Sharing Economy Platforms

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Juliet Schorr distinguishes for-profit from not-for-profit, and peer to peer from business to peer, creating a quadrant typology:

"While all sharing economy platforms effectively create “markets in sharing” by facilitating exchanges, the imperative for a platform to generate a profit influences how sharing takes place and how much revenue devolves to management and owners.

For-profit platforms push for revenue and asset maximization. The most successful platforms—Airbnb and Uber, valued at $10 and $18 billion respectively— have strong backing from venture capitalists and are highly integrated into existing economic interests.8 The introduction of venture capitalists into the space has changed the dynamics of these initiatives, particularly by promoting more rapid expansion. While some of the platforms present a gentle face to the world, they can also be ruthless. Uber, which is backed by Google and Goldman Sachs, has been engaging in anti-competitive behavior, such as recruiting its competitors’ drivers. While its representatives articulate a neoliberal rhetoric about the virtue of “free markets,” the company is apparently hedging its bets on what “free” markets will deliver for it by hiring Obama campaign manager David Plouffe to bring some old-fashioned political capital to its defense.

By contrast, many of the initiatives in the sharing space, such as tool libraries, seed banks, time banks, and food swaps, are non-profits. They do not seek growth or revenue maximization, but instead aim to serve needs, usually at a community scale.

While the for-profit vs. non-profit divide is the most important one, the divide between P2P (peer-to-peer) and B2P (business-to-peer) platforms is also significant.

P2P entities earn money by commissions on exchanges, so revenue growth depends on increasing the number of trades. In contrast, B2P platforms often seek to seek to maximize revenue per transaction, as traditional businesses often do. Consider the differences between Zipcar (B2P) and RelayRides (P2P). On RelayRides, owners earn income from renting their own vehicles, choosing trades based on their needs, and setting rates and availability. Zipcar functions like an ordinary short-term car rental company. With a P2P structure, as long as there is competition, the “peers” (both providers and consumers) should be able to capture a higher fraction of value. Of course, when there is little competition, the platform can extract rents, or excess profits, regardless. Sharing platforms, particularly non-profits that are operating to provide a public benefit, can also function as “public goods.” A tool library is like a public library in many ways, although it is not organized by a government, not typically supported by public funds, and not necessarily governed by a democratic process. Many public goods have a G2P structure (government-to-peer), rather than P2P. But P2P structures can be, and frequently are, democratically organized." (