This Week in the Sharing Economy: The Move to Professionalism

In separate announcements, two of the most well-capitalized sharing-economy companies (Lyft and Airbnb) announced moves away from their “sharing” and co-operative roots. I suggested they would at the end of this post:

To be successful, the venture-capital-funded “sharing economy” will be forced to lose all those aspects of informal sharing that makes “sharing” attractive, and to keep those aspects that erode neighbourhoods, erode employment rights, and remove basic standards. And if they succeed, they will have used the language of sharing to bring about an unregulated, free-market, neoliberal economy.

In September Lyft, Sidecar, and Uber (with its Uber X service) were approved in California as a new class of “Transportation Network Companies”. Now both Lyft and Sidecar have done away with the pretence that the money passing from passenger to driver was a “donation” and have instituted a system of formal fares (as Uber already does). The idea that passengers may pay more or less than the suggested donation, which is a part of the casual and informal nature of the exchanges that sharing economy companies appeal to, is now gone for Californians.

In a separate move, Lyft has instituted a new “surge pricing” initiative, which amounts to requiring a 25% additional payment to drivers during periods of heavy demand. Similar to Uber’s surge pricing, this move appeals directly to price as a means of rationing, and assumes that drivers are motivated primarily by money, despite the heavy use of community-focused language that Lyft uses in its marketing. We’ll have to see if the attempt by Taxi companies to raise money to push back gains any momentum.

These moves are part of a rapid shift of the Venture Capital-funded part of the transport side of the sharing economy. They follow the sale of Lyft’s original Zimride Carpool service to rental-car giant Enterprise in July, the sale of Zipcar to Avis Budget in January, and the shift of RelayRides to longer-term rentals. The moves are a fascinating contrast to the success of French company Blablacar, which has a model much closer to the original carpool idea, is growing by leaps and bounds, and is now moving into the UK.

The best treatment I’ve seen of the latest changes in this transport area is by Liz Gannes at All Things D.

The other big announcement came from Airbnb, at a press conference at their very fancy headquarters. In addition to announcing new versions of their mobile apps, CEO Brian Chesky stepped away from his “our hosts are regular people” line to tell them “You’re in the business of hospitality”. Airbnb is bringing back a program calls Superhost, which “is meant to identify and reward some of the platform’s most active and highly recommended hosts”; as well as offering a Host Rewards Program to encourage people to rent more often. So again there is a move away from regular people “occasionally” renting a room out and earning a little extra money, to a revenue model that is driven by higher volume hosts. Airbnb already relies on these increasingly professional hosts for a significant chunk of its revenue as I showed in my look at its New York data: that trend is only going to accelerate.

Again, this week’s steps are part of a rapid movement. Over the last year Airbnb has moved towards a more formal security and identification system, demanding government documents as proof of identity along with the usual Facebook information. Not, it seems, that relying on positive reviews is foolproof, as a Washington DC woman found out recently. Airbnb Brian Chesky increasingly refers to his hosts as “micro-entrepreneurs”: emphasizing the market-driven view of the business that he has, and again moving away from a community model of sharing. The term started, I think, with TaskRabbit, another “sharing” company that is walking the same path: less community, more temp agency in Rabbit’s clothing.

Push back from cities from Berlin and Paris to Roanoke City in Virginia to Grand Rapids in Michigan to Vancouver is growing, and the New York Case continues to roll on, with one notorious Airbnb landlord settling with the city. The danger here is that Airbnb’s hubris will damage other, less arrogant and less revenue-hungry companies who have engaged in apartment rentals for years (including the lovely one in Rome I was lucky enough to rent last spring) and that the venture capitalists, instead of bringing in a new level of sharing, will clumsily damage what’s already there.

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  1. Sharing/Collaborative economy is still very young and fragile, and I agree that some harsh steps might make some real damage (unfortunately)…
    So what do you guys think? Do these changes pose any real danger to this new economy? Can companies who started it all, help destroy it too? (would be very ironic)

    But on the other side – I have seen many people very passionate about this, displaying unique set of virtues, I would say unbound to economic success of the industry, just wanting a more transparent/just world. For example I met so many of them during last weekend in OuiShare summit @Brussels. And this brings me so much hope…

  2. Robert – thanks for the comment. To my mind, this movement needs to (1) give up the venture capital drug, and (2) move away from seeing itself as a technology movement. Technology has a role to play in solving social problems, but not when its proponents see it as the central and defining feature of the movement.

    Is the Ouishare summit written up anywhere?

  3. Liz Gannes suggests that Hailo would make Lyft, Sidecar, Uber (hence LSU) less likely to enter a market. Will be interesting to see how this plays out in London, where Hailo and others arrived before LSU.

  4. Pingback: P2P Foundation's blog » Blog Archive » The betrayal of community ethics by the venture-capital financed ‘sharing’ companies

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