A Blog by Jonathan Low


Jun 18, 2016

Why the Gig Economy Is Neither Sharing Nor Collaborative

As the following article explains, Airbnb no more collaborates with its guests than Marriott or Hilton shares with their customers.

They are all businesses using technology to facilitate exchanges of goods and services that create profits. The feel-good kumbayah moment has passed - if it ever existed. JL

Sarah O'Connor reports in the Financial Times:

The reason to reject “sharing” and “collaborative” labels is that they give the wrong impression: they are not hands-off intermediaries between ordinary people who exchange goods and services. They actively shape the markets they create. Virtual “human cloud” platforms create a global market where a worker in Dallas competes with Sofia and Manila. Earnings on Mechanical Turk are below minimum wage in the US, but 14 times the minimum wage in India.
If there is one phrase that makes me wince more than the “sharing economy” it is the “collaborative economy”. Last week, we were confronted with both: Morgan Stanley published a report on the former and the Centre for European Policy Studies (at the request of the European Commission) wrote one on the latter.The reports are on broadly the same topic: the growth of companies such as Uber, TaskRabbit and Upwork and how they might change the economy. It is an interesting question and one I think about a lot. But these are very different companies that do not sit comfortably under one label. And if they did, it would not be either of these.
Most “sharing” or “collaborative economy” companies use the internet to facilitate transactions between buyers and sellers for a fee. Some facilitate the renting of assets (such as Airbnb), some the sale of labour (such as TaskRabbit and Upwork) and some a bit of both (such as Uber). What exactly is being shared here? Who is collaborating with whom? Freelancers on Upwork are no more sharing their skills with the world than I am sharing mine with the Financial Times. Airbnb hosts are not collaborating with their guests any more than Marriott International is collaborating with its customers.
These labels made sense when they first appeared about six years ago. Then they applied to start-ups, such as SnapGoods and Share Some Sugar, that aimed to help neighbours lend things such as electric drills to each other. Some of today’s platforms still fit the sharing label but many of the household names do not.
You could argue it does not really matter. These monikers may not be a perfect fit for the phenomenon they now describe but they are entrenched and everyone knows what they mean.
But there are two reasons not to give in and go with the flow.
First, lumping these companies together leads to fuzzy thinking about their scope and scale as well as their pros and cons. We can debate whether Airbnb is unfairly undercutting regulated hotels and bed-and-breakfast businesses, but let's not mix it up with analyses of the impact of companies such as Uber on the labour market.
JPMorgan’s recent study of 260,000 users of online platforms found stark differences between people using capital platforms such as Airbnb and eBay and people selling their labour. The latter were poorer, more often from western states in the US and more likely to rely on the platforms to cushion dips in their incomes.
There is also a difference between physical work and online work. The report from the CEPS (which is very good, apart from its title) finds that earnings for physical taskers in countries such as the US tend to be much higher because they are competing locally with people who face the same cost of living.
The virtual “human cloud” platforms, in contrast, create a global marketplace where a worker in Dallas competes with one in Sofia and another in Manila. Average earnings per hour on Mechanical Turk are below the minimum wage in the US, but 14 times the minimum wage in India. National regulators and tax officials worried about the Ubers of this world will find it even harder to get to grips with the borderless “human cloud”.
The second reason to reject the “sharing” and “collaborative” labels is that they give the wrong impression of what these companies do. They are not exploitative masters of “digital serfs” (as some would have it), but neither are they hands-off intermediaries between ordinary people who want to exchange goods and services.
They actively shape the markets they create. Upwork, for example, recently changed the fees it charges freelancers from a flat 10 per cent to a sliding scale: freelancers will pay 20 per cent on the first $500 they bill to a client and 5 per cent on billings over $10,000.
David Francis, a research associate at Staffing Industry Analysis, says the company wants to encourage users to treat the site like a full-time job, which would make the business model more profitable.
That may be no bad thing — but it is a sign of the power these platforms have to shape the behaviour of their users. They neither promote nor facilitate sharing and collaboration: they are a handful of companies trying to make money by creating and controlling markets for our labour or our stuff.
Something tells me that catchy definition won't take off.


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