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Should media brands fear the sharing economy?

18 Dec 2013  |  Colin Strong 
Should media brands fear the sharing economy?

The sharing economy - that sees goods swapped or leased - is now a well-established and growing phenomenon being driven by technology - yet its consumer-to-consumer nature means businesses are being cut out of the loop. GfK's Colin Strong examines what this means for brands.

A growing number of us are starting to share goods and services rather than buy them. And it's different to the informal basis of borrowing from our friends and neighbours that we all grew up with.

Instead, sharing is becoming an organised movement that is being mediated through technology. So it's now about sharing with anyone who might have something that you need and you are willing to swap for something they may want or pay for it.

The important and somewhat worrying point for brands, is that the sharing economy is peer-to-peer, consumer-to-consumer, rather than business to consumer. So, the big question is: what is the future of the brand on the sharing economy? And in particular, what does this mean for media brands?

The context

The early examples of the sharing economy were typically about the redistribution of goods, often for free, via sites such as Freecycle and CouchSurfing. These have grown more than many predicted with, for example, Freecycle, now claiming more than 5 million members worldwide. The swapping market has become more sophisticated largely due to the ability of online sites to match the desires of more than two individuals.

Of course these 'redistribution markets' have also led to trading of second hand or handmade goods with sites such as eBay or Etsy being phenomenally successful. It's interesting that some categories are clearly more popular - particularly entertainment, such as books, films, music and video games.

Brands in these categories will clearly have felt the impact of popular redistribution platforms such as eBay for some time as it is of a magnitude that will be impacting on the bottom line. At GfK we recently estimated the value of the UK redistribution market to be worth about £9 billion per annum - a sum possibly not to be underestimated on the bottom line for any brand.

But the market is starting to change, and is doing so rapidly. The 'sharing economy' is increasingly not just about redistribution but about making money on the goods you own. This is now being accompanied by a change in consumer mindset from 'owner' to 'user'. So many individuals are starting to take the view that they don't need to buy a high cost item but they could instead lease them.

The poster child of the sharing economy is Airbnb. Started by graduates looking to make some extra cash, the founders built a website offering their spare room for short term stays. There was a conference in town and got takers - and went from there in 2007 to build a global business. Airbnb now claim to fill more room nights per annum than Hilton Hotels.

Trust is making this work

Yet again technology is disrupting business models, but instead of changing the mode of delivery from analogue to digital, it is now something more fundamental"

A lot of the discussion about the sharing economy to date has been around the way in which high value items owned by individuals can be monetised - why not earn some money from all that capital you have tied up in your spare room or your expensive car?

Pre-internet this would have been difficult. Not only because the number of potential 'sharers' would be limited to those you knew but also because there were limits to the degree to which we trust complete strangers sleeping in your spare bedroom.

The internet has changed all that with people able to do ID verification and social graph integration. But we are also seeing startups like TrustCloud providing a portable measure of trust that sharers can use across different applications.

Implications for media brands

So what does this mean for media brands, largely dealing in digital rather than physical goods and services? There are of course technical and legal constraints to redistributing digital media content so your assets cannot be leveraged in the same way as physical goods.

In fact the way in which the sharing economy manifests here is through facilitating new forms of financing and market creation. So services such as Tugg use Kickstarter style funding methods to allow like-minded audiences to crowd fund local screenings of films in cinemas with excess capacity once the required amount of money has been achieved.

StageIt offers a distribution platform for music artists to stream live performances and clips of their lives but with the difference to other forms of distribution is that the platform helps them to directly monetise their activity through virtual 'Tip jars'.

Another service is Songkick's Detour which allows a band's fanbase to pledge to buy tickets for their band to play locally which gets converted if sufficient people sign-up.

So should brands be worried about this? After all, it could be argued that the sharing economy means that established brands are now not the only means of distribution and funding for content creators. And that whilst we used to live in a world where brands were a marker of trust, technology is eroding this and allowing us to place trust in our peers.

In the physical world we are seeing big names dipping their toe in the water. So, for example, BMW is now offering subscription based car sharing and Marriott has formed a partnership with the LiquidSpace app, which allows users to instantly find meeting rooms while on the move using location data.

Yet again technology is disrupting business models, but instead of changing the mode of delivery from analogue to digital, it is now something more fundamental. Ryan Garner, an analyst at GfK, considers that "instead of selling direct to the individual, the institution is increasingly acting as an enabler between two parties wishing to trade or share their skills or belongings."

He points to chief scientist at Salesforce, JP Rangaswami, who said in his talk at Nesta's FutureFest that "the business model started shifting from the institution to the individual and the individual became the buyer and the seller [...] and an exchange type model evolved. The institution became the enabler, the platform, a place where these things could happen and get exposed in ways that make sense."

If the role of media brands is increasingly changing to help to better manage the 'flows' of information and resource then this is diametrically opposed to existing business models.

So is the sharing economy a game changer or merely over-heated rhetoric? It's hard to tell at this stage but if I were a media owner I would certainly be experimenting.

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