Individual or Corporate? Two Visions of the Sharing Economy

Google’s driverless car and Apple’s deal to buy Beats Electronics, primarily for its streaming music service, represent the latest moves in a battle between two visions of the sharing economy: One in which the goods being shared belong to the people who share them, and one in which they belong to corporations.

Many new businesses have gained high valuations on the idea that consumers no longer need to own products to reap their benefits. The big names include Uber, Zipcar and France’s Autolib’ in car-sharing; Spotify and Beats in music; Airbnb in short-term rentals; Swapstyle in clothes; Zopa and Prosper in peer-to-peer lending.

Not all sharing businesses, though, are alike. They can be categorized in various ways, but as the need arises to rewrite laws for some of the services to operate, one distinction is becoming increasingly important: Whether the income flows to corporations or directly to private individuals.

Take the music industry. It crushed the peer-to-peer free-for-all of Napster, tentatively accepted Spotify (in which Napster co-founder Sean Parker was an early investor) and will probably fully embrace streaming audio after Apple’s Beats deal. We may even be able to stream the Beatles, whose music is now under an exclusive contract to Apple’s iTunes. It was not OK for individual owners to exchange music among themselves, but the industry rejoices in Apple’s entry.

Streaming, run by major corporations such as Apple, is about to become the standard, and peer-to-peer sharing, in the form of BitTorrent file distribution, is dying out. According to broadband equipment maker Sandvine’s report for the first half of 2014, peer-to-peer sharing accounted for just 6 percent of North American peak-hour traffic, down from 7.4 percent in the second half of 2013. Streaming is cheap and trouble-free enough to render it obsolete.

Consider the car sharing market. The same Paris taxi drivers who physically attacked Uber cars haven’t caused a fuss about the Autolib’ sharing business, whose pretty electric Bollore Bluecars represent an even greater threat: If you can pay a small annual subscription fee and then a few euros per 30 minutes to drive yourself around town, you don’t really need taxis. When Google gets the self-driving car technology right and finds a reliable manufacturing partner — in five years or so — taxi drivers will probably not mess with it, either, even though cars without a steering wheel will render them completely useless.

Uber, a peer-to-peer service, keeps running into regulatory obstacles. Last month, Brussels banned it altogether. Bureaucrats are grumbling about insufficient insurance and safety standards, though it’s hard to see why these should matter if passengers are happy with the service. When Bollore needed space on hectic Paris streets for its recharging stations and parking lots, everything worked out fine. Google, too, will probably get all the necessary regulations changed — and cars without a steering wheel or pedals allowed on highways — just because of its enormous wealth and lobbying power.

Consider, too, the example of Airbnb, the modern-day competitor to one of the sharing economy’s oldest precursors, the hotel industry. Last year, Berlin’s senate banned it because neighbors complained about the noisy and untidy short-time renters and because apartment owners preferred renting out their properties for short stays, thus taking them off the already tight long-term rental market. The service is still available in Berlin, but on a somewhat shaky basis. In New York, Airbnb has also faced legal challenges. In this particular fight, my bet is on hotel owners — but in smaller cities, where Airbnb doesn’t strain the housing market, its service may well survive.

So far the collaborative consumption economy is favoring big corporations with the money, audacity and lobbying power to make products available as services. Governments and markets appear better suited to turning private individuals into perpetual renters of corporate property than to facilitating the sharing of these individuals’ relatively meager resources. This may benefit innovative corporations, the environment and often consumers, but peer-to-peer sharing is much better for strengthening society’s fabric. Regulators should reconsider their attitude: Big business doesn’t always have to win.

Topics Sharing Economy