Uber and AirBnb may be among the most visible manifestations of the so-called "shared economy" revolution under way in delivering consumer services, but it's also popping up in areas not typically associated with peer-to-peer platforms and ultimately represents a movement toward a decentralized economy disconnected from entrenched special interests.
Hitching a ride with ride-sharing app Lyft gives people a more convenient, cost-effective means of getting from point A to point B. Photo: Flickr via Raido.
People understand ride sharing apps like Uber and Lyft skirt the powerful taxicab lobby by directly connecting people needing a ride with drivers willing to take them there, all without having to obtain an expensive taxicab medallion to do so. If that weren't enough, apartment sharing services like AirBnB evade the strictures imposed on the hotel lobby by hooking up renters needing a place to stay with those who have rooms to share, even if it's just a mattress in the corner of a living room.
Sharing is caring
Yet when you look at the growing "tiny house" movement, cryptocurrencies like Bitcoin, and even in the manufacturing sector where Tesla (TSLA 3.33%) is attempting to sell cars directly to consumers and not through dealerships, you see that not only is the shared economy just avoiding traditional institutional support, it's actually doing an end run around them, sometimes willingly crossing the line into the illegal to meet the needs of the individual.
In its Consumer Trends 2015 report, the industry watchers at Mintel say the rise of on-demand convenience is "blurring the lines between digital and brick-and-mortar retail, not only driving convenience in shopping, but also expanding it into any customer interaction with business."
Take Tesla, which employs a direct-to-consumer sales model that eschews the needs for a elaborate, but bloated dealership network. By allowing customers to order a car over the Internet from a kiosk in a storefront, it's able to lower its overhead and keep the price of its cars lower. But it also threatens to upend the power structure built by state and national dealership organizations who've managed to convince politicians in a slew of states from Maine to Texas to ban such dealer-less sales.
Riding roughshod over regulation
Uber has similarly stood the car-for-hire industry on its head, though the taxicab lobby has persuaded a number of city councils, state legislators, and national politicians to outlaw the service as a threat to passenger safety. Like the car dealerships, though, it seems the real concern is the undermining of the monopoly power the special interests wield.
It's not much different with AirBnB, which skirts both zoning laws and hotel rules by serving as a middleman between renters and apartment owners.
Atypical rooming solutions like this gypsy wagon in Seattle listed on AirBnB are tying the hotel industry and zoning regulators up in knots. Photo: AirBnB via Jean-Marc.
Yet it was through AirBnB that I discovered the so-called tiny house movement after someone in Seattle listed his hand-built gyspy wagon was available for rent in his backyard for just $40 a night.
Living large in a tiny house
Tiny houses are usually under 200 square feet in size, but generally have all the amenities of a home -- kitchens, baths, bedrooms, etc. -- just less of them. An enterprising person can buy a 20-foot trailer from a local big box store and build a house on it for $30,000 or less. There's actually nothing illegal about such buildings, or even parking them in your driveway, because they're considered a temporary structure. They only run afoul of local zoning laws when they're declared as your legal residence.
Still they're proliferating across the country as people opt to not burden themselves with a mortgage and reject the trend toward building McMansions with all the attendant resource waste they represent. Tiny houses also offer a low-cost housing solution that's allowing several Oregon communities to meet the needs of the homeless .
Ka-ching!
But collaborative consumption is perhaps nowhere more evident than with Bitcoin, the anonymous, digital, cryptocurrency that could signal the end of government-backed legal tender. Despite financial institutions trying to tarnish its reputation as a haven for criminals -- as if some crime lord never did business in dollar bills -- it's a complete change in how we think about transferring value, which is really the purpose of money.
Hosts of services have sprung up to challenge the proprietors of the status quo: Zillow (Z 3.03%) took on the powerful real estate industry to bring home sales data to the masses; SpaceX -- the space launch company founded by Tesla's Elon Musk -- is looking to upend the aerospace/defense cartel represented by the likes of Boeing (BA 3.01%) and Lockheed-Martin (LMT 1.58%); and Square seeks to end the duopoly of Visa (V +0.64%) and Mastercard (MA +1.05%) on how people pay for things.
The danger of going along to get along
Yet the biggest risk to the proliferation of the shared economy is not their being completely shutdown -- think Napster, the granddaddy of P2P sharing, or Aereo, the streaming video service that tried to do the end run around cable TV but had broadcasters from Cablevision (NYSE: CVC) to CBS (CBS +0.00%) challenge it all the way up to the Supreme Court -- but rather the services are co-opted by the existing power structure.
Zipcar, for example, was changing the way people rented cars, using peer-to-peer networks to match renter to car owner. Rather than use its lobbying power to seek a regulatory roadblock to its proliferation, Avis Budget Group (CAR 0.66%) simply bought the company.
As Uber, AirBnB, and even Tesla have found, you can't completely ignore the powers that be, but the continued decentralization of decision-making through the use of technology means such services will only become more prevalent not less and the real power lays with the individual in the marketplace.
