The sharing economy: Sharing, social media and information

The sharing economy: Sharing, social media and information

Phuah Eng Chye (6 January 2018)

In earlier articles, I analysed the sharing economy from the narrow perspective of sharing platforms and the taxi industry. This has been useful for analysing how efficient use of part-time assets and labour triggers a massive shift in the patterns of participation, resource use, values, income distribution and risks and their disruptive effects on traditional organisations and processes. In the new environment, regulators are faced with the task of reorganising to cope with a changing landscape characterised by evaporating boundaries, landscape fragmentation and uncertainties, price volatility, multiple roles, many-to-many relationships, transience, mass participation and rising costs.

The full scope of the sharing economy extends well beyond the business models. In this regard, the undisputed flagbearer of the sharing economy is not the platforms but social media. As a matter of comparison, conversations and interactions were severely limited in terms of costs, space, time and number of participants prior to 1990.  Starting with the introduction of emails and followed by chatrooms, blogs, games, Napster, Youtube, Facebook, Whatsapp, Instagram and Twitter, these tools have transformed standalone communications to interactive participation in a social network.

Most critically, social media have transformed communication to a sharing activity. It is more than just a matter of semantics. Some aspects of social media activity such as the swapping of music and video files are clearly forms of sharing but in other activities, sharing may not be so distinct. But a major shift has taken place. Publication, distribution and broadcasting has been converted into the sharing[1] of news, gossip, experiences, music, photos and videos which is open to mass participation.

Tim Wu points out “that anyone could start one was not the only radical feature of a blog. The form also popularised the idea of sharing as a means of drawing attention to things. This represented a real break with the earlier ideas of attention harvesting of whose ideal of centralised authority was somewhere between the Third Reich’s enforced listening and the nationwide audiences of I Love Lucy: everybody gathering to listen to a single voice reaching the entire nation. Sharing was still primitive, amounting mostly to the trading of links, but it was already proving a powerful alternative means for information to spread, more in the manner of gossip or a conversation than a broadcast. It was another step toward what we now experience as social proliferation of information and opinion.”

Clay Shirkey explains “social tools remove older obstacles to public expression, and thus removes the bottlenecks that characterised mass media. The result is the mass amateurization of efforts previously reserved for media professionals.”[2] Thus sharing transforms communication into a participative activity where the crowd rather than a central authority (government, media company) choose what content is worthwhile discussing, how, when and where it should be discussed.

These social media trends foreshadow the emergence of an information society where the nature of information and participation differs vastly from the characteristics of information in the industrial age. Social media has changed the rules of social engagement. This is reflected by the new buzzwords such as blogging, viral, memes, hashtag, selfie, followers and likes which have meanings which either did not exist or had a different context. Changes in social behaviours ultimately affect the rules of economic engagement; and this affects the way economic activities are organised.

One such critical area is the sharing of personal information. Increasing the levels of transparency and audit trail creates new possibilities for organising activities. Stranger sharing[3] only works because there is more information (such as profiling and feedback) and the implicit assurance of accountability (electronic audit trail) which reduces the costs associated with the unknown. Stranger sharing has broader connotations. The rising public comfort with the transparency of their personal information numbs concerns on the risks of Orwellian surveillance[4]. It changes the nature of social relationships and tilts the exchange of information towards being an autonomous and transient experience.

These trends are compatible with the tendency towards modularisation in the information society. Modularisation is a significant concept in technology associated with shrinking the size of the organisational units and making them more self-contained to improve interchangeability, speed and scale. Mobile apps are a prime example of modular design.

The platforms have led the charge in demonstrating the benefits from sharing and participation. But there is a large gap between what the sharing platforms are doing relative to the ideal of a sharing economy. At the moment, information is controlled by the ridesharing platforms who are naturally reluctant to share the full information with drivers, customers or regulators. This lowers information transparency or increases information asymmetry. As a result, the outcomes are shaped by for-profit motives and pricing algorithms based on competitive strategies rather than oriented towards promoting economic efficiency.

In this context, the commercial sharing platforms are guilty of harbouring old-fashion ownership-based ambitions underneath their veneer of sharing. But they may have overlooked that the improved ability to use assets and labour diminishes the “ownership” value of assets and the “employment” value of labour relative to the “use” value. Hence, while the sharing firms appear to be targeting to expropriate the profits of traditional firms, it should not be overlooked that these profits exist primarily because of regulated scarcity. If sharing expands supply and lowers price, then there will be no profit “from traditional information inefficiencies” for the sharing platforms to capture because it would have evaporated.

I would therefore define the essence of the sharing economy as based on these principles.

  • The sharing economy combines information with participation to elevate economic efficiency to new heights and opens up new possibilities.
  • Sharing goes beyond mere intermediation. A genuine sharing economy requires the sharing of information to enable self-organisation and to bring economic coordination to new levels of precision and efficiency.

Self-organisation and efficiency is enhanced by information transparency as the quality and economic usefulness of information increases with the level of active interaction and use of data by many participants. Sharing isn’t genuine and self-organisation can’t work if all participants don’t have reasonable access to information.

Hence, we now have more information and better capabilities to solve problems and better lives. But sharing and participation works differently from ownership and transaction and this leaves us with three points to ponder on in the future. First, the ability to tap these new possibilities and opportunities is dependent on whether the new forms and ways of organising activities are allowed and supported. Second, we need to under the issues related to the ownership of information and “information assets” as opposed to the ownership of property, resources and capital. Third, we need to be careful that we are managing the information; otherwise we could end up with a situation where the information is being used to manage us.

References

Mara Hvistendahl (14 December 2017) “Inside China’s vast new experiment in social ranking”. Wired. https://www.wired.com/story/age-of-social-credit/?mbid=social_fb

Phuah Eng Chye (14 October 2017) “The sharing economy: Ridesharing business model”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/the-sharing-economy-ridesharing-business-model/

Tim Wu (2016) The attention merchants: The epic struggle to get inside our heads. Atlantic Books.

[1] Helped by the ease of copy and paste which has replaced photocopying and pirating as the bootlegging of content

[2] From his book “Here comes everybody. The power of organising without organisation.” Penguin 2008. Sourced from Tim Wu.

[3] Phuah Eng Chye “The sharing economy: Ride-sharing business model”.

[4] Mara Hvistendahl (14 December 2017) “Inside China’s vast new experiment in social ranking” provides an excellent account of the use of social media and big data for surveillance of behavior in China.

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