Sharing Economy—marketing hogwash, or new reality?
It’s no secret that marketers are eager to exaggerate. They craft stories to sell things; it’s part of the job. But the sharing economy didn’t originate as a marketing buzzword.
The term was first coined in economic theory. It was probably created by Harvard professor Lawrence Lessig in 2008, although different sources claim either different authors, or that the real origin is unknown.
You may remember 2008 as the same time when the great housing market recession was just starting to unleash its wrath on the global economy.
Economists? Boo! Marketers? Yay!
This headline is a bit facetious on purpose, so please don’t knock me for being ignorant just yet. Take a look at this Google Trends chart for the keyword “sharing economy”:
Google Trends shows us how popular a given keyword was over time. We can see that interest in the sharing economy was dwindling before the great recession of 2008—the exact same time when it was supposedly introduced for the first time.
After that, the amount of Google searches for “sharing economy” drops even more. It’s kind of funny, because you could interpret it as: whenever economists say something, people lose all interest in it.
But then, around 2013, interest started growing. That growth coincided with the increasing popularity of the term sharing economy among digital marketers. The term started appearing in blog posts, videos, press releases, and start-up pitch decks.
Its popularity topped out in 2015, and started to stabilize. Marketing hype fizzled out, but it helped to cement the term sharing economy in people’s minds.
From theory to reality in 8 years
Most of us can’t give a detailed explanation of the theory behind compound interest, even though this simple mechanism governs a big chunk of the financial world around them.
By the same token, most of us don’t care to label the economic reality we’re living in as a sharing economy. And it’s good. It simply means they have more pressing issues in their life than contemplating the nature of the world.
But it doesn’t mean that the nature of the world hasn’t changed. It has, and we are now deep in the new reality.
It was brought along not only thanks to economists and marketers who popularized the term but, more importantly, by disruptive businesses and smart policymakers.
Who started the sharing economy?
No big economic trend just ‘starts’ on its own. Both local and global factors need to contribute if people are to adopt a new way of living and working.
According to researchers, the key driver of the sharing economy was the fact that the world became enveloped in the internet. As digital networks spread everywhere, and new devices enabled everyone to tap into those networks, entrepreneurs started noticing a lot of opportunity.
For example, if you build an online platform that simply gives you a way to locate and message a driver, as well as pay him within the app, you don’t need taxi companies. And boom! Uber, along with several Uber clones, was born.
Same with renting, where disruption happened even before Uber. With an online platform that connects you with different people who have unused rooms to rent in their homes, you don’t even need to book a hotel for your trips. And that’s how AirBnB was born.
At least that’s what you read in the popular start-up success stories that many publications like to produce in bulk. These stories often omit the fact that companies like Uber and AirBnB were so ahead of their time that when they were created, lawmakers had no idea at all how to regulate them. That’s the real reason why they were disruptive; not just because they enabled you to hail a car or rent a flat from your phone.
That second part—using your phone to do stuff—was actually the least disruptive. It was merely a natural consequence of the technological progress of digital networks, computers and mobile devices.
Initial turmoil and long-term stabilization
Even if you’ve never heard the term sharing economy, you’ve definitely seen e-scooters all around your town, or memes about them on Facebook or Instagram.
It’s these seemingly little things that show us just how far into the sharing economy we actually are. It’s the fact that e-scooters, ubers, and airbnb have become the norm. So much so that most of us don’t give it a second thought, we just use it.
But as with all change, there was a lot of opposition at first. AirBnB and Uber had to face a lot of bad press, and fearmongering from companies that didn’t even expect this new competition. If you follow the news, you surely remember all of the taxi driver protests against Uber. They were happening in every single place that Uber tried to enter the market.
It was, however, already too late. People liked the idea, and wanted the service in their countries. As Uber spread across the world, taxi companies simply had to adapt to this new reality by creating their own apps and offering competitive prices.
Mature sharing economy business
And so here we are. While there are no more huge disruptors like Uber or AirBnB, now we have businesses like ideal flatmate. Mature, solid companies, built on bleeding-edge technology, and still raking in millions in funding.
Not as many millions as Uber did, but this only tells us that the sharing economy is mature and stable now. Investors know what they’re dealing with, and inject smaller sums of money into businesses with strong fundamentals.
Before AirBnB, you would never have thought to go online in order to search for a flatmate. But these days it’s nothing out of the ordinary. It’s the logical, easiest way of doing things.
So finally, regarding the question from the title of this article: is the sharing economy marketing hogwash, or is it reality? I think you already know the answer.
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