The Sharing Economy Model

Beth Furness
December 9, 2020

Everyday we are bombarded with terms like the gig economy, the on-demand economy, the freelance economy, the sharing economy and many more to describe the new way of doing business, taking up tasks or jobs - full-time or part-time. But is there an actual difference between them? What do they entail? In this Babel of terms, AppJobs is here to “translate” what these terms mean. So, let’s talk about the most controversial of these terms, which is the sharing economy.

Everyday we are bombarded with terms like the gig economy, the on-demand economy, the freelance economy, the sharing economy and many more to describe the new way of doing business, taking up tasks or jobs - full-time or part-time. But is there an actual difference between them? What do they entail? In this Babel of terms, AppJobs is here to “translate” what these terms mean. So, let’s talk about the most controversial of these terms, which is the sharing economy.

Why is the sharing economy considered a controversial term?

Let’s start with a definition: the sharing economy operates with a “focus on the sharing of underutilised assets, monetised or not, in ways that improve efficiency, sustainability and community.” A perfect example of this kind of economy would be Airbnb - individuals share their home with other people putting it into use and making a profit out of something that is considered an “underutilised asset” (a spare room, a sofa, an apartment).

The confusion starts when the term “sharing economy” is also used to describe economic activity involving any kind of online transactions that is not only peer-to-peer but also B2B. The term then broadens and becomes misleading, many claim. Uber is an example. It would be usually considered to fall under the sharing economy category, but is it ridesharing when a person leases a car to drive people around? He is not using an “underutilised asset” (his own car in this case) to make money. UberPOOL, on the other hand, that matches riders heading in the same direction, so they can share the ride and cost, is a more representative example of the “sharing economy”.


Nevertheless, the term “sharing economy” is used in its broader sense by people and in the media. It might be considered as misleading, but we should not forget that the sharing economy, as the freelance economy, the on-demand economy etc. are fairly new concepts and time will decide what they will end up meaning and which terms will prevail or change. After all, we live in times that advance quickly due to the development of technology and sometimes language cannot keep up with this fast a pace.

The rapid growth of the sharing economy and the reasons behind it.

Due to the controversy regarding what the sharing economy encompasses, it may be hard to identify and pinpoint what exactly the growth of it is. According to Wikipedia, a 2014 research by PricewaterhouseCoopers, looking into five sectors of the sharing economy (travel, car sharing, finance, staffing and streaming), found that the global spending was $15 billion at the time and predicted to reach to $335 billion by 2025, which is quite rapid a growth.


The main reason behind this rapid growth is the development of information technology and digital media - new technologies are mainstream and enable businesses and ordinary people to transact digitally. Then, because of social media, people tend to be influenced more by their peers for their purchasing decisions and are oriented towards smarter solutions, that will bring them financial gain. And the fact that most people live close to each other in urban environments is an enabling factor for the sharing economy to thrive, as enough customers and service providers are close to each other and are able to easily transact.

The benefits of the sharing economy.

But what is the impact the sharing economy has on people’s lives? Well, an obvious impact is the increased trust among society members. Without trust, the sharing economy cannot operate. And this, in turn, results in strengthened communities. Then, it gives the opportunity for many people to have a flexible way to earn money, live better and juggle better personal life and work, while offering more business opportunities to entrepreneurs. Not to mention the reduce of need for certain goods and the subsequent good impact on the environment. And, last but not least, we should mention the increased quality of provided services and/or goods as the sharing economy relies much on ratings, and who wants to get bad reviews?


In conclusion


Grasping the term “sharing economy” is not the easiest task, because there is not a consensus in how and when it should be used. And that controversy makes it hard to pinpoint its boundaries and what it exactly entails. In time it will probably be clearer and this is important for all stakeholders - users, workers, service providing platforms and governments especially - so there is a common ground for debate and decisions when it comes to vital aspects of this new economy, like rules and regulations, laws, working rights and obligations, insurance benefits, healthcare issues etc.

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