Spring 2015

Table of contents  –   Authors index

Peer-to-Peer Exchange and the Sharing Economy: Analysis, Designs, and Implications
(https://doi.org/10.55612/s-5002-024-001psi)

• Introduction

Modern day ‘peer-to-peer exchange’ refers to the direct exchange of finance, goods and services by citizens, mediated by a brokering entity that is typically embodied as an information system. It is an emerging paradigm that integrates economic and social interaction, creating a wide range of possibilities for innovation. It encompasses diverse services such as ride sharing (blablacar.com, carpooling.com, lyft.me, side.cr), performing everyday tasks (taskrabbit.com, airtasker.com), textbook exchange (chegg.com, zookal.com), accommodation sharing (couchsurfing.org, airbnb.com), car sharing (citycarshare.org, relayrides.com, getaround.com, flightcar.com), sharing parking spaces (parkatmyhouse.com, divvy.com.au), local food exchanges (farmigo.com), sharing household items (yerdle.com, openshed.com.au), home-cooking (cookening.com), sharing workspace and expertise (liquidspace.com, wework.com, desksnear.me), timebanking (hourworld.org, timebanks.org, community-exchange.org, timerepublik.com), municipal development (conyc.co) and more. Many of these entities make use of otherwise wasted resources such as parked cars, empty bedrooms, idle time and thus increase the efficiency and sustainability of economic activity. And their number, diversity and size have mushroomed in just the past couple years.
The sharing economy and peer-to-peer marketplaces were first popularized in 2010 by the book “What’s Mine is Yours” by Rachel Botsman and Roo Rogers [3] although they used yet another term ‘collaborative consumption.’ According to Google Trends, use of the term, ‘sharing economy,’ has exhibited a sharp rise online since 2013. It has been succinctly defined as “sharing the consumption of goods and services through online platforms” [8]. However, this techno-centric interpretation ignores the fact that much sharing goes on with little or no special-purpose technology involved. So, the sharing economy, at least as the expression has been used of late, does not include all of the economically impactful sharing that is going on today. And in many discussions, the terms ‘peer-to-peer exchange’ and the ‘sharing economy’ are used interchangeably.
We view peer-to-peer exchange not so much as sharing necessarily, but as consisting of person-to-person transactions that utilize skills, capacities, and resources that might otherwise go to waste or require organization through some enterprise. These transactions are typically arranged through the Internet, but are often carried out through direct and face-to-face interactions among participants. Thus, in the Uber example, the car and the driver are resources that might have been underutilized, but, through Uber, can be accessed by someone needing a ride. The driver and rider meet and interact face-to-face in the driver’s car.

• Principles of Peer-to-Peer Exchange

To clarify ongoing discourse around developments in the new peer-to-peer and sharing economy, we propose the following four principles as characteristic of many peer-to-peer exchange systems:

Atomic: in contrast to ‘peer production’ [1, 2], which is used to describe situations where volunteers work together on a large endeavor such as an open source operating system or a community garden, classic peer-to-peer systems involve atomic transactions that benefit individuals and do not require collaboration between more than two people in producing results. In such systems, individuals typically make offers and requests (for financing, services or goods) that others can discover and respond to on a one-to-one basis.

Disintermediated: Peer-to-peer exchanges are less regulated, supervised, mediated and less hierarchically organized entities than classical enterprises. There is no bureaucracy or supply chain separating producers and consumers in economic transactions. Thus, the person you deal with in arranging an Airbnb rental is typically the owner of the space you are renting, improvising a service on their own. This is very different from interacting with an employee of a hotel system or real estate agent working for and constrained by a larger enterprise and the rules and regulations it abides by. The term ‘micro-entrepreneur’ has been frequently used to describe the individuals providing the goods and services in these systems.

Technology Mediated: In many peer-to-peer systems, and certainly all the ones receiving major press attention in the so-called sharing economy boom, some of the functions of the mediating enterprise are substituted by a mediating technology platform that can connect providers to receivers with all the ease of modern-day internet search tools and social media. However, some (including some of the authors in this special issue) count communities using no technology at all as peer-to-peer exchange systems if people are providing goods or services directly to each other as in Light and Miskelly’s microlibraries in this special issue. Such systems cannot achieve the scale of the big success stories, but they do tend to foster much more of what we usually mean by the term ‘sharing.’

Level Playing Field: In peer-to-peer exchanges, providers compete on a level playing field, with no provider dominating others in terms of capacity for grabbing the attention of receivers seeking what is on offer. This is a side effect of everyone using the same platform, which is typically not biased towards one offering or another, with all providers and receivers starting on an equal footing. However, the service may use a rating system to allow receivers to distinguish the better providers from the mediocre or poor ones. And some services even kick out poorly performing providers (e.g., Uber and Lyft) or use reciprocated low-ratings by provider and receiver to prevent future ride matches being made (Lyft). It is worth noting the distinction between provider and product here. Some systems support the rating of a provider (Uber, Lyft, Taskrabbit, since the exchange is a service) while others focus on ratings of the product (Airbnb and GetMyBoat.com, since the exchange is temporary use of a possession).

• Confusion Around Terminology

A great deal of hype in the press has lauded the idea of new ventures promoting the ability of people to share much of what they currently own, from their clothes to their houses. However, not long after the explosion of popularity of this term, and despite the immense value that these new services contribute to our modern economy, observers were quick to point out that many services had little or nothing to do with the warm and fuzzy image that the term ‘sharing’ conjures up. Several even called out some of the new peer-to-peer services typically given as examples of the sharing economy for being exploitative, setting up low-paid workers in competition with each other to provide services at rock-bottom rates in inadequately regulated labor markets with no job security or benefits [4, 5, 6, 7, 9, 10, 13, 14]. Somehow the term ‘sharing economy’ became synonymous with ‘peer-to-peer’ but discrepancies between the sharing hype and the economic reality have quickly become apparent. Light and Miskelly’s paper in this special issue examines this tension in some depth and provides a comparison of various so-called sharing economy services along a number of pertinent dimensions, such as whether ownership is joint or not and whether the system is digital network dependent or not.
We, the editors of this special issue, see much of the negativity as the pangs of a significant wave of disruption that is underway and are enthusiastic about the promise of peer-to-peer services. A good deal of the criticism seems to spring from the conflation of ‘peer-to-peer exchange’ with ‘sharing.’ Although these two phenomena often intersect in the explosion of innovative new systems and services, we take ‘sharing economy systems’ to mean something other than ‘peer-to-peer exchange.’ Specifically, we argue that sharing happens when participants are, for altruistic, or idealistic reasons, sacrificing privacy, convenience, time, or profits in order to reduce consumption of limited resources and/or to increase the equity of access to such resources.
Only a subset of the services described above are truly sharing, according to our definition. For example, of the ride sharing companies, blablacar.com and carpooling.com encourage drivers to share their pre-determined rides and associated costs with others, whereas Lyft and Sidecar encourage drivers to sign up as something very like taxi cab drivers, making trips only in order to be paid by riders. Couchsurfing is about sharing one’s home with a visitor, but Airbnb is about renting a room or space to paying guests, more like a hotel. The task services, car sharing, parking place renting and home cooking services are also all innovative means for micro-entrepreneurs to earn money from, rather than share their property or labor. LiquidSpace and Desks Near Me are about giving those with spare office space the ability to rent it out – not share it. Green Spaces and WeWork are workspace cooperatives, providing office space for like-minded community-oriented businesses; this appears to be a standard business model (property rental) but with a sharing gloss.
Timebanks and other local exchange trading systems use alternative currencies and are generally centered around connecting and strengthening communities, rather than taking commissions from transactions as a means to generate revenue. In timebanks, since no one’s time is worth more than anyone else’s, it can be argued that members are sharingaccess to the resources of all the members’ time equally, rather than allowing some to earn more than others get for an equivalent amount of time.

• Principles of the Sharing Economy

To avoid the kind of confusion discussed above, we will define sharing economy systems as being characterized in most cases by the following three distinct principles, which are true of many but certainly not all peer-to-peer exchange systems:

Triple Bottom Line: Sharing economy exchanges are generally concerned with tapping into and making more efficient use of locally available resources such as consumer goods, vehicles, housing, land, expertise and labor. They are not primarily concerned with financial profit and competitiveness, but, rather than seeking to optimize on just those criteria, treat all resources as precious, including the resource of people who might otherwise be marginalized, unemployable and ‘redundant.’ Such systems therefore foster optimization from a ‘triple bottom line’ perspective, which means considering people and planet as well as profits. 

Personal Transactions: Sharing exchanges are personal, social and community-oriented relative to typical consumer interactions. Thus, a service exchange for gardeners to give and receive plant seeds and cuttings is distinct from a garden supply shop or website in that a key part of what happens and is expected in such interactions is making plant-related social connections, communicating about plants, sharing knowledge and pictures of plants, recommending each other for having certain horticultural skills and so on. These personal transactions are at the heart of the term collaborative consumption; people acting together in a concerted manner to share the consumption of resources whilst avoiding conflicts. Moser et al’s paper in this special issue drills down deeply into the ways in which a surprising number of roles may be adopted in such personal transactions that can be imbued with varying meanings, which are associated with distinct expectations and obligations.

Co-Production: In sharing economy exchanges, the recipient/customer and the provider/seller typically co-produce the service or good that is the focus of transactions.  In other words, services or resources are not merely delivered to the recipient/customer or picked up in a store, but are collaboratively negotiated and created by all participants. For example, timebanking services like visiting a person who is unable to get out and about or taking an elderly person shopping is only likely to succeed—i.e. satisfy both participants—if the service recipient contributes some effort to the service exchange, perhaps entertaining the visitor or bringing a thermos of coffee for the driver. As another example, in Couchsurfing, guests are usually expected to contribute something to the household, perhaps tidying their room and cooking a meal or two. These actions are carried out in an effort to reciprocate and shift some of the burden of the exchange from and acknowledge the altruism of the provider.
In sharing economy systems, it may be that the co-production is not strictly peer-to-peer but that several or many people are involved. This is still distinct from peer production [1, 2]—which typically connotes people working asynchronously, autonomously and often remotely and online—in that participants in co-production transactions are typically co-present and acting together on physical tasks, as in Light and Miskelly’s community garden (this issue) and Luckner et al’s community-funded co-housing project (this issue). There is also a well-established tradition of setting up intentional communities in the US and other parts of the world [11] where people work together to achieve specific shared outcomes. An example of a newer kind of sharing system is RepairCafe (repaircafe.org), a system where groups of skilled individuals agree to come together at a particular time and place to share their time and knowledge by repairing local people’s broken possessions and teaching owners how to take care of these items themselves. Yet another interesting recently established example is the Incredible Edible phenomenon, started in the bucolic village of Todmorden in the UK, in which communities grow edible food to be shared with anyone who wants it in front yards and on public property (including the front yard of the police station). Signs are posted encouraging anyone to take the food, which is often planted by people working together in groups, organized by a few community leaders.
These novel systems of sharing propagate through the distribution of information on websites about how anyone can set up their own instance of the scheme or can volunteer to join an existing instance. Such entities tend to be grassroots in their nature and they are more collaborative than classic peer-to-peer exchanges, requiring leaders that can educate the public about the new scheme, coordinate others’ activities to sustain it and organize working events that can increase awareness and participation.

• Designing for Success

A key question—also formulated in Lampinen et al’s and Luckner at al’s papers in this special issue—is: what does it take to make a sharing economy or peer-to-peer service succeed? It is clear that early-to-market peer-to-peer for-profits that extract commissions from transactions have been the most successful in terms of growth, although fierce competition has stifled competitors or, in the case of Uber and Lyft, led to accusations of astoundingly aggressive competitive tactics [14]. Meanwhile, many smaller peer-to-peer services that started out with a sharing or altruistic philosophy have floundered and shut down or changed their business model, sometimes drastically. For example, Snapgoods, a lending and borrowing service morphed into Simplist, a leads generation sales tool. Neighborrow, a similar service was simply shut down by its founders. Mealku, a home-cooked meal exchange became Made (eatmade.com), a chef-cooked meals delivery service. And Cookening, a home-cooked meal service mentioned above became part of VizEat and is growing only very slowly. Lampinen et al give us some deep insights into the story of one particular failed sharing system, whereas Luckner et al, consider several informative cases and the challenges they confronted to keep their systems going.
The truly sharing projects that have staying power are typically sustained by committed individuals, willing to make significant sacrifices. And these either do not grow or only grow slowly, compared to the great successes of Airbnb, Uber and Taskrabbit. For example, hOurworld, a community-based timebanking network and TimeRepublik, a centrally administered, but distributed timebanking system are growing, but relatively modestly.  Neither is able to earn profits from peer-to-peer transactions that they foster and must seek other forms of revenue to sustain and promote their organization. A similar service exchange, Kassi [12], took a different path and eventually transformed itself into a peer-to-peer marketplace platform provider, Sharetribe.com. This was the platform used in Lampinen et al’s case of a failed peer-to-peer exchange system. Such experiences teach us that there are many challenges to establishing and sustaining new peer-to-peer and sharing systems, particularly when they are not centered on extracting revenue from transactions.
So, in this special issue, we are interested in what we can learn from the design of and experience with services that belong to either or both of the peer-to-peer and sharing economy system categories. Such systems raise many questions for technologists, designers, policy analysts, social scientists, and citizens. What are experiences and impacts of adoption, appropriation, and repurposing of the technologies involved? How are such services organized in practice into ecosystems? How can we measure/assess the utilization and impacts of exchange? What are examples of current and future design innovation within this space? How can science and theory guide design of successful services, or provide insights into the interpretation of practices and ongoing developments? What are the broader economic and social consequences of the peer-to-peer exchange and sharing economy paradigms; what are implications for social policies?
This is a new and rapidly developing area of innovation with immense impacts. Most peer-to-peer exchange systems emerged in the past five years, although sharing systems as we have defined them have been around much longer. As is often true of interactive information technology, our understanding of human preferences, practices, and concerns is developing in concert with technology platforms and the new enterprises and business models they support. The papers in this special issue offer some enlightening perspectives on these developments and some of the implications for design of future systems. But, given the breakneck pace of this ongoing disruption, we should be cautious of concluding where technologies and institutions of peer-to-peer exchange and sharing will wind up, or what their ultimate social and economic impacts will be. The four papers included in this issue are as follows.

Airi Lampinen et al, in “Challenges to Participation in the Sharing Economy: The Case of Local Online Peer-to-Peer Exchange in a Single Parents’ Network”, describe a set of vivid episodes from organizing a peer-to-peer platform for single parents to exchange services and resources, focusing on tradeoffs between critical mass of membership and trust relationships among members.

Christiane Moser et al’s paper, “Mediating Informal Care Online: Findings from an Extensive Requirements Analysis” describes experiences of organizing a peer-to-peer platform to arrange care services for elderly people, identifying a series of candidate best practices for such peer-to-peer services.

Ann Light and Clodagh Miskelly, in “Sharing Economy vs Sharing Cultures? Designing for Social, Economic and Environmental Good,” report on a study of a local crowdfunding service that coordinated contributions from neighbors, friends and family toward the purchase of major items like bicycles and honeymoon trips. They contrast peer-to-peer enterprises in a local community context with those that address the larger scale global context.

Naemi Luckner et al.’s “Setting up and Running a Sharing Service: an Organisational Perspective” describes a study of five local community peer-to-peer exchange services in search of details in service design or implementation that made a difference with respect to the organizers’ day-to-day work.

by John M. Carroll & Victoria Bellotti

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