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Challenges to an Economy Based on Sharing

3p Contributor | Thursday November 11th, 2010 | 0 Comments

by Eric Liu

Scores of new businesses are leading the way and exploring how sharing can lower our environmental impact, increase community and happiness, and yes, generate revenues.  These companies have changed how people live, from car sharing to couch surfing.   For companies both big and small entering into this space, two main challenges remain: trust and regulation.

Trust through Community

Trust needs to exist in order to allow sharing transactions to occur.  Many sharing startups begin by leveraging an existing community.  People who wouldn’t share a ride with a complete stranger would have no problem doing so with someone who went to the same school.  Once sharing is established within a specific community, it then becomes simply a matter of linking separate communities to expand that trust.

Trust through Familiarity

Another approach is through the use of extensive profiles to build trust, even when the profile information seems irrelevant (like favorite bands).  Users are much more likely to trust someone they feel that they know and act socially responsible in response.  For instance, someone staying at a Hilton might not hesitate to take home a towel.  However, that same person wouldn’t think of stealing a towel from a vacation home filled with pictures of the owner’s children and all their favorite CDs.

Trust through Reputation

A more technological solution to this problem is reputation.  eBay has used feedback scores to effectively ensure that users can buy from complete strangers based on their reputation alone.  Similar structures need to be in place for any sharing transactions to occur.

Regulation

A much less understood challenge is regulation.  How businesses that leverage sharing  are dealt with in terms of retail licensing, tax codes, and insurance will be confusing at best and debilitating at worse.  For instance, can you tax the swapping of goods?   Yet in the same way that legal issues challenged but did not stop the proliferation of the audio tape, the VHS tape, digital music, and Youtube, laws will need to be fought over and adapted to the new sharing economy.

Socially conscious startups which are eager to expand the sharing economy have many challenges ahead of them; however, many resources exist to help them navigate into the future.  With some determination and care, they will usher in a new sharing based economy where enabling the sharing of rather than the overconsumption of resources creates profit.

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Eric Liu works in research and development at Palm, Inc. and writes for Changing the World and other minor thoughts.


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