the fair use report), the free software economy (now the default option for software) and the open hardware economy (emerging as dominant in many new niches) and its link with distributed manufacturing … the presentation reflects a market-driven rather than a commons-driven perspective on what is happening.

  4. Rachel,
    This clarification is key and coming from you is very important. an economy and an economic model are two different things. And as with all new concepts, definitions help provide some structure so others can build on new ideas. Great work!

  5. Pingback: 3 thoughts on sustainable consumption | Design, Consumerism & Activism Blog

  6. “P2P Marketplace” is the best term I’ve heard to say what Airbnb (or any other P2P Marketplace) is. In fact, in your most recent newsletter, your lead story use the term “Marketplace” (MARKETPLACES ARE NOT PAYMENT COMPANIES) and another featured story uses the term “P2P” (LIWWA: THE FIRST ARAB P2P LENDING PLATFORM). So… you got the pieces right there. However, like you said in the second paragraph of this blog post, you are biased. You’ve invested a lot in the term “Collaborative Consumption” and you want it to stick, which we get. But it just doesn’t fit, IMHO, no matter how you defend, gyrate, or reverse engineer. These companies and platforms are, with all due respect, “P2P Marketplaces,” not “Collaborative Consumptions” (or whatever the proper fuzzy, long, syllable derivative of the term is).

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