By offering more supply, user choice and a higher degree of human interconnectedness, AirBnB, Couchsurfing and other peer-to-peer sharing services are transforming the way we consume products, creating a more human business models.
When I started backpacking through Asia in 2003, I was largely reliant on travel guides like Lonely Planet to tell me where I could stay. Since I didn’t have much of a budget, I was primarily interested in cheap places to stay that were relatively clean and where I could meet interesting people. Since I could speak Chinese, I often found places tucked far off the usual tourist’s route. Now and then wanted to stay in places where I could engage in interesting conversations with fellow travelers.
This is why I started using many services like CouchSurfing, AirBnB, Hostelworld, Booking.com,
Global interconnectedness through the Internet
This growing global interconnectedness is being facilitated by a wonderful mixture of humans and technology. Instead of replacing human social interaction with little snippets of words, sites like Couchsurfing show interested humans how to engage with each other in real life. In a world where community is often devalued, they have created new communities of global citizens who are interested and able to engage with people from an incredible diversity of backgrounds.
Over time I have reflected on this extraordinary experience, which has been facilitated in large measure by the internet. While before one was limited to what was in a paper guidebook, today sites like Hostelworld allow you to see much more information provided by fellow travelers. On Couchsurfing you can find lots of information about the people you might stay with, allowing you to find the person that is just right. AirBnB has allowed for a ton of new properties to come onto the market for potential guests. Facebook allows people to easily stay in contact despite being thousands of kilometers away from each other. This massive shift is accompanied by the changing value propositions of the following types of accomodation services:
Classic institutions where you pay a set price for a single room on a nightly basis. Ranges from budget options to luxury. The presence of a large number of chains with established brands means that you almost always know what you are getting ahead of time (example: Booking Holiday Inn Express on Orbitz).
Hostels: cheap & social
Essentially a cheaper version of a hotel with the possibility that you can book a shared room with strangers. Primary reason to book a hostel is to economize on price. Potential risks are lack of security, less sleep because of noise and interruption, and potentially unsanitary shared services (i.e. dirty bathrooms). These risks are mitigated but not removed by the presence of online rating websites (Example: Booking “Marie’s’ Hostel in Paris” on Hostelworld because it has an 86% rating).
An emerging possibility thanks to the internet is finding a room or full apartment offered by the proprietor on a nightly basis. Since this type of business usually takes place on a person-to-person level, it also creates the necessity for social networks related to the sites that offer such accommodation. This also presents the additional time requirement of engaging with the people at the other side, rather than an instantaneous booking. Benefits of such arrangements are greater variety, likely more “homey” environment, potential cost-savings and other luxury options that may not be available in a hotel setting, i.e. booking a private castle (Example: Booking “Cozy Room in Mitte Berlin” because it is close to where you need to be, cheaper than a hotel and provides a kitchen).
Couches: cheaper, but depend on shared values
Essentially a free version of the above, advertised as a “couch” because of the presumed lack of frills. Here the social network is of increased importance, as we are in a near bartering system, that requires a sufficient number of people engaging as both “givers” and “takers.” This balance is maintained by social ethics, a review system and engaged users. One additional aspect that can be either a downside or upside is that one is probably expected to engage socially with the person offering the “couch.”
Emerging patterns in collaborative consumption
The most clear pattern that can be recognized when looking at these new business models is the least interesting: people want to economize. By engaging people who were previously not on the market (i.e. apartment holders with an empty room), there is increased supply, which gives people a variety of potentially more economical options.
The more interesting pattern that grows out of this is the following: markets are evolving to take into account the complexity of people’s choices. Here, the probable majority of bookers can be described by a variety of simple attributes: economical, clean, accessible. However, these factors are merely three in the myriads of things that people actually care about when they travel and, moreover, each person has a different set of factors. For instance, when I am on a short term business trip I think about the following: proximity to business location, cleanliness, speed of getting in and out. This is because I spend a minimum of time in the place of lodging. When I am in a more leisurely mode I think about: is there a comfortable place to sit and read a book, homey feeling, ability to cook for myself, proximity to nice places to take a walk. When I am visiting a new city I think of: relaxed feeling, ability to interact with knowledgable locals, proximity to tourist sites.
More preferences = a more human-friendly business
This panoply of preferences indicates that a single institution (i.e. a hotel) has no chance of catering to all of the preferences of a single person, let alone all of the diverse preferences of different people. The current explosion of small suppliers is enabling the travel industry to meet a far larger set of preferences than previously possible.
In this new environment, “Collaborative Consumption” is not simply about providing economic value (although it is), it is about providing a more human experience. This empowers users to choose on the basis of wider preferences than can be accommodated by a single venue, connecting people with like values and allowing them to create dynamic marketplaces on the basis of shared outlook and future potential. Not only is this a more human side of business, in the sense of newly catering to the diverse desires of diverse people, it creates a powerful network effect through the social networks associated with this phenomenon.
Curiously, after many modern trends in which humans are reduced to little datapoints for extraction, the collaborative consumption model is making business more personal. It becomes more about your individual wants and needs, your individual choice and less what an advertising campaign can convince you to need. This makes for a very exciting future.
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