The rise of the internet has paved the path for online savvy start-ups expanding onto the web-based platform. Traditional business models of big incumbents have been challenged by the models relying on the concept of ‘collaborative consumption’. Also known as the sharing economy.
The potential of peer-to-peer marketplaces – leveraging traditional methods of sharing, lending, renting and trading – in transforming commerce is astonishing. Renting out spare rooms through Airbnb, or your car through SnappCar are obvious examples. But the possibilities are endless. Other examples are Peerby, through which you can borrow basically anything from people in the neighborhood. Or Thuisafgehaald, enabling you to buy a home cooked mail from someone around the corner. The traditional business model where firms provide value through ownership of assets is passé. But as the peer-to-peer industry reaches a critical mass, downsides start to emerge.
The informal nature of the peer-to-peer economy, which is based on good intentions of others, may collide with regulations implemented to ensure safety and fairness for both the suppliers of goods and services and the consumers. As Janelle Orsi, expert on emerging law of the sharing economy, states: “sharing organizations tend to operate in a grey area between personal and commercial, public and private, which makes it difficult to figure out how regulations apply.” (Fast Company, 2013).
Take the restaurant industry, they have to obey to a wide range of regulations to ensure the quality of food. However, there are no formal regulations for the people selling meals through Thuisafgehaald. Where does the boundary lay; at what point should these initiatives obey to certain regulations? Recent commotion around the negative effects of Airbnb – tax issues and unsafe housing – illustrates the point made by Orsi as well. The hotel industry is subject to regular inspections to ensure safety and cleanliness. Airbnb faces no such thing. This creates an uneven playing field that potentially even poses dangers to people that rent through Airbnb. The same goes for the taxi industry – cab drivers need licenses and there are all sorts of safety and insurance regulations. Currently, Uber-drivers do not need a license, nor are there formal standards that the cars should meet. As a result, Uber has been facing injunctions battles by taxi companies in several cities for unfair competition.
What do you think. Is the sharing economy something to embrace or be cautious about to ensure safety and level the playing field?
Reference:
Fast Company. (2013). Does The Sharing Economy Have a Shadow Side?. [online] Available at: https://www.fastcompany.com/3013272/does-the-sharing-economy-have-a-shadow-side [Accessed 23 Sep. 2016].
Other sources:
https://www.theguardian.com/commentisfree/2014/may/27/airbnb-uber-taxes-regulation [Accessed 23 Sep. 2016].
http://www.marketingfacts.nl/topic/sharing-economy [Accessed 23 Sep. 2016].
http://www.mejudice.nl/artikelen/detail/wat-is-nu-eigenlijk-deeleconomie [Accessed 23 Sep. 2016].
http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy [Accessed 23 Sep. 2016].
Hi Nanne,
I think it is a good thing that this side of the sharing economy is being discussed. Everyone is hyping about the benefits of for example Airbnb and Uber, but as you point out, there is definitely a downside. I think we have to be more cautious with these sharing platforms. There should clearer rules to protect both users and owners. In the traditional businesses these rules were invented for a reason and there should be more attention paid to this matter as we are transitioning to a sharing economy. Overall, important and interesting topic!
Thank you so much for your reply, I totally agree with you Jonne. Technology-based sharing platforms are touching more and more people’s lives, but policy and regulation can struggle to cope with new technologies. However, it is super important to get the regulations right in order to protect the safety of the consumer and also to stop unfair competition getting out of hand. Despite growing criticism, most platforms don’t seem eager to take the responsibility and to respect regulations.