Access economy

The access economy is a business model where goods and services are traded on the basis of access rather than ownership: it refers to renting things temporarily rather than selling them permanently. The term arose as a correction to the term sharing economy because major players in the sharing economy, such as Airbnb, Zipcar, JustRide, Zoomcar, EliteHeads and Uber, are commercial enterprises whose businesses do not involve any sharing.^[1][2][3][4]

This model uses a technology platform, often accessed via mobile phone, to connect suppliers willing to rent assets (e.g., apartments for rent or cars for transportation services) with consumers. This may reduce the need for intermediaries (e.g., organized businesses such as taxi companies) between the supplier and consumer. Such platforms may also be used to connect employers and laborers for short-term employment opportunities, bypassing traditional employment services firms and employer-employee relationships. This is a movement said to be already be worth around $26B a year.^[5]

The number of persons involved in the access economy is not easily measured. The "access economy" or "on-demand economy" poses regulatory and political challenges, such as: defining the nature of the employment relationship; designing regulations to safeguard parties to these transactions; the loss of taxes and corporate access that results from moving away from small locally owned companies to large remote technology companies; and the bypassing of local regulations (such as the requirement for taxi drivers to provide wheelchair vans, or provide drivers 24-7).^[6]

Economic model

The companies mentioned above represent technology platforms that connect suppliers willing to rent their assets to consumers interested in temporarily using those assets. For example, owners of real estate may offer an apartment or bedroom for rent on a weekly basis, or the owner of a car may offer taxi-like services. Mobile phone applications are a typical method used to access the technology platform and connect the consumers and suppliers.

As an economic model, the access economy suggests that "access" to goods and services may become more desirable than "ownership" of them.^[7] Steve Denning notes:^[8]

The third thing that the Internet did was social. It created a generation of people who began doing something that cut to the heart of the way society has been organized for several hundred years. These people—mainly young—began preferring access to ownership. Instead of planning their lives on the premise of acquiring and owning more private property, this new generation began finding meaning and satisfaction in having access to things and interacting with other people in the process.

Business strategy

The Harvard Business Review has argued that it's important for businesses in this space to think of themselves as being in an access economy. In a 2015 article called "The Sharing Economy Isn’t About Sharing at All", authors Giana M. Eckhardt and Fleura Bardhi write,

This insight − that it is an access economy rather than a sharing economy – has important implications for how companies in this space compete. It implies that consumers are more interested in lower costs and convenience than they are in fostering social relationships with the company or other consumers.

The article goes on to argue that a major difference between Uber and its competitor Lyft is that Uber understands the difference: Uber's tagline is "Better, faster and cheaper than a taxi", while the tagline of the much-less-successful Lyft is, "We’re your friend with a car".^[4]

Alternate names and related concepts

There are many related concepts and alternate names currently being used for the access economy. They include:^[2][9][10]

• On-demand economy
• Circular economy
• Collaborative economy
• Uberisation
• Gig economy
• Peer-to-Peer (P2P) economy
• Reputation economy
• Trust economy

The validity of some of those is disputed. For example, both Uber and taxi companies provide access to cars that are not owned by the passenger; the real difference is that taxis are a mature industry that pay living wages and abide by local regulations (such as to ensure that there is always a wheelchair van available), while Uber and its ilk are a new industry that is exploiting the lack of regulations that affect it. Michael Bauwens notes that companies such as Uber aren't operating by a peer-to-peer structure, saying:^[11]

A “sharing economy,” by definition, is lateral in structure. It is a peer-to-peer economy. But Uber, as its name suggests, is hierarchical in structure. It monitors and controls its drivers, demanding that they purchase services from it while guiding their movements and determining their level of earnings. And its pricing mechanisms impose unpredictable costs on its customers, extracting greater amounts whenever the data suggests customers can be compelled to pay them.
This is a top-down economy, not a “shared” one.

Economic effects

Overview

The impacts of the access economy in terms of costs, wages and employment are not easily measured and appear to be growing.^[12] Various estimates indicate that 30-40% of the U.S. workforce is self-employed, part-time, temporary or freelancers. However, the exact percentage of those performing short-term tasks or projects found via technology platforms was not effectively measured as of 2015 by government sources.^[13] In the U.S., one private industry survey placed the number of "full-time independent workers" at 17.8 million in 2015, roughly the same as 2014. Another survey estimated the number of workers who do at least some freelance work at 53.7 million in 2015, roughly 34% of the workforce and up slightly from 2014.^[14]

Economists Lawrence F. Katz and Alan B. Krueger wrote in March 2016 that there is a trend towards more workers in alternative (part-time or contract) work arrangements rather than full-time; the percentage of workers in such arrangements rose from 10.1% in 2005 to 15.8% in late 2015.^[15] Katz and Krueger defined alternative work arrangements as "temporary help agency workers, on-call workers, contract company workers, and independent contractors or free-lancers." They also estimated that approximately 0.5% of all workers identify customers through an online intermediary; this was consistent with two others studies that estimated the amount at 0.4% and 0.6%.^[16]

At the individual transaction level, the removal of a higher overhead business intermediary (say a taxi company) with a lower cost technology platform helps reduce the cost of the transaction for the customer while also providing an opportunity for additional suppliers to compete for the business, further reducing costs.^[13] Consumers can then spend more on other goods and services, stimulating demand and production in other parts of the economy. Classical economics argues that innovation that lowers the cost of goods and services represents a net economic benefit overall. However, like many new technologies and business innovations, this trend is disruptive to existing business models and presents challenges for governments and regulators.^[17]

For example, should the companies providing the technology platform be liable for the actions of the suppliers in their network? Should persons in their network be treated as employees, receiving benefits such as healthcare and retirement plans? If consumers tend to be higher income persons while the suppliers are lower-income persons, will the lower cost of the services (and therefore lower compensation of the suppliers) worsen income inequality? These are among the many questions the on-demand economy presents.^[13][18]

Effects on particular industries

Yellow cabs in Manhattan have experienced decreased demand due to Uber

One study indicated that ride-sharing company Uber is significantly replacing taxi services in parts of New York City; comparing the April to June periods in 2014 versus 2015, Uber pickups rose by 6 million (from 2 million to 8 million), while Green cab pickups rose by 1 million and Yellow cab pickups fell by 4 million. Uber's impact was the most significant in Manhattan.^[19]

See also

• Collaborative consumption
• Sharing economy
• Uberisation

References