Technology Creates the “Sharing Economy”
New Yorkers are no strangers to sharing – we share public transportation, park space, apartment lobbies and more. But technology has changed the way we coordinate the sharing of goods and services, creating a widespread network of peer-t0-peer business models which many are calling “the sharing economy.”
“What’s really new about it is the fact that it’s scaling beyond your immediate neighborhood,” Arun Sundararajan, Professor of Information, Operations and Management Sciences at New York University’s Stern School of Business, told Hari Sreenivasan. “And so, you know, instead of having to only share your lawnmower or your car or your vacuum cleaner with people who are close by, or people who you actually are socially connected to, you can use what people call the ‘digital trust infrastructure’ and the internet to be able to borrow and lend to people who are not within your immediate neighborhood or your immediate social circle.”
Sundararajan’s research focuses on how digital technologies transform business and society. He predicts that the sharing economy will completely alter point-to-point transportation and short-term accommodation in the city in the coming years. “We’ve seen Uber grow to thousands of cars in a couple of years,” Sundararajan said of the popular ridesharing service.
But the rapid growth of the sharing economy has also been met with resistance from existing businesses, who must comply with long-established rules and regulations.
This friction has become highly visible in New York City, where State Attorney General Eric Schneiderman has locked horns with the popular room-sharing service Airbnb. Last year, Schneiderman issued a subpoena for records from over 15,000 Airbnb hosts in an attempt to prove that many are illegally renting out spaces for less than 30 days. On May 21, the day this segment aired, Airbnb announced an agreement with the office of the Attorney General to hand over anonymized data about its New York hosts.
“[T]he trouble that the new players like Lyft or Sidecar or Airbnb are facing is that they’ve invented a new way of providing something familiar, and this new way doesn’t fit into the old regulatory boxes,” Sundararajan told Sreenivasan.
Sundararajan also claims the barriers to new companies and sharing models are greater in New York than in other cities. “The rules and regulations that govern sharing in New York are far more elaborate because it’s part of our day-to-day lives and it’s been around and it’s sort of integral to the way the city functions,” he said.
Despite the regulatory barriers, Sundararajan argues that the sharing economy is here to stay.
“What we need is sort of forward-looking city and state government that sort of sees beyond the fact that there’s misfit and…thinks more expansively and says…this is innovation, this is going to enable us to sort of make the city more efficient, this is going to enable us to sort of attract jobs and attract innovation to New York City,” Sundararajan said.