The shar­ing econ­omy

The Insider - - CONTENT -

Ac­cess to other’s idle as­sets is re­sult­ing in a sig­nif­i­cant be­hav­ioral shift: peo­ple start fa­vor­ing us­age over own­er­ship.”

Fueled by tech­nol­ogy and driven by mil­len­ni­als, the shar­ing econ­omy has pi­o­neered a new per­cep­tion about the value of phys­i­cal and dig­i­tal goods from which few in­dus­tries are im­mune.

It’s in­ter­est­ing how the in­ter­net and cloud ser­vices grad­u­ally weaned peo­ple away from the whole con­cept of own­er­ship. For cen­turies the prin­ci­ple of “pri­vate prop­erty” was a ba­sic value - the sa­cred cow of west­ern civ­i­liza­tion. It was pa­raded on ban­ners dur­ing rev­o­lu­tions and wars; many peo­ple were killed in the name of pos­ses­sion.

But when the dig­i­tal rev­o­lu­tion erupted it didn’t take long for Ap­ple and Net­flix to de­bunk this long-held ide­ol­ogy. It was quite easy to ac­cept the premise that we shouldn’t have to buy CDs and DVDs; we just need to pay for the right to lis­ten to mu­sic or watch videos. His­tor­i­cally, mu­sic down­loads from the likes of iTunes made up the ma­jor­ity of the record­ing in­dus­try’s revenue; in 2015 stream­ing mu­sic be­came its big­gest in­come source.

“25 years from now, car shar­ing will be the norm, and car own­er­ship an anom­aly.”

Jeremy Rifkin

Au­thor and Econ­o­mist

Paying for Kin­dle eBooks was a harder pill for us to swal­low. The ex­pe­ri­ence of brows­ing book­stores and choos­ing the per­fect book for one­self or as a gift has never been fully repli­cated in dig­i­tal. This is partly due to the more tran­sient na­ture of dig­i­tal books, but also for the loss of the in­di­vid­u­al­ity that comes with a trea­sured col­lec­tion of dog-eared ti­tles in a book­shelf. For many of us, our li­brary is a re­flec­tion of who we are, what we value and what we dream about.

The auto in­dus­try is def­i­nitely feel­ing the ef­fects of this econ­omy. At one time buy­ing a car, es­pe­cially a first car, rep­re­sented the “com­ing of age” – every­one re­mem­bers their first car. Cars were a re­flec­tion of who we were; a quar­ter of Amer­i­can’s even an­thro­po­mor­phized their au­to­mo­biles by giv­ing them names. But as car own­er­ship be­comes less prof­itable than its us­age, more and more peo­ple are giv­ing up all the emo­tional and pro­pri­etary as­pects of pos­ses­sion to be­come mem­bers of a car-shar­ing com­mu­nity.

Real es­tate and the ho­tel in­dus­try are also be­ing dis­rupted by the trend to­wards shared ac­com­mo­da­tions, spawn­ing new re­fer­ral ser­vices such as Airbnb, FlipKey, VRBO and HomeAway. Not every­one is ready to let strangers live in their homes for money. But we must, of course, evolve in this di­rec­tion. Some have even sug­gested that it won’t be long be­fore peo­ple will only own one per­sonal thing, their pass­code on their smart­phone. And that there will be only one set­ting the way they lay out ap­pli­ca­tions on the desk­top and pho­tos al­bums in the cloud.

The tan­gled web

One of the main prob­lems in to­day’s shar­ing econ­omy lies in the fact that even in Europe and Amer­ica there is not enough le­gal frame­work that prop­erly reg­u­lates “con­sump­tion ver­sus own­ing.” To­day com­pa­nies are just do­ing what they want, and we the peo­ple, what we can get away with.

Fash­ion­ably trendy Uber, which dis­ac­cus­toms peo­ple of car own­er­ship, wrote a user agree­ment that is con­trary to the con­sti­tu­tions of some coun­tries and it re­fuses to un­link bank­ing cards from cus­tomers’ ac­counts. We’ve all heard the hor­ror sto­ries of out­landish surge pric­ing and dis­cre­tionary fees. All we can do is try to re­solve con­flicts as they oc­cur us­ing ex­ist­ing and in­ad­e­quate le­gal in­stru­ments. Dis­rup­tion forces us to move the bu­reau­cratic be­he­moth faster.

But there are some prece­dents for which cus­tomers are un­pre­pared. What hap­pens to

shared dig­i­tal ac­counts (e.g. iTunes, Ama­zon, mag­a­zine app sub­scrip­tions, etc.) be­tween spouses upon divorce? How do you di­vide those dig­i­tal as­sets when you only have ac­cess priv­i­leges, no real own­er­ship of the content? Clearly there needs to be a re­for­ma­tion of the laws sur­round­ing col­lab­o­ra­tive con­sump­tion.

The dou­ble- edged sword of dis­rup­tion

In the shar­ing econ­omy, there is typ­i­cally two dif­fer­ent kinds of dis­rup­tors – those that evolve in­dus­tries (clever dis­rup­tors) and those that dis­solve them (de­struc­tive dis­rup­tors). But re­gard­less of their endgame, both suc­ceed in their goals be­cause they share one fun­da­men­tal fo­cus – the con­sumer.

Zip­car (clever dis­rup­tor) has helped evolve the trans­porta­tion in­dus­try by in­spir­ing ma­jor au­tomak­ers to em­brace car shar­ing to the point of chang­ing their mis­sion from sell­ing cars to of­fer­ing “pre­mium ser­vices for in­di­vid­ual mo­bil­ity.”

The same is true in hos­pi­tal­ity with many tra­di­tional ho­tel chains launch­ing unique mil­len­nial-friendly prop­er­ties that give GenYs what they want – af­ford­able, func­tional and min­i­mal­is­tic lux­ury.

The mu­sic in­dus­try was dis­rupted both clev­erly and de­struc­tively. By unbundling al­bums into songs, iTunes vir­tu­ally de­stroyed the al­bum in­dus­try, while at the same time sav­ing the mu­sic in­dus­try from the plagues of piracy that had the record la­bels fac­ing 15% losses of its rev­enues in just four years from its peak of US$15 bil­lion in 1999.

Net­flix had sim­i­lar ef­fects on video when it launched its stream­ing ser­vice in 2007. How­ever, it only took four years for home video in­dus­try rev­enues to sta­bi­lize with dig­i­tal con­tribut­ing up to 70% of sales.

And while Net­flix may still seen as a du­bi­ous dis­rup­tor as a re­sult of its im­pact on TV and the­aters, movie stu­dios have been grow­ing rev­enues since 2009 as a re­sult of the mas­sive increases in dig­i­tal video con­sump­tion, thanks to Net­flix, Hulu and oth­ers.

And the grum­bling film stu­dios are still more prof­itable than their fren­emy.

But what does all this have to do with news­pa­per and mag­a­zine publishing? A lot…

In the publishing in­dus­try there are a num­ber of dis­rup­tors look­ing to cap­i­tal­ize on the shar­ing econ­omy. And although one might not in­tu­itively see an ap­ples-to-ap­ples com­par­i­son be­tween mu­sic and news content (due to news’ ephemeral na­ture), when it comes to meet­ing the needs of the new con­sumer, the sim­i­lar­i­ties can’t be de­nied.

Take a look at craigslist. The unbundling of clas­si­fieds from news­pa­pers was not un­like iTunes unbundling songs from al­bums; the move brought tan­gi­ble value

to con­sumers and ad­ver­tis­ers. But in­stead of evolv­ing the in­dus­try, this de­struc­tive dis­rup­tor all but de­stroyed it, trans­form­ing clas­si­fieds from a multi-bil­lion-dol­lar busi­ness into the 300-mil­lion-dol­lar one it is to­day.

On the flip­side of the com­mo­tion coin, clever dis­rup­tors are ac­tu­ally help­ing to evolve publishing into a more con­sumer-cen­tric in­dus­try. Plat­forms like Google, Face­book, Ap­ple, PressReader and Blen­dle bring value to pub­lish­ers by pro­vid­ing ac­cess to a mas­sive au­di­ence they can’t reach on their own and of­fer­ing innovative ways for pub­lish­ers to mon­e­tize their content. And un­like craigslist, th­ese com­pa­nies are not com­pet­ing with pub­lish­ers on content; many are, in fact, paying for the priv­i­lege of giv­ing read­ers what they want – qual­ity content when, where and how they want it.

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