Thinking of Trying to Make Money Off Airbnb or Uber? Read This First


The so-called ‘sharing economy’ is becoming a booming industry for middlemen, but for you, it’s complicated.

Photo Credit: Shutterstock.com

Joining the sharing economy as a provider of services – accommodation, transportation or whatever else the market calls for – gives you a chance to make money while being part of a “movement”. It sounds tremendously appealing, doesn’t it?

The companies being built around this new zeitgeist have different enough business models for it to be worth discussing them as if they do, indeed, fall into a different category from more traditional bastions of capitalism. To some, the appeal is the ability to feel like part of a community by pooling their resources: helping a neighbor or network member to cut the cost of everything from a pricey textbook to a baby stroller, or a ride from San Francisco to LA and an overnight stay in someone’s spare room. It’s a far cry from shopping on Amazon, and checking for plane fares on JetBlue and shopping around for hotel bargains on Priceline – somehow morepersonal.

But make no mistake: it’s a business. And you forget that at your peril, regardless of how you’re participating in the sharing economy.

Here’s the bottom line: none of the businesses that have sprung up to serve the sharing economy are 501c3 non-profit entities. Rather, they are corporations whose goal is to make a profit out of a much less formal sharing economy that already existed. Long before Airbnb was launched in 2008, a friend of mind traveled across Europe using a couch-surfing style network called Servus. I’ve formed some lasting friendships with people with a free Airbnb-style network, Hospitality Club, that offers hosts and guests the chance to review each other, Airbnb style. Airbnb has just formalized those arrangements, while ride-sharing companies like BlaBla Car have done the same with those old-fashioned ride share boards on walls or online – and build in a profit for the middleman.

But you don’t get to become one of the most valuable venture capital-based businesses in the world, as Airbnb has done, and to be worth an estimated $10bn (more than some hotel chains) if all you are is part of a “movement”. Nope, you have to have found a way to make being the middleman pay off very handsomely indeed – and that’s capitalism 101, not a movement.

All of which means that if you’re doing business with Airbnb – or Uber, or Parking Panda, or Liquid, or any of the other sharing economy enterprises springing up – you need to think of it in those terms, too.

First of all, while you may think of this as just generating a bit of extra income on the side – a way to pay off your student loans, to make your summer vacation pay for itself, to fund your weekends out with friends or to help save up to pay for a wedding or a downpayment for your house or car – the IRS won’t see it that way.

And if you think the IRS won’t ever know, well, let me disabuse you of that right now. You’ll fill out tax forms – and come January, you’ll get a 1099 form. Depending on the figure on it, you may end up kissing your expected refund goodbye, or facing an unexpected tax liability. If that 1099 form doesn’t show up? Don’t heave a sigh of relief and fail to report that income. If you think an unexpected tax liability is bad, getting on the wrong side of the IRS is exponentially worse.

The best idea of all is to talk to your accountant and ask for their input. At what point does sharing economy income change your tax picture by putting you in a higher tax bracket? Are there any additional writeoffs you should be aware of? Sure, this might cost you an hour of her time – but it could save you a lot of money down the road. And remember, you’re thinking of this as a business – just like the Airbnbs, Ubers and others who are quite happy to scoop up a percentage of what you collect.

Before you delve into the sharing economy, consider the regulations governing the micro-business that you’re choosing to enter and how they might affect you. In New York, for instance, it’s illegal to rent out a room in your apartment unless you’re there during the guest’s stay; generally, apartment rentals of under 30 days are illegal. (Depending on who you ask, this is an attempt either to make sure housing stock remains available to people who want to live in it, or a result of fierce lobbying by the hotel industry.) That doesn’t stop people from publicly violating both the law and the terms of their own leases – but Airbnb has made it crystal clear that they are on their own when it comes to sorting out those problems. So if you’ve got a landlord – or neighbors – who you know are just itching to bid you farewell for whatever reason, handing them an ironclad reason to do so might be foolhardy.

(Meanwhile, Airbnb is confronting some of these issues itself: this past week Barcelona slapped a fine on the company for violating laws that require rooms rented to tourists be registered with government authorities.)

What does set this new breed of business apart from its peers and predecessors is the emphasis on collaboration: hence, the alternative moniker of “collaborative consumption”. That’s a reason to assume that it’s less businesslike in nature (just as the Internet startups of yore were no less focused on making millions just because their founders wore khakis instead of suits). What it means for those of us hoping to make a much smaller amount of money alongside the capitalist creators of these businesses is that marketing may matter much more than before. Expectations are pretty low for customer “service” from traditional businesses; they’re higher from your peers in the sharing economy community who will be rating things like the cleanliness of your home and the promptness with which you respond to queries.

The “sharing economy” isn’t going anywhere, and the temptation to become a micro-entrepreneur is only going to grow. But if you’re on the verge of succumbing to temptation, ask yourself whether you’re ready to view this as a business. If not, you’re probably not ready to deal with the risks you’ll be taking onboard along with the much more widely touted rewards.

http://www.alternet.org/economy/thinking-trying-make-money-airbnb-or-uber-read-first?akid=12016.265072.GVVEly&rd=1&src=newsletter1011288&t=13&paging=off&current_page=1#bookmark

Net neutrality is dying, Uber is waging a war on regulations, and Amazon grows stronger by the day

Why 2014 could be the year we lose the Internet

Why 2014 could be the year we lose the Internet
Jeff Bezos, Tim Cook (Credit: Reuters/Gus Ruelas/Robert Galbraith/Photo collage by Salon)

Halfway through 2014, and the influence of technology and Silicon Valley on culture, politics and the economy is arguably bigger than ever — and certainly more hotly debated. Here are Salon’s choices for the five biggest stories of the year.

1) Net neutrality is on the ropes.

So far, 2014 has been nothing but grim for the principle known as “net neutrality” — the idea that the suppliers of Internet bandwidth should not give preferential access (so-called fast lanes) to the providers of Internet services who are willing and able to pay for it. In January, the D.C. Court of Appeals struck down the FCC’s preliminary plan to enforce a weak form of net neutrality. Less than a month later, Comcast, the nation’s largest cable company and broadband Internet service provider, announced its plans to buy Time-Warner — and inadvertently gave us a compelling explanation for why net neutrality is so important. A single company with a dominant position in broadband will simply have too much power, something that could have enormous implications for our culture.

The situation continued to degenerate from there. Tom Wheeler, President Obama’s new pick to run the FCC, a former top cable industry lobbyist, unveiled a new plan for net neutrality that was immediately slammed as toothless. In May, ATT announced plans to merge with DirecTV. Consolidation proceeds apace, and our government appears incapable of managing the consequences.

2) Uber takes over.

After completing its most recent round of financing, Uber is now valued at $18.2 billion. Along with Airbnb, the Silicon Valley start-up has become a standard bearer for the Valley’s cherished allegiance to “disruption.” The established taxi industry is under sustained assault, but Uber has made it clear that the company’s ultimate ambitions go far beyond simply connecting people with rides. Uber has designs on becoming the premier logistics connection platform for getting anything to anyone. What Google is to search, Uber wants to be for moving objects from Point A to Point B. And Google, of course, has a significant financial stake in Uber.



Uber’s path has been bumpy. The company is fighting regulatory battles with municipalities across the world, and its own drivers are increasingly angry at fare cuts, and making sporadic attempts to organize. But the smart money sees Uber as one of the major players of the near future. The “sharing” economy is here to stay.

3) The year of the stream.

Apple bought Beats by Dre. Amazon launched its own streaming music service. Google is planning a new paid streaming offering. Spotify claimed 10 million paying customers and Pandora boasts 75 million listeners every month.

We may end up remembering 2014 as the year that streaming established itself as the dominant way people consume music. The numbers are stark. Streaming is surging, while paid downloads are in free fall.

For consumers, all-you-can-eat services like Spotify are generally marvelous. But it remains astonishing that a full 20 years after the Internet threw the music industry into turmoil, it is still completely unclear how artists and songwriters will make a decent living in an era when music is essentially free.

We also face unanswered questions about the potential implications for what kinds of music get made in an environment where every listen is tracked and every tweet or Facebook like observed. What will Big Data mean for music?

4) Amazon shows its true colors.

What a busy six months for Jeff Bezos! Amazon introduced its own set-top box for TV watching, its own smartphone for insta-shopping, anywhere, any time, and started abusing its near monopoly power to win better terms with publishing companies.

For years, consumer adoration of Amazon’s convenience and low prices fueled the company’s rise. It’s hard, at the midpoint of 2014, to avoid the conclusion that we’ve created a monster. This year, Amazon started getting sustained bad press at the very highest levels. And you know what? Jeff Bezos deserves it.

5) The tech culture wars boil over.

In the first six months of 2014, the San Francisco Bay Area witnessed emotional public hearings about Google shuttle buses, direct action by radicals against technology company executives, bar fights centering on Google Glass wearers, and a steady rise in political heat focused on tech economy-driven gentrification.

As I wrote in April

Just as the Luddites, despite their failure, spurred the creation of worker-class consciousness, the current Bay Area tech protests have had a pronounced political effect. While the tactics range from savvy, well-organized protest marches to juvenile acts of violence, the impact is clear. The attention of political leaders and the media has been engaged. Everyone is watching.

Ultimately, maybe this will be the biggest story of 2014. This year, numerous voices started challenging the transformative claims of Silicon Valley hype and began grappling with the nitty-gritty details of how all this “disruption” is changing our economy and culture. Don’t expect the second half of 2014 to be any different.

Who talks like FDR but acts like Ayn Rand? Easy: Silicon Valley’s wealthiest and most powerful people

Tech’s toxic political culture: The stealth libertarianism of Silicon Valley bigwigs

Tech's toxic political culture: The stealth libertarianism of Silicon Valley bigwigs
Ayn Rand, Marc Andreessen, Franklin D. Roosevelt (Credit: AP/Reuters/Fred Prouser/Salon)

Marc Andreessen is a major architect of our current technologically mediated reality. As the leader of the team that created the Mosaic Web browser in the early ’90s and as co-founder of Netscape, Andreessen, possibly more than any single other person, helped make the Internet accessible to the masses.

In his second act as a Silicon Valley venture capitalist, Andreessen has hardly slackened the pace. The portfolio of companies with investments from his VC firm, Andreessen Horowitz, is a roll-call for tech “disruption.” (Included on the list: Airbnb, Lyft, Box, Oculus VR, Imgur, Pinterest, RapGenius, Skype and, of course, Twitter and Facebook.) Social media, the “sharing” economy, Bitcoin — Andreessen’s dollars are fueling all of it.

So when the man tweets, people listen.

And, good grief, right now the man is tweeting. Since Jan. 1, when Andreessen decided to aggressively reengage with Twitter after staying mostly silent for years, @pmarca has been pumping out so many tweets that one wonders how he finds time to attend to his normal business.

On June 1, Andreessen took his game to a new level. In what seems to be a major bid to establish himself as Silicon Valley’s premier public intellectual, Andreessen has deployed Twitter to deliver a unified theory of tech utopia.

In seven different multi-part tweet streams, adding up to a total of almost 100 tweets, Andreessen argues that we shouldn’t bother our heads about the prospect that robots will steal all our jobs.  Technological innovation will end poverty, solve bottlenecks in education and healthcare, and usher in an era of ubiquitous affluence in which all our basic needs are taken care of. We will occupy our time engaged in the creative pursuits of our heart’s desire.



So how do we get there? Easy! All we have to do is just get out of Silicon Valley’s way. (Andreessen is never specific about exactly what he means by this, but it’s easy to guess: Don’t burden tech’s disruptive firms with the safety, health and insurance regulations that the old economy must abide by.)

Oh, and one other little thing: Make sure that we have a social welfare safety net robust enough to take care of the people who fall though the cracks (or are eaten by robots).

The full collection of tweets marks an impressive achievement — a manifesto, you might even call it, although Andreessen has been quick to distinguish his techno-capitalist-created utopia from any kind of Marxist paradise. But there’s a hole in his argument big enough to steer a $500 million round of Series A financing right through. Getting out of the way of Silicon Valley and ensuring a strong safety net add up to a political paradox. Because Silicon Valley doesn’t want to pay for the safety net.

* * *

http://www.salon.com/2014/06/06/techs_toxic_political_culture_the_stealth_libertarianism_of_silicon_valley_bigwigs/

Cut-Throat Capitalism: Welcome To the Gig Economy

Economist Gerald Friedman warns that the much-hyped gig economy is a road to ruin for workers.

Photo Credit: Shutterstock.com

The media are all abuzz with the changing nature of work. Exciting words like “creativity” and “adaptability” get thrown around, specifically in connection to the shift away from steady, full-time employment to a gig economy of freelancers and short-term contracts. Proponents of the gig economy, from the New York Times‘ Thomas Friedman to bright-eyed TED pundits, tout it as a welcome escape from the prison of the standard workweek and the strictures of corporate America. Working on a project-to-project basis will set you free, they tell us. Wired magazine has called it “the force that could save the American worker.”

But when you’re actually stuck in it, the gig economy looks quite different.

Consider the New York Freelancer’s Union: According to a report in the New York Times, 29 percent of the union’s New York City members earn less than $25,000 a year, and in 2010, 12 percent of members nationally received some type of public assistance. Turns out that life with no health benefits, vacation pay or retirement plan is not a rosy picture.

Writing for Fast Company, Sarah Kessler, who went undercover to hustle for work in the gig economy, put it this way:

“For one month, I became the ‘micro-entrepreneur’ touted by companies like TaskRabbit, Postmates, and Airbnb. Instead of the labor revolution I had been promised, all I found was hard work, low pay, and a system that puts workers at a disadvantage.”

What’s really going on is the desire of businesses to chop wages and benefit costs while also limiting their vulnerability to lawsuits, which can happen when salaried employees are mistreated. The burden of economic risk is shifted even further onto workers, who lose the security and protections of the New-Deal-era social insurance programs that were created when long-term employment was the norm.

I caught up with Gerald Friedman, who teaches economics at the University of Massachusetts at Amherst and has written about the gig economy, to find out how this trend happened and what it means to workers and our increasingly unequal society.

Lynn Parramore: How did the shift away from full-time employment to the gig economy come about? What forces drove the change?

Gerald Friedman: Growing use of contingent workers (in “gigs”) came when capitalists sought to respond to gains by labor through the early 1970s, and in response to the victories capital won in the rise of the neoliberal era. Because contingent workers were usually not covered by union contracts or other legal safeguards, employers hired them to regain leverage over workers lost when unionized workers gained protection against unjust dismissal, and courts extended these protections to non-union workers under the “implicit contract” doctrine.

Similarly, the rising cost of benefits due to rising healthcare costs and government protection of retirement benefits (under the 1974 ERISA statute) raised the cost of full-time employment; employers sought to evade these costs by hiring more contingent workers.

In the early- and mid-20th century, employers created careers and job-ladders to lock valuable workers into particular jobs. Job-lock reduced the danger that low unemployment would lead to competition for workers, wage inflation, and would undermine their control over their workers. (The other side of job-lock, as Richard Freeman among others noted, was the organization of labor unions among workers who could not “exit” from no-longer-agreeable employments, and therefore, engage in collective action to improve conditions.)  Reduced market regulation, the opening of markets to international competition, and a shift in macro-economic policy focus from full-employment to price-stability all reduced the danger that workers would quit to gain higher wages or better jobs.

Instead of using job-lock to protect themselves from labor-market competition, employers rely on repressive macroeconomic conditions, relatively high unemployment, and therefore, do not need to offer job ladders, careers, or benefits to attract and to hold workers.

LP: We hear a lot of buzz from trendwatchers on a new wave of “microentrepreneurs,” “minibusinesses,” and empowered freelancers who are changing the nature of work. Why do people find this vision so intoxicating?

GF: Talk of “microentrepreneurs” presents a favorable view of the rise of the gig economy, one consistent with liberal values of individualism and opportunity, even while ignoring the oppression and poverty-wages many find in the gig economy.

There are certainly some who enjoy the uncertainty of irregular employment. When unemployment rates fell to levels traditionally associated with full employment in the late-1990s, however, we saw how workers really feel about gig jobs: they rejected them and the contingent economy contracted.

Given a choice, workers choose careers and jobs, not freelance gigs.

LP:  The reality of the gig economy often seems to be a system that puts workers at a disadvantage. From your research, how do you see the gig economy playing out in people’s lives?

The gig economy is associated with low wages, repression, insecurity, and chronic stress and anxiety.  Freelance workers fear to complain about working conditions, fear to ask for higher pay, and fear to reject any conditions imposed by prospective employers.  By removing any social protection, the gig economy returns us to the most oppressive type of cut-throat and hierarchical capitalism, a social order where the power to hire and fire has been restored to employers, giving them once again unfettered control over the workplace.

LP: How can we create jobs that are flexible and adaptable, but also give workers some security and decent benefits?

GF: We should not romanticize the situation of organization workers on careers and with job ladders. While providing more security and protection than the gig economy, this was a type of contract established by capitalists to enhance their power over workers. Instead, we should seek to enhance worker security and independence outside of work through systems of income security (enhanced unemployment insurance and guaranteed income and universal health insurance), by establishing worker-controlled guilds to regulate access to gig work through hiring halls and hiring lists, and by extending legal protections to workers’ civil rights and health and safety while doing freelance and gig work.

LP: To what extent do you see the gig economy impacting growing economic inequality?

The gig economy has been a giant vehicle transferring income from workers to capitalists. Gig work has become a vehicle not only to drive down wages but to eliminate employment-related benefits (including health insurance as well as retirement pensions and government social security). By undermining labor unions and promoting individualist competition among workers, gig work drives down wages and reduces the possibilities for effective working-class political action.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of “Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.” She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet’s New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

http://www.alternet.org/economy/cut-throat-capitalism-welcome-gig-economy?akid=11854.265072._wVk_Z&rd=1&src=newsletter996675&t=4&paging=off&current_page=1#bookmark

“Sharing economy” shams: Deception at the core of the Internet’s hottest businesses

 

How companies like Airbnb use the language of “sharing” and “gifts” to conceal ambitions far more libertarian

 

 

(Credit: akindo via iStock)

 

“Sharing is the new buying.”

The title of technology analyst Jeremy Owyang’s survey of the sharing economy was exquisitely designed to grab attention: It was released just before the start of SXSW Interactive, the annual orgy of techie self-congratulation held every March in Austin, Texas. It boasted a clever, cognitively disjunctive twist: Sharing? Buying? Aren’t they opposites? And in an era of unlimited hype, it tabulated real data, reportedly “engaging 90,112 people in the US, Canada and the UK” to discern how and why they were embracing services like Lyft and Airbnb and Yerdle.

The study’s findings make for interesting and useful reading for anyone tracking the rise of what is called “collaborative consumption” — the proliferation of services that allow us to rent out our spare rooms and cars and junk gathering dust in the garage. But as I perused the contents, I found myself repeatedly coming back to a question I’d been obsessing over for months.

What, I wondered, would a Kwakiutl chieftain make of the sharing economy? (Bear with me for a moment.)

It is one of the delightful oddities of Internet anthropology: Dig deep enough into the early days of online communication and you are sure to stumble upon references to the practices of the Kwakiutl, indigenous inhabitants of North America who once reigned over a significant swath of what is now British Columbia. The Kwakiutl were famous for their “gift economy” rituals, festive gatherings in which gifts were exchanged to mark relative social status and create ties of reciprocity.



It was once fashionable for both libertarian programmers and left-wing social critics to characterize the early growth of the Internet as following “gift economy” practices that broke the traditional rules of market capitalism. In the Internet’s gift economy, programmers built tools and wrote code that they contributed freely to the benefit of the common good. They didn’t labor for anything as crass as money. Because they wanted to “scratch their own itch,” or aspired to higher status among their own peers, or for reasons of simple pragmatism, voluntary coordination seemed like a more effective way to solve common problems. The Internet was one giant potluck (a word derived from the Kwakitul “potlatch”) — we brought what we had to give, and got to taste everyone else’s offerings. The theorist Richard Barbrook dubbed it “cybernetic communism.”

The new sharing economy overlaps with its predecessor, the gift economy, in many obvious ways: Before the emergence of globe-spanning digital networks, it was impossible for far-flung programmers to efficiently collaborate on huge projects like the Linux operating system. The infrastructure of the Internet enabled programmers to share, copy and modify code with ease. In other words, it was suddenly much easier to give away the product of your programming labor and coordinate that labor with others. Similarly, there’s no Lyft without networks and smartphones — and no way to find out where the nearest Lyft driver is to the would-be Lyft rider. The fact that the Internet and mobile devices have enabled much more efficient resource allocation is not hype. It’s a fundamental building block of our new world.

But there’s also an overlap of rhetoric. The early advocates of the Internet gift economy saw it as a better way to be. This amazing information-sharing network, built from code that anyone could modify or copy, would benefit all of society! The sharing economy is proselytized with similar language. Sharing apps, we are told, builds trust between consumers and service providers. Sharing our stuff also conserves resources (e.g., ride sharing is good for the planet). Stare long enough at the marketing materials for Yerdle — “a marketplace where everything is free” — and “cybernetic communism” seems alive and well.

But there’s one crucial area where the linkages between the gift economy and the sharing economy break down. Reciprocity. The anthropologists who studied the Kwakiutl and other cultures with similar gift economy practices argued that the act of gift giving was meant to be reciprocated. Gift giving created obligations to respond in kind. These mutual obligations were the ties that bound society together.

The sharing economy doesn’t work quite the same way. The most high-profile sharing economy apps are designed to generate significant profits for a relatively small number of people. It is an open question whether the concentration of wealth that will result will bind our society closer together or continue to exacerbate the growing income inequality that is ripping us apart. This is the defining contradiction of the new economy: apps that enable us to pinch pennies and survive in an era of intense competition — to make do with less — will make them rich. That’s not the Internet “gift economy” as originally conceived, a utopia in which we all benefit from our voluntary contributions. It’s something quite different — the relentless co-optation of the gift economy by market capitalism. The sharing economy, as practiced by Silicon Valley, is a betrayal of the gift economy. The potlatch has been paved over, and replaced with a digital shopping mall.

*  * *

In her introduction to Marcel Mauss’ “The Gift: The Form and Reason for Exchange in Archaic Societies,” the British anthropologist Mary Douglas wrote that “a gift that does nothing to enhance solidarity is a contradiction.” Mauss himself writes that potlatch implies “a succession of rights and duties to consume and reciprocate, corresponding to rights and duties to offer and accept.” When we give each other gifts we are not being altruists; we are strengthening our mutual connections. This is how a group of individuals becomes a society.

I won’t deny that you can hear faint echoes of this sense of solidarity in the sharing economy. When I fist-bump with a Lyft driver I feel more of a sense of connection with her than I do with my typical Yellow Cab driver. If your Airbnb experience has you ending up in a spare bedroom of a house that is occupied by its owner at the same time you are there, then you may very well strike up a bond more meaningful than those that you share with the concierge at the nearest Hilton.

But I can’t shake the suspicion that this nascent, fragile solidarity is nothing more than marketing for some of the most agile capitalists on the planet. Consider Lyft. Last week, Lyft announced it was halfway through a new round of financing that aims to add another $150 million of capital on top of the $83 million the company has already raised. The new infusion will value Lyft at around $700 million. If all goes as planned, Lyft will one day enjoy a spectacular public offering or be purchased by another company for billions of dollars — and the investors will happily haul in some significant multiple of their initial payout. It will be a great day for Lyft shareholders.

But what does that mean for solidarity? What will the Lyft shareholders do with their profits? Outside of a few philanthropists, it’s not at all clear they will “give” their bounty back to the larger community or otherwise “share” it. Quite the contrary! As best we can tell, the politics of the venture capital elite boil down to fending off higher taxes, keeping labor costs low and reducing the “burden” of government regulation.

The concentration of great wealth in the hands of a small group that then employs that wealth to protect its own privileges and fortify its own status is the polar opposite of reciprocity. Growing income inequality weakens social ties. Our “sharing” is their windfall. That’s not how the gift economy is supposed to work.

Nowhere is this contradiction more self-serving than in the sharing economy’s stance on regulation. As articulated recently in “Trusting the ‘Sharing Economy’ to Regulate Itself,” a New York Times Op-Ed written by Arun Sundararajan, a business school professor at New York University, we are somehow supposed to believe that the forces of capital mobilizing behind the sharing economy are qualitatively different from any other potentially misbehaving market.

The profit-seeking interests of these private marketplaces aren’t that different from those of a textbook regulator: encouraging productive trade, keeping market participants safe and preventing “market failure.”

This is an extraordinary claim. The profit-seeking interests of private marketplaces are usually considered to be, by definition, at odds with the interests of regulators. The intersection of public safety and profit-seeking is exactly the point at which true friction enters the system. It’s exactly the point at which the general public can’t trust the private sector. It’s hard to understand why Sundrarajan thinks that sharing-economy companies are different from any other consumer-facing company. Don’t they all want to keep participants safe and prevent market failure?

In “Sharing Is the New Buying,” Jeremy Owyang declares that “brands that want to succeed in the sharing economy must tell stories around value and trust.” That strikes me as an odd formulation. Brands that want to succeed need to deliver value. And as for trust? In the earliest gift economy sense, trust was built from reciprocity and mutual obligation. Silicon Valley is going to have to work a lot harder to make that happen. It could start by putting a stop to pretending that the sharing economy is about anything other than making a killing.

 

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

http://www.salon.com/2014/03/14/sharing_economy_shams_deception_at_the_core_of_the_internets_hottest_businesses/?source=newsletter

 

Do companies like Lyft and Airbnb help democratize the economy?

 

Those cars with the pink mustaches may not be smiling for long, if regulators get their way. (via Lyft)

The ‘Sharing’ Hype

BY Rebecca Burns

Last year year marked meteoric growth in the new “sharing economy”—a catch-all term for websites and apps that let people charge others for use of resources such as cars and rooms. Ride-sharing company Lyft saw a twentyfold increase in users of its signature mustachioed cars, and room-sharing platform Airbnb gained 6 million customers.

But 2013 also exposed the iffy legalities of “sharing,” as ride-sharing services tangled with city regulators and taxi unions, and Airbnb faced off against New York State Attorney General Eric Schneiderman in what Fortune magazine called the “seminal legal dispute” for the burgeoning sharing economy. In October, Schneiderman subpoenaed Airbnb for information on its hosts, alleging that some are using the platform to operate de facto hotels. The company is fighting the order in court.

Proponents of the sharing economy bill it as a way to reduce consumption and create jobs, and say that the crackdown on Airbnb would harm New Yorkers just trying to pay their bills. But critics argue that beneath their feel-good veneer, sharing businesses are little more than a new way for corporations to circumvent regulations, rob city coffers and undercut unionized labor.

In These Times convened a discussion on the sharing conundrum with David Golumbia, assistant professor of English at Virginia Commonwealth University and author of The Cultural Logic of Computation, Neal Gorenflo, co-founder and publisher of Shareable Magazine, and the SolidarityNYC collective, which supports the growth of cooperatives in New York City.

Proponents of the sharing economy tend to portray it as benefiting ordinary people by giving them a leg up over corporate actors like hotel chains. Is this accurate?

NEAL: As the cost to create, market and sell an increasingly wide variety of products and services plummets, people have a new system to go to: the sharing economy. Much of what was only possible for large corporations just a few years ago is accessible to ordinary individuals now. There’s a possibility for a power shift in favor of ordinary people, but they must wake up and take action to secure it.

DAVID: Siding with upstart venture capital is not my idea of giving ordinary people “a leg up.” The “sharing economy” doesn’t have much to do with individuals. Instead, it represents corporate capital doing what it typically does: Monetizing parts of the social world that have previously avoided it. The difference between renting one’s apartment on Craigslist and Airbnb might seem small, but it’s huge: the role of the intermediary converts the effort from an individual one to a corporate one that is all about extracting profit from resources that are not, currently, monetized enough, in the opinion of some venture capitalists.

SOLIDARITYNYC: There’s a spectrum of sharing economy groups, from cooperatives to private companies like Airbnb. Airbnb is portrayed as helping cash-strapped individuals, which may be true in some cases. But in the long-term, it will likely exacerbate New York City’s housing crisis, by allowing landlords to charge more in rent because their tenants can turn to this secondary market to make up the difference.

DAVID: Yes, and as this proceeds, “sharing” tends to become required by market prices rather than voluntary, in a dynamic I’ve been calling “crowdforcing.”

Most of the criticism of the sharing economy so far has come from conservatives. Writer Milo Yiannopoulos has called it an “ugly throwback to the dark days of socialism.” Is the sharing economy in fact socialist, or in any way anti-capitalist?

DAVID: How can a movement that has been started by corporate and venture capital be any kind of socialism? If we reframed Airbnb as “Hilton wants access to every Manhattan resident’s apartment when he or she is out of town,” we’d see more directly what is happening.

NEAL: The best parts of the sharing economy are bottom up, self-governed phenomena. It isn’t limited to tech companies, either—think about cooperatives, as well as depositor-owned credit unions. At Shareable, we use the term “sharing economy” in the broadest sense possible, as the wholesale democratization of the economy.

But we definitely need to use resources more wisely, so startups that help us better use idle assets have tremendous value. One shared car replaces up to 13 owned cars. Nothing else but sharing has the potential to radically reduce resource use, radically increase access to resources, and act as a big, local economic stimulus package.

DAVID: “Sharing” can be seen as a form of resistance to the capitalist economy. But the “sharing economy” becomes a way of capitalizing on that resistance. This strikes me as a strong instance of cyberlibertarianism, which is the yoking of far-right ideas about “freedom” and government to an apparently apolitical digital utopianism. The political mushiness of the rhetoric surrounding such projects masks what the leaders of the projects want, which is the extraction of profit from sectors so far insulated from such monetization. The only “freedom” such efforts ultimately serve is the economic freedom of concentrated capital.

SOLIDARITYNYC: “Solidarity economy” organizers define and try to frame our work through five principles: democracy, cooperation, social justice, mutualism, and ecological sustainability. Without the explicit commitment to some or all of those values, then the sharing economy—or the social economy, the new economy, or whatever other label we use—is just a new space of capitalist exchange where it didn’t previously exist or predominate. It’s the politics of the stuff that really matters here.

How should urban policy address the legal challenges presented by “sharing” businesses like Airbnb?

NEAL: The sharing economy doesn’t hinge on one ruling, or one company: There are many practical policy directions to increase the capacity citizens to co-consume, co-produce, and create their own jobs. Shareable and the Sustainable Economies Law Center recently put out the first ever sharing economy policy primer for urban leaders. In the case of housing, policies supporting housing coops, micro-units, and mother-in-law suites can increase density, make more affordable housing available, and build social capital.

DAVID: But the NYC case is emblematic because it exposes what Airbnb is really up to: getting around taxation and regulation for profit. While there may be nothing wrong with individuals offering their apartments for short-term rental themselves, coordination of these efforts together by a central corporate entity was always about getting around laws that were put in place by the democratic process and are mostly there for the protection of the public. Airbnb, like much of the “sharing economy,” is a project designed to bypass democratic governance, which is something no progressive should favor.

SOLIDARITYNYC: Yes, and the kind of profit-making that Airbnb enables can also act as backdoor gentrification that prevents communities from having a say in whether a neighborhood is mostly long-term residents or a collection of pop-up hotels and the businesses that cater to them.

It’s also worth noting that Airbnb takes business from the hotel industry, which offers many living-wage union jobs in the private sector in New York. Those jobs are backed by a complex web of regulation, collective bargaining agreements, and cultural custom that has generated economic well-being for a largely immigrant workforce. Undermining democracy and labor isn’t sharing, in our book. Democracy and social justice will need to be included and protected within sharing economy initiatives from the start if it’s going to be more than a tool for extraction and exploitation.

How about the growing numbers of people who work in the sharing economy? The car-sharing companies Uber and Lyft have both become the subject of lawsuits from drivers who say they were ripped off. But sharing economy companies tend to argue that those providing services are users of their platforms rather than employees, potentially making labor action more difficult.

DAVID: I would suggest refraining from getting involved in large-scale venture capital-backed projects to begin with. Anyone who doesn’t is making not just themselves but their peers and relations into targets for capital, and historically capital tends to get what it wants out of such relationships.

SOLIDARITYNYC: The abuse of labor can exist in any enterprise or organization, no matter how progressive. Instead of signing up as an Uber driver, these drivers could form their own company as a taxi collective—like Union Cab in Madison Wisconsin. Another way to do this that would improve upon the labor issues and the allocation and distribution of the surplus would be a consumer cooperative in which the vehicles were actually owned and shared by people who were the consumer-owners. You could even combine the two: a consumer-cooperative that had stake in the equity and governed a worker collective, which would run the service as drivers.

NEAL: The possibility to combine community financing, a cooperative business form, and an internet-based sharing platform exists.  Why not a “Fairbnb?” The challenge, however, is that community financing and cooperative businesses take more time and money to set up.  You typically see coops execute on well-understood business models like retail, distribution, and manufacturing.  I don’t see coops tackling unusual, risky tech ideas.  I think that this can change, but it’ll take a lot of time and hard work.

Given these challenges, how should progressives approach the sharing economy at this juncture?

NEAL: Progressives need a business model.  Republicans and Democrats have corporate America; progressives have a collection of issues to appeal to people’s moral instincts. But that can only go so far when people can’t house, feed, or educate themselves.  Progressives need to get behind the people-powered economy, all those ways ordinary people co-own what they need to thrive, as their main strategy.  Until progressives play the needed role as an institution builders in the new economy, they will continue to fade in importance.

DAVID: Progressives should be very suspicious of any and all liberatory claims stemming from venture capitalists, including those being made about the potential of the “sharing economy.” The advent of cyberlibertarianism has provided capitalists with a means to attract Left activism without making clear how divergent their goals are from those of the Left. Many existing cooperative enterprises have clearly articulated their relationship to Left politics, and it is important to support them. Newer “sharing economy” initiatives should be looked at very skeptically, especially if they appear to have backing from venture capitalists, and we should think very carefully about what the ultimate picture such efforts paint appears to be. While voluntarily sharing some extra space in one’s apartment may well be appealing, the prospect of being essentially compelled to “share” one’s living space in order to afford it is much less so.

SOLIDARITYNYC: We should be organizing around economic activities that contribute to community wealth and that include all people, not just those with the ability to access capital for a start-up based on sharing technology. Progressives need to ensure that the idea of the “sharing economy” is translated into real policies for economic democracy.

Rebecca Burns, In These Times Assistant Editor, holds an M.A. from the University of Notre Dame’s Kroc Institute for International Peace Studies, where her research focused on global land and housing rights. A former editorial intern at the magazine, Burns also works as a research assistant for a project examining violence against humanitarian aid workers.

http://inthesetimes.com/article/16111/the_sharing_economy_hype/