The mainstream press is falling in love with the idea and promise of the sharing economy. First it graced the cover of Forbes, where it was called “Unstoppable!” then the Economist. But there’s one big problem: It’s very hard to quantify how big the sharing economy is, how much money it’s creating, and how many people make their living in it.
There are plenty of guesstimates and flawed research studies, but not a lot of real data.
This has been a frustration for the largest companies in this wave as well as the press. Etsy has worked hard to find ways to quantify its economic impact, as has Airbnb. The closest we seem to get is, “Uh… billions?”
Why do we need a number? Well, it helps the smaller companies raise money, it helps build a non-hype story around the trend, and some in the newly awakened political consciousness of Silicon Valley would like to be able to drape the sharing economy with the ever-popular Job Creator mantle to help push through more favorable legislation to enable it — whether that’s on a local or national level. We’re going to hear more about some of those lobbying efforts in a few weeks. As Naval Ravikant explained at our PandoMonthly last November, it’s hard to argue with jobs.
Amid all of this, there’s one constituency no one seems to be consulting — the actual worker bees of the sharing economy. Do they actually want their jobs counted? It seems to benefit the platforms and their investors more than the people powering it.
A lot of this depends on how much of sites like Airbnb, Lyft, TaskRabbit, and Zaarly stay in something that can be called the sharing economy versus what people are increasingly starting to call the peer-to-peer economy.
What’s the difference? Well everyone will have their own version of this, but to me a core difference is whether these pursuits are side jobs — a woodworking hobby you pimp out on Zaarly on weekends, doing ride shares every once in a while to make some extra money, or renting your house while you are on vacation — and whether these pursuits increasingly become people’s primary sources of income. Essentially this is the difference between a babysitter and a nanny.
The Economist’s cover compared this potential development to the way eBay started out as a casual flea market for buying kitschy things and cleaning out your garage and moved to a place dominated by stores and professional Buy It Now! sellers. As we’ve written before, that changed the community of eBay permanently — and I’d argue, killed the fun of it. But it certainly made it a more formidable company.
In that vein, it may well be a transition these companies embrace, pushing this trend more towards the Uber side of the sharing economy spectrum. Zaarly is already about 50/50, says CEO Bo Fishback, and 99designs is similarly heavy on full-time designers.
Why would counting them as part of the formal economy be so bad? In a word: Taxes. The beauty of a side job to most people is that it’s under the table. In the old analog days of the sharing economy, where you just had a friend who was a landscaper who you paid on the side to go plant shopping with you, no one had to report that income. If there’s a paper trail and the government is counting that as a “job” that changes. Another example is babysitters. How many casual babysitters report to the IRS? But if a sitter uses a site like UrbanSitter, will they eventually have to? We’ve already seen stories of people on disability getting busted on Facebook for looking pretty, well, able while they collect government cash.
So far, most sharing economy platforms have navigated one potentially thorny transition: They’ve managed to introduce cash into something that used to be neighborly and altruistic without irreparably harming the community ethos.
Could welcoming the government’s attention be a corporate step too far?
[Image courtesy GlennFleishman]