Sharing thoughts about the sharing economy

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These days, the sharing economy is all around us. One person might use her smartphone to get an Uber ride to a dinner arranged through Feastly. Another might hire a Taskrabbit to clean up his garden for spring and order custom pots for his flowers from a seller on Etsy. But do these new services come with risks to competition and consumers? And how should regulations governing traditional suppliers be tailored to apply to them? The FTC will take a look at some of the economic, competition, and consumer protection issues these novel platforms present when it hosts a June 9 workshop on the subject. Today, we posted a workshop agenda, revealing a terrific lineup of speakers and panelists, including economists, industry representatives and academics. We also invite members of the public to submit comments expressing their views.

Is it wrong to call it the “sharing economy”? Many think so, because transactions in this space typically involve an exchange of money for a good or service and don’t involve sharing in the way kids share toys in the sandbox. But in many sharing economy sectors, suppliers essentially share access to an asset such as spare rooms or idle automobiles, improving the utilization of the assets (for a price of course).

What’s so interesting about the sharing economy? Among other things, sharing economy platforms use technology to establish online marketplaces that allow buyers and sellers to transact with each other. In fact, while some platforms are big companies, sellers using the platform generally are small firms or individuals who otherwise might not be able to reach a large pool of potential buyers. Introducing these new sources of supply can benefit competition, but small suppliers can face challenges in meeting decades-old regulations designed for traditional suppliers. Buyers also need some assurance that they can trust the person from whom they are renting a room, with whom they are taking a ride, or whom they are asking to hang a picture in their living room.

Indeed, an important policy challenge posed by the sharing economy is how—or whether—to apply existing regulations to new suppliers. Applying decades-old regulations designed for existing suppliers may inhibit innovation and block new entrants from competing, but some regulation may be needed to protect consumers and to promote public interest goals. Traditional suppliers may also be disadvantaged if new suppliers competing with them are not required to comply with legitimate regulatory mandates. Commission staff addressed some of these issues in a prior blogpost regarding regulation of ridesharing services and in several related advocacies addressed to regulators in various jurisdictions. But tune in June 9th, when the FTC will spend the day hearing from thought leaders about some of these important issues. We are looking forward to learning more from workshop participants and from your comments.

Comments

I own a bed and breakfast in Mechanicsburg, PA. We have worked hard to establish our award-winning business and have followed all necessary regulations including paying our taxes. Airbnb places are undercutting us more and more. They can offer a spare room, a shared bathroom and kitchen. With all this sharing there is great opportunity for airbnb and/or guest to be taken advantage of. We hear of hosts and guests being burglarized and attacked. Many hosts are really not well prepared for guests either. They can, however, offer cheap accommodations, partly because they pay no taxes and do not follow other regulations. Please protect us who follow the rules.

i drive for uber and find it convenient for 1 reason. I live on social security and fine the extra income handy. it is convenient since i drive my daughter to work in her restaurant job at 4pm and pick her up when she gets off between 10 and 11pm. With uber i can sign off when i need to and go back to work when i'm done. i don't know of any other jot in which i could do this. 3235

Preserve the Middle Class!

Allow people to use their homes and cars, etc, to earn a middle class living!

Save the Middle Class

Sharing Economy is about economic freedom. It benefits the economy as well as protects the shrinking middle class.520

It would be helpful to have an appropriate label for this allegedly new way of doing business. There is nothing that is "shared" by companies like Uber, Lyft or Airbnb all of whom in fact garner profits at a level never seen by any of the players in these very traditional businesses. Ride-sharing has been around for decades on college campuses where students used to post notices asking fellow students to share the cost of gasoline for their trips home. The difference was it was not to "make" money as is the case with de-facto taxi drivers who use the internet to connect to passengers to cater expressly to the latter's need.
Home-sharing too has been around for decades except that the home-owner was always around while a "guest" roomed on holiday. The difference again was that there was no platform to make it a commercial proposition.
Both "new" industries do not pay the many regulation costs that traditional actors do. In the case of Airbnb there is no commercial real estate tax on a house, no higher rate for mortgage loans or recording taxes or cost to build based on specific building and fire codes that were designed to protect consumers. They also do not have the employee costs associated with traditional hotels. Nor do they need to worry about complying with Federal laws for disabled people. The list is virtually endless.

"Every passenger that I have carried since driving for UBER has had nothing but positive feelings and rave about the service they receive when requesting a ride. This is no exaggeration, it is fact every person spoke positively of their experience and complete faith and sense of security when requesting a ride. I believe that spoken in front of any wise business person, these persons should see UBER as a blessing not a curse, they should be scrambling to raise their level of service to the high standards UBER has set for the new born business model, instead of accepting the poor service the cab industry has provided for so long. I greatly enjoy driving for UBER and hope to do so for a long time to come. I believe also that the riding public should have their say in the matter."

Island County in Washington State levies a 2% lodging tax for all accommodations. The tax is captured by the state and then returned to the county for use in tourism marketing. AirBnB accommodations in the county do not charge this tax and therefore critical tourism marketing revenue is lost.

Enforcing a policy where each AirBnB accommodation is held accountable for paying the tax is not enforceable due to the sheer number of accommodations. Requiring AirBnB to capture the tax, or anything other taxes, as part of their transactions and then forwarding that money to the respective states is more realistic and can be automated.

The retail shoe industry has been engaged with internet competition for years. The stronger (smarter? more adaptable?) store owners are still in business, just with a lot fewer local stores as competitors. For years, I was tweaked by Amazon having the competitive advantage of not collecting sales tax as I did. But when Amazon got competition from Walmart, etc. offering online shopping options, plus faster delivery (order at local Walmart ready to be picked up), Amazon responded with more fulfillment centers around most major metropolitan markets and was forced to collect sales tax wherever it had a "business presence", i.e. fulfillment center. So Jeff B did a 180 and started supporting online collection of sales tax so Amazon would not be at a competitive disadvantage of having to collect sales tax while other online businesses with fulfillment centers did not have to meed this legal requirement. How did we outline 8 of our competitors before selling our business to a younger couple so the store could continue to service its large customer base? We found a niche and developed our store as a brand in that niche. We focused on solving foot problems with footwear and relatively inexpensive but profitable arch supports and shoe mods. Customers cannot call up Zappos and have a remote person "look at their feet" and solve their needs. We had visitors to our community come in with their relative that we had helped, helped that person who then would order long distance from us because we kept detailed records of what needed to be done to their footwear. Local customers would come back to store to get what we offered (knowledge, solutions, service) and told their friends, relatives, and coworkers about our store until the store name became a brand in our community. We drew customers from 50-100+ miles away as word of mouth spread. Were we stilled bothered when a new customer walked in and hammered us on price because they could get it cheaper online? Yes, and we explain how we could be more useful but needed to charge our prices to offer that service. Did that work 100% of the time? No, but enough that we kept explaining why we were better than online options. Until state legislation mandates collection of taxes for online competition, one has to find ways to out service, out deliver, out niche online competition. And not lose sleep worrying about that type of competition. Customers that use that type of business are not your customer anyway.

Share economy is still in its infancy, yet it already shakes the marketplace. I personally think it is impossible to effectively deal with it with the old paradigm thinking. Reductionist approach of the old paradigm where one deals with the issue unrelatedly to everything else is not working anymore. Yes, with tremendous effort it is perhaps possible to find the way, how to place the tax burden on the platform providers (airbnb’s, uber’s and such) as Island County proposes, however the market place will still be dramatically affected by it and it does not really deal with the ‘’issue’’ from other than tax perspective.

It is therefore important to view it in the context of the EMERGING PARADIGM that regardless of whether you like it or not, will have a profound effect on all the industries, the way people interact and the way the entire society operates. The conventional business model will also be thoroughly transformed by it for it will have to replace fear-based principles such as competition, individualism, protectionism and control by more love-based principles such as collaboration, authenticity, sharing and creativity. Rest assured, real solutions can only arise from the emerging paradigm perspective and those who get it first, will benefit the most.

NYCHOTPILOT has hit upon the many ways "Sharing Economy" is a misnomer designed to obfuscate what many of these new businesses really are. AirBnB launched itself as a way to home-share and has morhped into whole-house/apartment/condo rentals, now about 86% of their business. More often than these vacation rentals are operated by property management companies. Nothing sharing about this business model, they are in it for the money. In the meantime the property rights, quality of life and safety of the residents around these properties suffer in intolerable ways. Every time a housing unit is converted from monthly residency to less than 30 days, residents who work in our communities are forced from their rentals. For all these reasons cities up and down the State of California are moving to ban short-term vacation rentals in residential zones.
Neighborhoods are for Neighbors, Not Vacation Rentals.

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