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The Continuing Evolution of the On-Demand Economy

August 11, 2015

The past few years have seen the rise of what’s been variously referred to as the on-demand, collaborative, sharing, or peer-to-peer economy.  Regardless of what we call it, this trend has captured the public’s imagination.  Articles on the subject now appear fairly frequently.  Some of the articles are focused on the empowerment nature of these technology-based economic models, enabling people to get what they need from each other.  Others are more concerned with on-demand’s impact on the very nature of work in the 21st century.

In an excellent 2013 report, industry analyst Jeremiah Owyangargues that the collaborative economy is the evolution of the Internet-based economy of the past two decades.  The one-to-many Web 1.0 made lots of information accessible to individuals, but control remained mostly in the hands of institutions.  It was followed by the many-to-many Web 2.0, where individuals could easily share content and opinions with each other.

Now, the on-demand phase of the Internet economy is enabling individuals to go way beyond sharing information.

“An entire economy is emerging around the exchange of goods and services between individuals instead of from business to consumer,” wrote Owyang.  “This is redefining market relationships between traditional sellers and buyers, expanding models of transaction and consumption, and impacting business models and ecosystems…  This results in market efficiencies that bear new products, services, and business growth.”

In 2011, Time Magazine named the sharing economy one of 10 Ideas that Will Change the World.  “Someday we’ll look back on the 20th century and wonder why we owned so much stuff… [S]haring and renting more stuff means producing and wasting less stuff, which is good for the planet and even better for one’s self-image…  But the real benefit of collaborative consumption turns out to be social.  In an era when families are scattered and we may not know the people down the street, sharing things – even with strangers we’ve just met online  – allows us to make meaningful connections.”

This early bloom has now started to fade. “If you want to start a fight in otherwise polite company, just declare that the sharing economy is the new feudalism, or else that it’s the future of work and all the serfs should just get used to it, already,” wrote a recent Wall Street Journal article.  “Uber isn’t the Uber for rides – it’s the Uber for low-wage jobs,” note the critics.  “Boosters of companies like Uber counter that they allow for relatively well-compensated work, on demand.”

A Financial Times article reflected on what it means to be running “a collaborative business model within a capitalist framework.  Are the two even compatible?  Or is there a fundamental conflict at the heart of an industry that preaches collaboration but, due to being radically commercialised by venture capital money from Silicon Valley, also needs to profiteer from the goodwill of others if it’s to remain viable?  For the most part it’s a hypocrisy the community is trying to address…  For now, the uncomfortable truth is that the sharing economy is a rent-extraction business of the highest middle-man order.”

This past May, OuiShare Fest, a three-day collaborative economy festival took place in Paris.  There was much discussion that this emerging economy is now practically owned by Silicon Valley’s 1 percent.  “The sharing economy has created 17 billion-dollar companies (and 10 unicorns),” said this article.  In a keynote at the festival, Owyang noted that the VC money being poured into the sector already far outweighs the monies that flowed into social media at this stage of its development.  “It’s worth noting that the early hope that this sharing market would foster altruism and a reduction of income inequality can now be refuted,” he said.  “

The one percent clearly own the sharing startups, which means this is continued capitalism – not idealistic socialism.”

Read the full post of my July 21 blog here.