How much of the sharing economy really involves sharing?

It’s a question that came up first thing today at the Collaborative Economy Conference, and it’s a question that came up in a number of responses to my recent post on picking the winners and losers of the sharing economy.

What we call these new forms of economic activity really matters, because we risk diluting the social impetus towards real sharing — a norm that helps build social capital — when we use the term “sharing” to describe everything from Airbnb to Car2Go. Sharing, properly understood, is a very specific and consequential form of economic activity:  “the act and process of distributing what is ours to others for their use as well as the act and process of receiving something from others for our use“.

For much of human history, this form of economic activity was actually the norm, as much agricultural production depended on the “commons”, grazing land that could be used by any member of the community. It was only with the 18-century advent of Enclosures Acts that we moved away from the commons and towards a model in which private ownership of assets and production became the new norm. As has been widely documented, this shift has had enormous consequences for wealth distribution and social capital — consequences that we obscure when we use the term “sharing” to describe businesses that lack any component of common ownership or resource sharing.

That said, there is an underlying intuition driving this usage: the intuition that there is something important, new and different about the wide range of apps and web services that make it possible for consumers to buy and sell to one another, access rather than buy what they need, and get both goods and services on an on-demand basis. That’s why I like the term “collaborative economy”, which acknowledges the existence of a larger phenomenon without (inaccurately) describing it all as sharing.

But there’s a reason the terminology is still in play: different terms feel more accurate, depending on which kinds of activity you’re discussing, and which characteristics of the collaborative economy you’re trying to highlight.

For the past year, I’ve been playing with various ways of plotting the collaborative economy as a 2×2 (of course!), which is an approach that can help us think systematically about the commonalities and differences among different collaborative economy business models. Mapping the collaborative economy as a 2×2 also helps us use the right terminology for this phenomenon, so we don’t categorize all of it as sharing.

Jeremiah Owyang, my collaborator on the Crowd Companies/Vision Critical report Sharing is the Buying, usefully relies on the terms “provider” and “partaker” to distinguish between roles that we’d previously have conceived as “seller” and “buyer” — terms that are often inaccurate when we’re talking about the collaborative economy. Mapping the collaborative economy according to these two dimensions helps us differentiate among different types of collaborative economy enterprises, and lets us more accurately use terms like “sharing economy” or “on-demand economy” to refer to particular kinds of transactions.

On the provider axis I distinguish between enterprises in which goods or services are centrally produced or owned (typically by a single company), and those in which goods or services are produced or owned by individuals. Note that this axis does not speak distribution: often, the value of a collaborative economy service is in centralizing the distribution of services and goods that are produced or owned by many different people. Note also that even goods that had an original, centralized producer (like a Patagonia jacket) may then be owned and sold in a decentralized way (like Patagonia Worn Wear).

On the partaker axis I distinguish between enterprises that allow people to buy goods and services, and those that allow people to access (borrow or rent) goods and services.

There are a few notable wrinkles in this model.

First, it’s a lot harder to categorize businesses that provide services than businesses that provide products, and a lot of businesses actually include both a product and service component: when you’re taking a ride with Uber, you’re buying a service (a ride) but you’re also borrowing a product (a car). When you rent a room on Airbnb, you’re borrowing a product (a home) but you’re also typically buying a service (the work of cleaning up that home). For the purposes of categorizing different businesses, it’s helpful to think about whether the offering is primarily a product, or primarily a service. If the value of what you’re getting is mostly constituted by labour, rather than mostly constituted by capital (physical goods), I consider it a service…so you are buying a service, rather than borrowing a product.

Second, it’s a little tricky to categorize community-owned operations like traditional public libraries, or emergent services like tool libraries or bike shares. While these could be considered centrally-owned resources that would therefore land in the “on-demand economy” quadrant, treating these as on-demand services would deny the very important distinction between public and private ownership.

For those of us who care about preserving the cultural norm of sharing, the precision of this model allows us to retain the idea of sharing as a form of economic activity that involves either communally owned resources and/or providing community access to privately owned goods. Even if you don’t have a strong political or social commitment to community ownership or access, using the term “sharing economy” in this precise way can be helpful: indeed, if your political values lean more towards an emphasis on entrepreneurship and business growth, separating out community-owned assets gives you a way of quantifying and promoting those collaborative economy activities that grow private wealth.

But this 2×2 isn’t meant to imply a value judgement. The sharing economy isn’t the “best” part of the collaborative economy, or even the part with the greatest social or environmental impact. On-demand businesses can play a valuable role in reducing overall resource consumption, encouraging the production of goods that are more durable, and broadening access to resources people and businesses need. Peer-to-peer businesses create new forms of employment and economic opportunity, and can reduce the environmental footprint of consumption by supporting local economies and artisanal production. Even the conventional economy should not be considered the enemy: old-school bricks and mortar stores may not seem super sexy, but I’ll bet each and every one of us regularly buys food, clothing or other goods from small stores that are valuable members of our local economies and communities.

In fact, the great value of this kind of 2×2 isn’t (just) in allowing us to share a common language or preserve the social and political value of sharing. Mapping the different business models that flourish in the collaborative economy allows us to identify the wide range of ways that both startups and established companies can organize their collaborative economy offerings, and to spot market gaps where a new enterprise could flourish.

Is the on-demand market for high-end fashion fairly saturated? Think about opportunities to offer high-end fashion on a peer-to-peer or sharing model. Are there already plenty of players in sharing space? Then look for ways to sell space on a peer-to-peer basis, or to rent it an on-demand by building up a stock of centrally owned offices or apartments.

Whatever your interest in the collaborative economy — as participant, as observer, as would-be entrepreneur — it’s in your interest to talk about different entreprises and business models in the most accurate way possible. Best of all, if we’re all speaking the same language, we can have the kind of crucial conversations that will help us build this new area of the economy together.