By Dion Chang and Raleen Bagg
E – Economy
Sharing economies create active options for passive new revenue streams.
Napster, eBay and Craiglist were the pioneers of the sharing economy but companies like Uber and Airbnb have taken collaborative consumption to new heights. These innovative companies offer unique income streams to passively generate extra income. Airbnb was created by the CEO’s idea to help pay the rent while Uber enables people to turn their vehicles into sources of profit instead of financial liabilities. While Airbnb is the best-known example of this phenomenon, over the past few years at least 100 companies have sprouted up to offer owners an income stream out of dozens of types of physical assets, without needing to buy anything themselves.
The sharing economy will not impact favorably on conventional businesses. As consumers share and recycle their belongings, overall product demand could well decrease. Rather than compete with other first-time sellers, companies will compete with millions of consumers willing to rent the same product for a fraction of the cost. As a result, this will drive down prices for “owned” things, dramatically cutting into business’s margins.
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Image credit: Staffan Scherz