How collaborative consumption is changing the economy


First aired on Spark (01/03/13)

"Collaborative consumption" is an economic model that relies on sharing, trading and bartering rather than ownership. People have shared and bartered for ages of course, but thanks to the internet we can now do this in ways on a scale that's unprecedented, whether it involves sharing living space or garden tools.

Rachel Botsman is the author of What's Mine Is Yours: The Rise of Collaborative Consumption, and she describes herself as a "champion" of the movement. She believes that in an economy built on collaboration, our reputation could be our most valuable asset -- and that kind of economy is growing. She pointed to airbnb, a site that matches people who have places to rent with those who are looking for a place to stay. "It now has 1.3 million rooms available across 193 countries," Botsman told Spark host Nora Young in a recent interview. She believes that these sharing networks are changing the way our economy works. Over the last 18 months, we've seen explosive growth across all sectors."


The growth is being driven by technology, Botsman explained, because secure peer-to-peer payment systems make it easy to transfer money, and mobile technologies allow us to access what we want when we want. "So I really say there's two ingredients, efficiency and trust -- the social glue that enables us to trade peer to peer without big institutions or companies in between."

Trust is a key element of collaborative consumption, and Botsman believes that we are moving towards a "reputation economy." Traditionally, we've relied on things like credit ratings to assess whether someone can be trusted in a commercial transaction, but these aren't that helpful in the collaborative consumption economy. "What matters more is whether you're a reliable person," she said, adding, "and that's where your reputation comes in." As an example, she points to eBay, where power sellers were able to sell more items for more money and attracted more bids than sellers who didn't have a reputation. Botsman says the same thing is happening in the collaborative consumption economy, "but it's kind of happening on steroids."

Of course, there are many facets to reliability. Someone may be trustworthy when it comes to paying a bill, but forgetful when it comes to watering your plants. So the context in which reputation is considered is an important factor.

Botsman noted that the shift to a reputation economy means that there's value in not being anonymous. "One of the big shifts that we're going to see on the internet is that, the first wave was really about, you know, the value of being anonymous," she explained. "The second wave is actually if you have a pseudonym, and you are anonymous, in many instances you're losing value. There's a tremendous value now in being transparent, in building your digital identity."

The question is, who owns the data associated with that digital identity? Botsman acknowledged that companies such as airbnb likely wouldn't be keen on its users taking their data to competing sites. "That's the one thing that scares me a bit," she said.

When asked about the impact of collaborative consumption on privacy, Botsman said that what interests her is "whether the notion of privacy is changing. The way we think about privacy today, is it becoming an outdated concept? I'm a big advocate for privacy, you should be able to keep things [private] that you don't want public. But that's very different from being not transparent, and dishonest."

People who aren't active online present a different kind of challenge for this new economic model. "How do you take their offline activities, so what they contribute to their jobs and communities their families and other areas of their lives and convert that into some kind of online currency?," Botsman said. "Because we can't marginalize people just because they choose not to lead their lives this way."

Related links: