From cars to office space, and even livestock, the Collaborative Economy is changing more than how we use things. It’s reinventing how we value property.
By George Jahn & Roxanne Powell
On any given day Lena Kover will wake to the sounds of oldies streamed over web radio. Busying herself in the kitchen of her 17th district apartment, she makes breakfast to a curated Spotify playlist. A consultant, Kover works out of The Impact Hub, one of several co-working spaces in Vienna. She usually rides her bike there, but today it’s raining so she swipes her card and hops into a Mini provided by the car-sharer DriveNow.
Taking a break from work, she closes her shared file on Google Drive and checks out her next vacation destination. While she hasn’t yet decided on a country, she is pretty sure of one thing: She will be sleeping in a bed found through Airbnb, the accommodation sharing platform. And crashing on her couch, once the day is done, Lena opts for a relaxing movie, streamed over Netflix.
Sharing for free… or for a fee?
Call it sharing. Or renting. Or just using. Whatever Lena is doing, it’s definitely not owning. And she is not alone. “I’d say 90% of my friends are into these services,” says the lively 28-year old. “It just makes sense to use things when you need them, instead of possessing them.”
In Austria, a farmer in Elsbach, west of the capital, may have taken the concept to a new level. He rents out ducks to gardeners plagued by slugs, with each bird gulping up to 80 of the slimy creatures a day. But services saving us both time and money by allowing us to use – and pay – for them only when needed, certainly aren’t new. Just two examples: Every time you board a Vienna subway using a single ticket, you are living the philosophy. And time-shared holiday homes also have been around for decades.
Vienna’s Mitwohnzentrale has provided furnished accommodation for short-time renters. Couch surfing has been around in Vienna since 2005 and now has 57,000 members. And the good old bus, tram, or subway is enjoying a Europe-wide renaissance. In Vienna, ownership of private vehicles has dropped from 40% in 1993 to 28% today, while use of public transport has jumped from 29% to 39%.
But real expansion has come over the past decade with increased internet use, cutting-edge technologies, and changing attitudes. Baby boomers loved their cars. Ask most 20-something males nowadays what he thinks of the latest model Beamer and you’ll get an arched eyebrow and a “meh.”
While music streaming platforms, living space rentals and car shares are the best known, other services are popping up rapidly. They allow users to dine at a chef’s home: Rent a boardroom for an hour-long meeting, or take a book from a street corner case and replace it with one already read.
Austria is definitely part of the trend. Artware rents reproductions of Albertina museum artwork for companies looking for something special to hang in the boardroom. About 25,000 households are using stoves, irons and other household items leased through Mietenstattkaufen for five years under contracts that include delivery, repairs and replacement. In Vienna, the 7th district is the headquarters for Usetwice, a platform that lets people rent just about anything from other people. There’s also a private car rental platform (Carsharing24/7), a social network (Fragnebenan) grouping 10,000 Viennese neighbors to share ideas or skills, and dozens of shared urban gardens. Over 100 projects are already thriving in the Austrian capital alone, and the growth of the sharing economy shows no limits.
Some are too new to chart in terms of growth. But in Vienna, an estimated 4,000 to 5,000 people already offer short-term living space through Airbnb, and worldwide the platform brokers more rooms than Marriott International. The music streaming industry, which has been around for more than a decade, also provides a yardstick. According to Digital Music Report, the number of subscribers paying for streaming worldwide stands at an estimated 41 million, five times that of 2010.
From grassroots to global
So there is obviously more going on here than just a shift by a few millennials to a more convenient lifestyle.
Eugen Antalovsky, managing director at the Europaforum Wien think tank, sees a potential upheaval of the way we will live in the next few decades.
He notes a progression from sharing being an approach “critical of mass consumption and the growth model of the capitalistic society,” to a “business model that is becoming interesting for the consumer mainstream.”
“New technologies are creating new possibilities, to bring together jobs and those looking for jobs, businesses and customers quickly and according to their needs,” he says. “An ‘on-demand’ economy is being created that is changing company structures and careers.”
Antalovsky links the appearance of smartphones and apps to the rapid advance of on-demand services. Initially they allowed small start-ups to become “micro-entrepreneurs” through quick and unbureaucratic contacts to potential customers. A cleaner originally working in one or two households could thus expand to a much wider audience. Today, Vienna consumers have the choice of an array of cleaning services at their fingertips.
Yet the main reason for sharing or leasing, according to a recent study at Innsbruck University, is not just to save money (65%) or the environment (61%), but the ideal of sharing itself (75%). Above all, the Facebook generation is already used to a constant exchange of music, videos and ideas. The typical share-or-rent consumer is under 40, educated, postmodern and seeks a varied lifestyle.
At the same time, there are downsides. Beyond eroding traditional tax bases, the “don’t own – share/rent” philosophy leads to outsourcing. Instead of an in-house legal expert, large companies are increasingly turning to outside lawyers, and only when they need them. The same is true for IT technicians and many other fields. That may lead to benefits for highly-paid experts, looking to do less work and have more free time. For others, the system will translate into “McJobs” – hard work for low pay and meager social benefits. Antalovsky cites Uber. It is good for the consumer as a cheap alternative to a taxi, “but if you look at how little taxi drivers already earn, the life of an Uber driver can turn very precarious.”
Room shares are another example. Antalovsky sees them as possibly invigorating city neighborhoods by bringing new people to them. But not all residents may be happy with that. “Your idea of good city living may not fit with the idea of new people in the flat above you every three days, making noise and upsetting your routine,” he says.
Such concerns led to a ruling in summer 2014 by Austria’s Supreme Court stipulating that unless an apartment was registered for holiday use only, it could be rented through Airbnb and similar services only with the consent of all other apartment owners in a building. It cited the “uncontrolled presence of strangers” in its decision.
Other restrictions may be in the making. Warning that the new platforms are changing established ways of doing business, Vienna Deputy Mayor Renate Brauner says at least some of those involved are sidestepping established rules, evading responsibility or distorting competition. “They appear on the surface to be small pop-up alternatives, but are backed by powerful ventures worth billions.”
Social commentators are split on the benefits versus the negatives. Blogger Sascha Lobo is critical of what he calls “platform capitalism,” arguing that it is leading to the commercialization of everyday life. But economic and social theorist Jeremy Rifkin sees sharing platforms bypassing the capitalist market and creating horizontal value chains that will bring massive economic and social improvements.
So is the new economy of sharing good or bad? Antalovsky remains optimistic – with a caveat.
“I think overall there are benefits both to consumers and to producers, who themselves are consumers,” he says. “But there have to be clear controls.”
Predictably, Lena, the 28-year-old we met earlier, is more enthusiastic.
“It’s not any kind of philosophy, it’s just convenient,” she says of the many new services that make her life easier. “You don’t need to plan ahead or worry about parking spaces. You pay exactly for use, no more. And with Airbnb, it’s not just cost and time – it’s a better experience.”
“In a sense you get much better value. You live in someone’s flat instead of a stale hotel room. You get to meet the people whose flat you’re using. And you get their recommendations for places to go.
Her generation has quickly gotten used to these conveniences.
“It would be hard to do without them.”