Antenna for Social Innovation. We Share. Who Wins: unravelling the controversies of the collaborative economy.

We share.
Who wins?
MAY 2016
AUThors
Heloise Buckland
Esther Val
David Murillo
Unravelling the controversies of the collaborative economy

PART 1:
THE COLLABORATIVE ECONOMY
1.1 SETTING THE SCENE
1.2 Unravelling the controversies
1.3 Market controversies
1.4 Government controversies
1.5 Workers’ controversies
1.6 Citizens’ controversies
07
11
12
15
19
22
PART 2:
BlaBlaCar
26
PART 3: 10 examples
of social innovation from
the collaborative economy
3.1 CHEGG
3.2 ETSY
3.3 FREEGLE
3.4 KICKSTARTER
3.5 LA RUCHE QUI DIT OUI
3.6 PEERBY
3.7 REFUGEES WELCOME
3.8 SHARETRIBE
3.9 SOCIALCAR
3.10 VANDEBRON
44 PART 4:
Final reflections
66
2.1 social impact
2.2 financial sustainability
2.3 innovation type
2.4 cross-sector collaboration
2.5 scalability and replicability
references
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34
36
38
40
42
46
48
50
52
54
56
58
60
62
64
references
Annex 1:
Stakeholders interviewed
for BlaBlaCar
70
73
05

INTRODUCTION
5
In this fourth edition of the Antenna for Social Innovation, we
discuss one of the most fascinating and controversial economic
transformations: the growth of the collaborative economy. This
transformation has been accompanied by a series of events that
is destined to revolutionise our societies – namely, the expan-
sion of the Internet, as well as the rise of smartphones, social
networks, advances in artificial intelligence, and the capacity to
instantly process huge amounts of information at a tiny cost. We
talk about societies in a broad sense because the new wave of
developments in the digital economy will transform the economic
sphere of our lives – as well as the workplace, tax system, ed-
ucational models, consumption patterns, and communications.
We face profound change.
As we are talking about disruptive innovation, and a set of in-
novations with similar characteristics, we must also discuss
the less friendly side of these innovations. This is the starting
point for this Antenna and to which we dedicate considerable
space. We note that the early and worthy declarations regarding
the collaborative economy emphasised its horizontal, humanist,
democratic, and environmentally-friendly character. However, we
now see a widening gap between those initial ambitions and
subsequent developments. It must be remembered that all of
this has happened in just five or six years.
It is appropriate that a document that is both academic and
informative – such as the Antenna – participates in this discus-
sion. We approach current debates on the collaborative econo-
my without preconceived ideas or premature assumptions, and
intend to determine if the collaborative movement is an ally or
an obstacle for the aims of social innovation. We want to es-
tablish to what extent the collaborative economy can generate
innovations whose ultimate recipient is the whole of society, and
aim to convincingly explain the impact from a social perspective.
In this Antenna, we revisit this area of innovation with the five
variables we used in previous editions. This means focusing
on: social impact; economic sustainability; type of collaboration
established with other agents operating in the environment;
and the characteristics of innovation – such as scalability and
replicability. The collaborative economy shows positive results
for many of these measurements. However, there are grey ar-
eas: particularly when we look at who takes most of the profit
of ‘sharing’. The results are also less clear than expected when
we analyse the impacts on environment and labour. And when we
examine the model of governance, we find the early horizontal
and democratic promise is unfulfilled, and that reality reveals an
operating structure that is hierarchical, opaque, and seemingly
arbitrary.
Books by Morozov1
or Slee2
have recently opened our eyes. There
are plenty of socially beneficial enterprises being developed as
part of the collaborative economy, but the term has also been
misused by some; while others have parasitically exploited al-
truistic and confidence generating initiatives. The concept has
also been cited by those with a purely capitalist interest and no
inclination to promote the social good.
We start with a reading of the critical and demystifying literature
produced around the collaborative economy. We emphasise the
progress made, but also the unresolved disputes and debates
that should be studied in depth. Our case study features a Eu-
ropean company at the spearhead of the collaborative economy,
the French BlaBlaCar, a pioneer in the field of new mobility and
often mentioned in relevant discussions.
Finally, as has been customary in previous Antennas, we pres-
ent ten initiatives in the form of mini-cases (some in a nascent
state) that offer clues about how the collaborative economy
can advance in light of the five variables mentioned. The final
point is also where we began: unless the social impact of the
analysed innovations is emphasised, the collaborative economy
will become increasingly distanced from the initial liberational,
horizontal, and ecological promises. If we begin calling things by
their name, then perhaps we can still rescue for social innovation
the good name of the collaborative economy.
Sant Cugat del Vallès
May 2016
1
Morozov, E. (2013). To Save Everything, Click Here. The Folly of Technological Solutionism. PublicAffairs.
2
Slee, T. (2015). What’s Yours Is Mine: Against the Sharing Economy. OR Books. New York and London.

7
Before delving into the complexities and unravelling the contro-
versies behind the collaborative economy, we take a step back
to observe how the definitions of this emerging space have
evolved over recent years. We then present a brief history of the
collaborative economy from the birth of the term “collaborative
consumption” in the 1980s to the current regulatory wrangles
we are witnessing in 2016. As a final scene-setter we share a
couple of useful frameworks that unpack some of the techy jar-
gon that underpins the collaborative economy and help give an
overall picture of the different types of activity across sectors.
Evolving definitions
The collaborative economy is made up of a rich and diverse arena
of technologically supported systems, platforms and networks
that enable individuals to share access to assets, resources,
time and skills, and to exchange services, in ways that are
faster and cheaper than ever before, and that today are being
executed on an unprecedented scale. For the 40% of the world’s
population who have access to the Internet, the collaborative
economy represents a radically different set of options for the
way we live, work, bank and consume.
In 2015 Rachel Botsman described the collaborative economy as
“the macro paradigm shift the 21st century will become renowned
for” and PWC estimated that by 2025 the five main sectors of
the collaborative economy could generate global revenues of
$335 billion (with peer-to-peer finance and online staffing growing
quickest of all) (PWC 2015).3
In 2015 the European Commission
launched the first international consultation on the collaborative
economy,4
and in the same year the European Collaborative
Economy Forum was formed by a group of collaborative economy
companies across Europe to facilitate dialogue between policy
makers and business.5
In the US, the Federal Trade Commission
has organised workshops to discuss competition, consumer
protection and regulation issues arising in this new economic
landscape. In 2015 the UK Government set out objectives in
the national budget to facilitate a related concept, the sharing
economy, with the aim of making Britain the “best place in the
world to start, invest in, and grow a business, including through a
package of measures to help unlock the potential of the sharing
economy” (HM Treasury 2015). There is no doubt: this is big,
and actors from across civil society, business and government
are all taking part.
In the following pages we decipher some of the key evolutions
around the terminology and concepts used.
From collaborative consumption to the collaborative economy
Rachel Botsman’s highly acclaimed book What’s Mine Is Yours6
brought the concept of collaborative consumption into the spot-
light in 2010 by outlining three different economic models: 1)
redistribution markets for unwanted or underused goods, where
Ebay led the way in the 90s; 2) product to service systems
where the boom in car-sharing is one of the clearest examples;
and 3) collaborative lifestyles which include the exchange of
any non-product asset such as time, skills and finance. The
idea of idling capacity (the term used to describe the untapped
social, economic and environmental value of underused assets)
was one of the key underpinning concepts behind collaborative
consumption and this has translated into a cultural shift away
from ownership to access, particularly popular for millennials.
Since the introduction of this early definition, the convergence of in-
creased internet and smartphone access with the economic crisis
has resulted in a much broader phenomenon that extends to other
economic areas, namely production, finance and education—in
short, what is now described as the collaborative economy—where
disruption of traditional models occurs across the board.
Production models are evolving with the proliferation of open-
source platforms and collaborative maker’s spaces with 3D
printers and other technologies enabling citizens to co-design
and co-create independently from large corporations. Collabo-
rative finance follows a similar trend, where we observe a shift
of power and trust away from large traditional financial institu-
tions towards individuals and groups that come together either
through online platforms or in person. The global crowdfunding
market was estimated to have a value of $34.4 billion in 2015
(Massolution 2015) and peer-to-peer lending platforms have also
seen exponential growth in recent years. The education sector is
also witnessing major disruption as the increasing popularity of
MOOCs and peer-to-peer learning platforms is radically changing
access to education.
3
The five key growth sectors are peer-to-peer finance, online staffing, peer-to-peer accommodation, car-sharing and music and video streaming.
4
Public consultation on the regulatory environment for platforms, online intermediaries, data and cloud computing and the collaborative economy, as part of the Digital
Agenda for Europe. For more information see: https://ec.europa.eu/digital-agenda
5
For more information see: http://eucolab.delanyco.com/
6
Concept hailed by TIME Magazine as one of the “10 Ideas that Will Change the World”. Botsman’s TED talks on the topic have been viewed more than two million
times. In 2015 she designed the world’s first MBA course on the collaborative economy, which she taught at Oxford University’s Saïd School of Business.
1.1 Setting the scene

We share. Who wins? Unravelling the controversies of the collaborative economy
Advocates of the collaborative economy describe it as “systems
that unlock value from underused assets by matching ‘needs’
and ‘haves’ in ways that bypass traditional intermediaries and
distribution channels” (Botsman 2015) with idle capacity, crit-
ical mass, trust, community and the concept of disinterme-
diation identified as the key underlying principles (see Figure
1). However, the growing diversity of the sector (from the free,
no-money-exchanged systems such as couch surfing to bil-
lion-dollar enterprises like Airbnb, Uber, Lyft etc.) means that
for some the concept of the collaborative economy is beginning
to fall short as a common denominator. Spain’s CEO of Airbnb
recently stated that while the term was a good way of describ-
ing the sector, “it is now becoming outdated as within this huge
playing field there are many niches that now form their own cat-
egories. Airbnb is hugely different from Uber or BlaBlacar, both in
ways of working and in organisational models” (Serrano 2015).
Figure 1. “The complete picture”:
Categorizing the collaborative economy.
Collaborative Finance Collaborative Consumption
(Zopa, Kickstarter, Pave)
B2B B2C P2P
•Collaborative lifestyles
•Product service systems
•Redistribution markets
(Airbnb, Etsy, Lyft)
Collaborative Education Collaborative Production
(Coursera, Skillshare, Chegg) (Techshop, Fablabs, Quirky)
Source: Adapted from Botsman 2015.
The debate on sharing definitions
In parallel to the consolidation of the concept of the collaborative
economy, the idea of the sharing economy is more popular in
certain countries. This is the case for the UK, where the concept
has gained political support; “it allows people to share property,
resources, time and skills across online platforms (…) to unlock
previously unused or underused assets” (Wosskow 2014). As
noted above, the UK Government has allocated a budget to
the sharing economy with several regulatory adaptations and
initiatives already underway to facilitate these activities. These
include new rules to allow individuals to sublet rooms and allow
local governments to use sharing platforms to book transport
and accommodation, the digitalisation of criminal record checks
as well as a national platform for sharing government spaces.
In addition two pilot initiatives will be carried out in Leeds and
Manchester to facilitate sharing across transport, space, health
and social care. Sharing economy trade associations are also
starting to appear; in the UK and Spain the trade associations
use this term to encompass the emerging sector of organised
networks where participants rent, lend, trade, barter and swap
goods, services, space or money.
The concept of sharing has generated both academic interest and
criticism Hellwig (2015) has defined two types of sharing: “shar-
ing in,” the type of sharing that we do with what he describes as
the extended self, i.e. family, close friends and relations; and
“sharing out,” which we are happy to do with strangers. He con-
cludes that the personal value we assign to different assets will
affect sharing behaviour. For example, objects that tend to have
a high personal value and attachment, such as a laptop, will only
be used for sharing in, whereas a hand drill is more likely to be
put onto a sharing out type of platform. In the case of cars and
flats, those individuals who have less emotional attachments
to these resources are more likely to share them out. Critics of
the concept have questioned the use of the concept “sharing”
to describe an economic activity. After all, if you’re paying for
something, is it really sharing? And more fierce opposition has
described the sharing economy as “a triumph of public relations
artistry” (Taylor 2015).
From the access to on demand economy
One of the more pragmatic terms is the access economy, which
has been described as “people coordinating the acquisition and
distribution of a resource for a fee or other compensation” (Belk
2014). This term has received less criticism as it is void of the
ethics associated with sharing and the connotations of living
in a global connected village and sharing common resources,
which formed part of the discourse of the early advocates of
collaborative consumption. The recent disruption in the automo-
bile sector is a good example of the access economy, whereby
the motivations of established players to acquire relatively new
car-sharing services is a clear response to the economic oppor-
tunity presented by the efficiency and cost benefits of shifting
from ownership to access, “a new age where underutilized assets
become peer to peer services for hire” (Cusumano 2015).
As economic activity in this space grows, definitions are be-
coming more precise and many of the companies operating in
this space are simply described as “new software platforms that
allow service providers and consumers to interact without costly
intermediaries” (Edelman 2015). Edelman describes the key
components of these new software platforms as the provision
of information about service providers (e.g. taxi drivers) and
services offered (e.g. short term rental properties), an online
payment system, reputation mechanisms about service providers
and users, and finally, assistance with dispute resolution. Figure
2 illustrates the different layers of technology that enable the
collaborative economy to function.

9
Figure 2. Collaborative Economy Technology Stack
Shareable Resources Layer Marketplace listings, Digital signals
Device and Application Layer Apps, Smart devices, Digital payments
Developer Layer
Data formats, Software Development
Kids (SDK), Application Programming
Interface (API)
Trust Layer Reputation, Ratings, Social logins
Data Layer
Customer relationship management,
Big data analytics, Cloud computing,
Inventory management
Source: Adapted from Collaborative Economy Technology Stack Version 1.0 (Crowdcompanies)
As the software platforms providing peer-to-peer services grow
exponentially and smartphones become ever more sophisticat-
ed, we are now witnessing a very different kind of interaction
between users of the collaborative economy. A far cry from the
community sharing philosophy behind lending your neighbour a
hand drill or participating in a local time bank, the on-demand
economy which instantly matches buyers and sellers to deliv-
er goods and services immediately describes the fast, profes-
sional, app-based services to deliver holiday rentals, transport,
micro-tasks or goods. “Mobile-enabled, on-demand, customised
products and services are becoming the new normal” (Owyang
& Samuel 2015). In this context it is no longer so relevant to
have a personal connection with the person with whom you are
exchanging access to an asset, but rather how much it costs,
how convenient the delivery service is and the brand of the plat-
form. To support the on-demand economy there is a subcategory
described as the gig economy where traditional company jobs
are broken up into individual gigs where independent workers
are paid to do a specific task.
Given the fast pace of technological growth and the breadth
of activity that spans the realm of peer-to-peer services, new
software platforms, the Maker movement, crowdfunding, peer
lending and collaborative education it is unsurprising that there
is little consensus around the definitions except for widespread
agreement that they will continue to evolve. In this publication
we have chosen to use the term collaborative economy for sev-
eral reasons. Firstly, it is the most established term to date
both from advocates and critics, it does not bring up the ethical
questions the shared economy faces and it is not restricted to
one particular type of activity such as the access or on-demand
economy (which excludes some of the more community oriented,
long-term service-based platforms).
As a final scene setter, in Table 1 we illustrate the sectors
with most activity, namely transport, space and finance followed
by goods, learning, services, and logistics. Today there are 17
companies valued at a billion dollars or more operating in this
space, 8 of which are based in California and 12 in the US. To
date there are no billion-dollar companies operating in the fields
of health, food, corporate, utilities and municipal sectors which
are the remainder of the 12 categories described in the honey-
comb model, a visual interpretation of the sector categorised
into families, classes and startup organisations (Owyang 2015).
Table 1. The 10 Unicorns of the Collaborative Economy
Sector Billion dollar companies7
Transport
Lyft ($2.5B), Uber ($40B), Ola ($1B),
Kuaidi Dache ($8,8B)
Space
Airbnb ($10B), HomeAway , Wework
($5B)
Trust Layer
Transferwise ($1B), Lending Club,
Prosper ($1.7B), Funding Circle ($1B),
Data Layer Etsy, Trademe, Ebay
Learning Chegg
Services Freelancer
Logistics Instacart
Source: Adapted from Owyang 2015.
A potted history
While the past five years have witnessed the most growth of the
collaborative economy, we illustrate in Table 2 some of the key
phases between the time when the term collaborative consump-
tion was first coined in 1980 and 2015 when share economy
and ride share entered the Oxford dictionary. It is interesting
to note recent developments in two key areas of technology:
smartphones and global Internet access.
7
The 10 Unicorns of the collaborative economy are those billion dollar companies that are still private.

Table 2. A potted history of the collaborative economy and enabling technologies
Year(s) Key phases in collaborative
economy
Investment Smartphone
usage
Smartphone
technologies
Internet
traffic
Internet
access
1980 Concepts develop: Edgar Cahn
creates time banking. Arcus
Felson and Jose Speath coin the
term collaborative consumption.
15GB/mo8
(1984)
1990-2000 Redistribution markets: Ebay
and Craigslist are launched.
Napster starts “pirate” culture
in the music industry movement.
Ownership gives way to streaming
services.
50,000 units of
Simon Personal
Communicator
sold (1993)
IBM’s Simon Perso-
nal Communicator
(1992)
Nokia 9000 (1996)
Ericsson GS88
(1997)
150,500
GB/mo
(1995)
1% of world
population
have access
2000-2005 Peer-to-peer platforms: Freecycle
(2003), couchsurfing (2004) and
Zopa (2005).
Zopa raises 1$m
in venture capital
in 2005
738 million mobi-
le phone users
ITunes launched 1 billion GB/
mo (2005)
1 billion have
access
2005-2009 Cloud culture emerges: Economic
crisis sees the explosion of cloud
and pirate culture and peer-to-
peer platforms. Airbnb and Uber
launched (2008).
Airbnb secures
$600.000 invest-
ment in 2009
Only 10% of mo-
bile phones sold
are smartphones
Nokia, first colour
screen (2000),
Blackberry (2002),
First iPhone (2007),
First Android (2008).
Apple Store launched
9 billion GB/
mo (2009)
2010-2011 Growth in shared access
platforms: Rachel Botsman
advocates a new economy where
reputation, community and
shared access are key values.
Airbnb reaches 10 million stays.
Airbnb raises
$7.2m and
Uber $1.25m.
$2.700m raised
in crowdfunding
sector
9,6% of world
population with
smartphone,
50% of phones
sold are smar-
tphones
Mobile data traffic is
3 times the size of
the entire internet
(2011)
20 billion
GB/mo
(2011)
2 billion have
access
2012 Car-sharing goes global: Myteksi
launched in Malaysia, EasyTaxi
in Latin America, Olacabs in
Mumbai, Lyft in the US. 8 million
car-share users in Europe.
15,7% of world
population with
smartphone
(more than 1
billion users)
More than 100,000
apps in Windows
Phone Marketpla-
ce with 36 billion
downloaded in 2012.
iPhone 5 launched
26 billion
GB/mo
2013 Big money - big business:
Forbes estimates the sector at
$3.500m. Boat bound (Airbnb for
boats) is launched. Avis buys Lyft
for $500m.
Lyft secures
$60m, Airbnb
gets $200m
19,8% of world
population with
smartphone
33 billion
GB/mo
2014 Backlash begins: 30.000 taxi
driver strikes against Uber across
Europe, NYC state attorney
claims 72% of Airbnb stays
illegal. European Commission
states Uber should meet taxi
regulations. BlaBlacar 20m
users.
BlaBlacar
receives $100m
investment
24,5% of world
population with
smartphone
Smartphones
overtake desktop as
primary source of di-
gital communication
42 billion
GB/mo (2.7
billion times
higher than
in 1984)
3 billion with
access in
2010 (40%
of world
population)
2015 Regulation debate heats up:
Lyft loses bid for lawsuit to treat
drivers as employees, European
Commission launches public
consultation on regulatory issues
of collaborative economy. Uber
launches in its 300th city.
Uber secures
$2.8bn, in March
Lyft secures
$530m and
$150m in May
28,2% of world
population with
smartphone
(almost 2 billion
users)
Iphone 6 launched 3,25 billion
with access.
(48% Asia,
22% Ame-
ricas, 20%
Europe, 10%
Africa)
Source: Authors and various sources (Bloomberg, CISCO, Mitchell, InternetLiveS).
8
Gigabytes per month.

11
The collaborative economy has seen unprecedented and expo-
nential growth over the past five years, disrupting traditional
consumption, production, education and finance models on a
global scale. These rapid changes have caused backlashes from
traditional sectors that struggle to compete with the new players.
Governments, consumer associations and citizens alike have
also raised concerns. Should Uber operate under the same
rules as existing taxi services, should Airbnb hosts pay hotel tax,
should TaskRabbit workers receive a minimum wage? Regulatory,
fiscal and labour issues are some of the key controversies on the
table, however there is also increasing debate about the value
distribution of this new billion dollar industry, as well as issues
of liability, trust and data protection. Last but not least, and
what concerns us most, is whether the collaborative economy
is generating a positive social and environmental impact. In this
section we unravel some of the controversies that are emerging
behind the glamour of this shift from the “me” to “we” heralded
at the outset of this new economic era.
The aforementioned controversies are not just hot topics in the
press, but are also being examined by governments, consumer
associations and international institutions alike. The European
Commission is currently undertaking a public consultation on
the regulatory environment for software platforms, online in-
termediaries, data and cloud computing and the collaborative
economy to better understand the social and economic role of
these interrelated sectors, emerging market trends, dynamics
and business models and will produce a series of guidelines for
regulators in 2016. Likewise the UK government commissioned
an independent study on the share economy in 2014 and has
since proposed actions to deal with issues of trust and identity,
insurance, digital inclusion as well as industry representation,
proposing a European-wide trade association for the share econ-
omy as well as a kite mark for responsible sharing. Finally, in
PWC’s recent analysis of the economic potential of the sector
two key hurdles were identified: “first, major regulatory and fiscal
issues need to be resolved; and second, in scaling up, sharing
companies face challenges in maintaining their uniqueness and
authenticity” (PWC 2014).
The debate as to whether the collaborative economy is generating
positive social value is also ripe from the advocates of this new
space, as expressed by the founder of the Ouishare platform:
“Often the narrative behind innovation is disruption for the sake
of disruption, transformation for the sake of transformation, but
there a social vision of these changes is lacking.”
In the following pages we explore some of the controversies that
have attracted considerable debate from four different perspec-
tives. Firstly, who gets the money in this growing market? What is
the value distribution and governance of the software platforms
that generate value on the back of the social capital generated by
their users? Secondly, we open the Pandora’s box of regulatory
and fiscal issues considering the dilemmas around if, how and
when to regulate innovation. Thirdly, we look at the emerging
precarious labour market of the micro-entrepreneurs who make
the collaborative economy tick, who have been described as
“employee-serfs” forgoing security, insurance and protection
to serve a transaction based, on-demand economy. We then
consider the consumer and the implications of living in an era
of hyper-accountability and explore some recent controversies
highlighted about the motivations of taking part in the collabo-
rative economy. Finally we pose the question as to whether the
overall environmental impact is positive or not.
1.2 Unravelling
the controversies
Market
1.Who gets the money?
2. Do the users get a slice of the cake?
3.Traditional companies: share or die?
Government
4. In the new “DIY culture”:will the state retreat?
5. Is sharing “fair” for existing companies?
6.Taxation and regulation:
what should governments do?
Workers
7. Does it create more jobs?
8. Micro-entrepreneur or shared-serf?
9.Who pays the bill when something goes wrong?
Consumers & the Environment
10.A community of trust or privacy for sale?
11. Idealists or pragmatists: do sharers really care?
12. Is sharing good for the planet?

1.3 Market controversies
Estimates of the current value of the collaborative economy and
predictions for future growth are starting to emerge. While the
figures may not be unified across the board, the overall mes-
sage is clear: it has generated considerable interest from the
investment community. According to market analyst VB Profiles,
this economy today includes 17 billion-dollar companies (12 of
them based in the US) with 60,000 employees. The sector has
received $15 billion in venture capital, which amounts to more
than twice what has been invested in social networks to date,
however recent research by Crowd Companies and Vision Critical9
reveals that this has been channelled to just a few dominant
players. More than half of the activity in each sharing category
is owned by one company; Kickstarter is responsible for 57%
of crowdfunding transactions, Craigslist for 65% of professional
services, Uber for 86% of ridesharing and Etsy for 91% of the
custom products marketplace. “The one percent clearly own the
sharing start-ups, which means this is continued capitalism — not
idealistic socialism” (Owyang 2015).
The secret to the success of these “unicorns”10
is “the financial-
ization of the everyday version 3.0 (….) companies like Uber and
Airbnb are enjoying their Andy Warhol moment, their $15 billion of
fame. In the absence of any physical infrastructure of their own
they are running on your car, apartment, labour and importantly,
time” (Scholz 2015).
1 / Uber, the world’s largest taxi company, owns no cars;
2 / Airbnb, the world’s largest accommodation provider,
owns no real estate; 3 / Alibaba, the world’s most valu-
able retailer, owns no inventory; 4 / Facebook, the world’s
most popular content platform, owns no content.11
In addition to lack of equality at the macro level, inequality
of value distribution has also been observed at the individual
platform level. For example, collaborative economy critic Tom
Slee has challenged Airbnb’s claim that its users are single
individuals earning small amounts of extra money, finding that
half the revenue generated in New York City accrues to hosts
with multiple listings (Schor 2014).
At the heart of the business model of new software platforms
are the low transaction costs where companies effectively act as
middlemen between those who have the asset or service, and
those who want access to it. This matching of haves to needs is
part of the discourse of collaborative economy advocates, whereby
efficiency and trust are heralded as the key ingredients to facilitat-
ing this exchange. However, from a purely economic perspective,
the shift towards a “Zero Marginal Cost Society,”12
a term coined
by Jeremy Rifkin to describe an economy based on software and
intellectual property (rather than physical goods), may be a way
of achieving even higher returns on capital than before.
At the other end of the spectrum, grassroots organisations
within the collaborative economy sector (such as Freecycle and
Couchsurfing) are becoming more commercially oriented. The
UK-based free reuse platform Freegle is a good example of this.
It was formed by 200 volunteers who left the US-based platform
Freecycle in 2009 as they felt its ethos was being eroded; Freegle
now has 1,9 million members. As it grew in membership Freegle
went through a process of formalizing internal policies, creating
a new cooperative structure, centralizing activities and finally
establishing income streams to support its new professional-
ized structure. By 2014 Freegle had become a limited company
(Martin el al. 2015).
2. Do the users get a slice of the cake?
The great fallacy behind the software platforms business model
is that the very users who build the social capital and provide
the assets and services required for the platforms to operate
are eventually taken advantage of as external investors demand
ever higher returns. “Thanks to users unpaid labour of friending
and posting, tech companies can employ far fewer people, and
extract five to ten times more profit per employee than business-
es in other industries. Fiduciary responsibility to their investors
requires that they turn on the people who made them successful”
(Schneider 2014). Schneider goes on to explain how platforms
entice users into their online communities as an apparently free
and open commons, “only to gradually enclose it by tweaking
terms of service, diluting privacy, or charging fees for essential
features.” Other authors note similar patterns. Shor observes
that business-to-consumer software platforms are more about
maximising financial return than sharing values: “increasingly
they’re about earning money (for providers) and managing labour
9
The new rules of the collaborative economy, a report published by Crowd Companies and Vision Critical.
10
Unicorns are companies that have soared to a $1 billion valuation or higher, based on fundraising.
11
Tweet by Ted Nash @Nashy 2015.
12
This concept was coined by Jeremy Rifkin in his book of the same title published in July 2015.
1. Who gets the money?

13
and other costs cheaply (for the platforms), than the feel-good
values of sociability, carbon footprint reduction and efficiency
many platforms emphasized when they started out” (Shor 2015).
While of course the platforms do generate collaboration between
users, when it comes to value distribution, ownership and gover-
nance, the collaborative economy is built on age-old capitalism
techniques: reduce marginal costs, invest, grow fast, sell and move
on. Now that the collaborative way has been paved by the pioneers
(notably Uber and Airbnb), the sector is fertile for this kind of quick
“growth and sell” model. Take Lyft, for example, which was launched
in 2012 and within just two years was bought by Avis for $500
million (along with its competitor Zipcar for the same amount).
Advocates for a fairer distribution of the wealth generated by the
collaborative economy claim that the value should be shared
with the users who have helped create it. In this vein Gansky
argues that “collaborative economy companies should share more
with the people who generate value for them” (Gansky 2015).
Others have taken an even more critical stance, asserting that
“the sharing economy is truly neoliberalism on steroids” where
everyone is encouraged to be an entrepreneur and take part, yet
the power lies in the hands of the few companies who control
the data (Morozov 2014). The network effects of new software
platforms (where the value of their service is dependent on
the number of people using them) exacerbates this inequality.
This is because network effects reinforce market power for the
already dominant companies as more users attract still more
users, dominant networks attract developers and networks at-
tract advertisers (Data Justice 2015).
As the sector grows, so do the disparities between the different
types of approach, with an increasing gap between the not-for-profit
platforms that offer genuine sharing of assets without any money
changing hands such as Freecycle and Couchsurfing, LandShare
and Yerdle, and the commercially oriented profit-making multi-
nationals such as TaskRabbit, Airbnb, Uber and Lyft. There is a
widening gap between the gift-giving models and those founded
on market-based exchange; “some are genuinely collaborative and
communal, while others are hotly competitive and profit-driven”
(Nadeem 2015). Given the concern around this disparity, new
concepts are emerging such as that of “we washing” – disguising
purely profit-driven operations as open commons platforms.
In light of the controversy around value distribution and platform
governance there is an emerging debate from collaborative econ-
omy advocates on the potential for decentralised platforms. This
concept is built on the idea that individuals would be able to share
their assets, time, and money without going through an intermedi-
ary, externally managed software platform. Sharetribe. which has
developed an open-source software to enable independent sharing
communities to achieve this, is highlighted later in this publication.
A recent sign that the collaborative economy has disrupted busi-
ness models across the board is the adoption of collaborative
services by traditional companies. Should we therefore consider
BMW’s car-sharing service part of the collaborative economy? Is
Avis’ purchase of Lyft and Zipcar an example of “sharing”? The
collaborative space now offers a broad range of responses to
the disruption of the mobility sector from traditional automobile
manufacturers offering car-share services (e.g. BMW’s Drive
Now, Peugeot “Moi voiture” etc.), to independent car-sharing
companies (e.g. Lyft, Avancar), ridesharing systems (e.g. BlaB-
laCar) and peer-to-peer rental (e.g. Socialcar). The economic
crisis, mobility saturation in cities and young people’s interest
in access over ownership are all factors that have paved the
way for these innovations.
Traditional companies in the tourism sector are also adapting
their models to the collaborative culture. Marriot has recently
partnered with the international co-working company LiquidSpace
to offer co-working in their under-used lobbies and common spac-
es, which represents a new revenue stream and also brings po-
tentially new customers through their doors. Fang Roe, Marriott’s
chief sales and marketing officer for Asia and Pacific explains,
“It wasn’t just revenue generation, it was also about changing
consumer perceptions of our hotels and becoming more relevant
to how people live and work today” (Botsman 2014). The new
hybrid business Be(Mate) combining the facilities of a hotel with
the culture of Airbnb is another example. While the big players
have the resources to adapt to the collaborative economy, the
reality of the small hotels is very different, with many being
threatened by the competition of cheaper Airbnb rentals. Recent
research shows that in Austin and Boston, local hotel revenues
have dropped by 8-10% as a result of Airbnb (Zervas 2015).
There is extensive literature on the emerging trend of traditional
companies adapting their business models to the collaborative
culture (Martin 2015, Owyang 2015); the UK government’s re-
view of the sharing economy also points to this as a key growth
sector: “we will see more of is traditional businesses starting to
use sharing models to complement their existing services” (De-
partment for Innovation and Skills 2014). Other UK examples
include B&Q’s skill- and tool-sharing platform Streetclub and
Marks & Spencers’ secondhand clothes service. Table 3 out-
lines some of the different approaches traditional companies
are taking to adapt to the trends of the collaborative economy,
from the lowest-risk strategy of partnerships (sometimes criti-
cised as simple marketing ploys) to the integration of entirely
new business models.
3. Traditional companies: share or die?

“The continued, rapid growth of collaboration means every busi-
ness needs to think about how to combat, complement or compete
in this space” (Owyang 2015).13
“These new upstarts are changing
the rules of the game, and forcing everyone else to play along or
disappear from existence” (Owyang and Samuel 2015).
Table 3. How traditional companies adapt to the collaborative
economy
Approach Company activity Examples
Sponsorship
and partnership
Pay for co-branding or create
partnerships for an integrated
service provision
• Walgreens pharmacy, PepsiCo and GE partnerships with
TaskRabbit including TaskRabbit buttons on their apps for
deliveries
• Vodafone sponsors Bicing, Barclays sponsors “BorisBikes”
in London, Citibank sponsors bike-sharing in France
• Marriot Hotels partners with LiquidSpace to offer co-working
spaces in hotels
• Whole Foods partners with Instacart for one-hour deliveries
• Nordstorm resells maker goods from Etsy in retail stores
Investment Purchase equity in established
collaborative economy companies
• Google invests $125 in Lending Club (P2P lending)
• GE invests $30m in Quirky (crowdsourcing ideas)
• General Motors invests $3m in RelayRides
• BMW’s iVentures invests in Parkatmyhouse (driveway rental)
and Chargeatmyhouse (EV charging)
• Hyatt invests in OneFineStay (homesharing platform)
Acquisitions Buy new software platforms,
usually maintaining the original brand
• In 2013 Avis buys Lyft for $500m and Zipcar for $500m,
and maintains the two competing brands
• In 2013 SNCF (the publically run French railway) car-sharing
platform www.123voiture.com
• In 2015 Expedia bought Airbnb rival, HomeAway for $3.9
billion and Priceline has bought booking.com
New hybrid business
models
Develop new business models adpating
to collaborative trends
• DHL’s new App “Myways” to connect senders and recipients
with people willing to transport parcels
• Hotel chain Room Mate launched “Be Mate” (tourist apartment
platform)
• BMW’s “Drive Now,” Peugot’s “Mu”, Ford’s “GetAround”
carsharing services and Ford’s “GoDrive” for low emission
vehicle hire
• Decathlon’s “Trocathlon” and for selling 2nd hand products,
Wallmart’s “Trade In” to sell back phones & electronics in stores
• Insurance companies (USAA, Geico, Farmer’s Insurance) offer
special packages for ridesharing
Source: Author, Cusumano (2015) and Botsman (2014).
13
For more information see: http://www.triplepundit.com/2015/10/collaborative-economy-opportunities-companies/

15
The report “How to survive and win in the collaborative economy”
published by Crowd Companies shows that 82% of sharing trans-
actions are at least partially motivated by price. Convenience is
the second most popular reason people choose sharing services
and branding is very relevant with trust in known brands as a key
factor. The report recommends that companies focus on these
three aspects (price, convenience and brand) when driving their
consumers and traditional buyers towards sharing.
Take-aways
To round up our exploration of the market-based controversies,
we offer three take-aways. Firstly, the majority of the collaborative
economy is controlled (like so many other parts of the economy)
by just a handful of external investors and driven by tradition-
al capitalistic principles. Secondly, the value created by these
companies is based on assets they don´t actually own with the
“sharers” getting no share of this value. Thirdly, while there is
great diversity across the sector from the genuine collaborative
platforms offering shared access to common resources to the
profit-driven low-marginal-cost intermediary platforms, there is
a growing tendency for traditional companies to sponsor, invest
in and acquire new software platforms as well as adapting their
own models to compete in this new arena.
4. In the new “DIY culture”: will the state retreat?
“The proliferation of Do-It-Yourself (DIY) culture in all aspects of
citizen life (education, professional, labour, health etc.), appears
to be the perfect legitimization for the progressive dismantling
of the state” (Sunyer 2015).
That the emerging context of profitable private companies with
the help of collaborative citizens can create efficient ways of
providing “public” services, such as transport or waste man-
agement, and achieve significant environmental gains, is poten-
tially great news for governments. Many collaborative economy
platforms are achieving major efficiencies in terms of a more
intensive use of underutilised resources that has not been
possible to achieve from public initiatives alone. The massive
uptake of private car-sharing initiatives (BlaBlaCar alone has 20
million registered users) is a clear example of this and research
shows that this translates into reductions in C02
emissions
(Martin & Shaheen 2011). However, the flip side of this issue is
that the car-sharing trend could result in the state having fewer
potential passengers to provide for through public transport,
and hence legitimizing reductions in those services. This could
leave those who lack access to such software platforms with
poorer access to transport.
The global phenomenon of Open Education (OpenCourseWare,
MOOCs, TED, Wikiversity, aaaaarg, et al.) is another area of
major disruption; it is radically changing the landscape of higher
education in terms of technological-pedagogic practices, busi-
ness models, ownership and institutional structures. In this
case public education provision is being turned on its head by
private market-oriented solutions, again posing a question for
governments as to the future of public education provision.
“Many venture and multinational capital-backed Open Education
start-ups are consciously aimed at disrupting the institutional
structures of higher education in order to open up what to date
has largely been a public institution to the penetration of their
marketised solutions” (Broekman et al. 2014).
A potential outcome for the collaborative economy is that it
creates a similar situation to that of the UK’s Big Society, where
social costs are offloaded onto the realm of households and
“empowered” communities and as a result more profit making
initiatives engage with social provision resulting in more, not
less, inequality. Critics have argued that in the case of the Big
Society this created “further financialisation and a deepening of
capitalist disciplinary logics into the social fabric” (Dowling 2014).
1.4 Governmentcontroversies

Clearly a pragmatic scenario would be a combined effort be-
tween private software platforms and public institutions where-
by the platforms focus on achieving resource efficiencies and
widening access to new services while the public sector di-
verts potential financial savings to the social priorities that
the collaborative economy may not reach, such as the elderly
or other groups with limited internet access. To safeguard
public services and citizens, Morozov, author of Net Delusion:
The Dark Side of Internet Freedom, has put forward a more
radical solution. To ensure that citizens are not crushed by the
increasing power of software platforms whereby the majority of
day-to-day services end up being controlled by a small handful
of large private companies in an “emerging data-centric cap-
italism,” he advocates ensuring that the driving force of this
new capitalism (i.e. the data itself) remains within public hands
(Morozov 2013).
5. Is sharing “fair” for existing companies?
Companies operating within the collaborative economy benefit
from a variety of economic advantages (Edelman 2015). A major
advantage is bypassing the financial burden of owning stock
as the physical assets being exchanged (e.g. cars, houses and
tools) belong to platform users. There are also significant cost
reductions through decentralization, where no central physical
resources are required to operate the platforms. In turn, the
decentralization of production and distribution enables a far
more efficient matching between the haves and wants of cus-
tomers, which is described as preference-matching. The ability
to balance supply and demand more efficiently through dynamic
pricing models such as Uber’s “surge pricing” algorithm is
another advantage for companies. This model raises prices
in times of peak demand and in response users shift from
peak to lower demand periods, thus self-regulating supply and
demand. Likewise Airbnb has started to use a variable pricing
model where hosts can set a maximum and minimum and let
the algorithm calculate the best price according to demand.14
BlaBlaCar provides price recommendations through a series of
algorithms based on location, popularity and seasonal tempera-
tures to ensure hosts are accurately adjusted to the market.
Given that many new software platforms provide services that
are unregulated, an additional economic advantage is not having
to pay for a license to operate. Furthermore, in some cases li-
censes are simply not available, as in the case of taxis in Madrid
or touristic apartments in Barcelona. Finally, organisations can
operate without needing to comply with local health and safety
regulations and standards or, in some cases, to pay local taxes.
As a result of these economic advantages, it is unsurprising
that there is considerable backlash from the traditional service
providers and we are witnessing as “constant and continuing
battles occur between incumbents, lobbyist and governments”
(Allen & Berg 2014). Incumbents claim that their new soft-
ware-based counterparts enjoy unfair competition and empirical
evidence is starting to emerge that the sharing economy is
making inroads by successfully competing with, and acquiring
market share from, incumbent firms (Zervas et al. 2015). Unfair
competition is a growing concern amongst trade associations,
governments and international institutions, which take the view
that “to assure sharing will grow up, we need to avoid market
and regulatory failures that allow parts of the market to gain
unfair advantage over others” (Malhotra 2015).
In response to disgruntled lobbies from the hotel and taxi
industry, Spain’s National Commission for Markets and Compe-
tition (CNMC) has undertaken a consultation on the legalities
of the collaborative economy and whether it breaches rules
around fair competition, although it has already advanced that
no regulation may be the best kind of regulation. This approach
has gained support recently in the Spanish press: “If there
is no economic reason for the activity not to take place, why
should the individual freedom of the businessman or consum-
er be restricted? Why defend the interest of a single group?”
(Villarejo 2015). To counteract the pressure from incumbents,
some collaborative economy groups have organized their own
counter-lobbying; Airbnb funded the “Fair to Share” campaign
in San Francisco and has hired “community organisers” to
amplify the voice of home-sharing supporters in Barcelona to
allow for short-term rentals. A curious phenomenon is that
this kind of activity has been described as the “uberisation of
activism” (Boudrou 2015).
14
“Airbnb Modifies Its Pricing Model” Accessed 13 November 2015 at http://www.pymnts.com/

17
Taxation is another thorny issue and research suggests that
government tax revenue will decline as the collaborative econ-
omy grows. “Ridesharing can exploit loopholes to avoid rules
and taxes. When this occurs, the sharing economy becomes the
skimming economy” (Malhotra & Alstyne 2015). Where cloud
companies’ fiscal duty lies is unclear. As in many other sectors,
the company headquarters are often established in countries
with low corporate tax regimes; Airbnb has joined social media
giants such as Google, Facebook, LinkedIn and others in that it
pays corporate tax in Ireland. For local tax, certain city councils
and governments have taken a proactive stance to enforce
collaborative companies to make a contribution. For example,
Airbnb now facilitates local tax collection from users in 16 cities
across the world (of the 190 where it operates) (see Table 4).
Table 4. Airbnb tax collection across the world
City/Country Tax Policy
Amsterdam 5% of total
revenue to
host
Enforced by City Council,
applied to all length stays
Phoenix, Arizona
(US)
5% of total
revenue to
host
Several cities operate under
this tariff
New York City (US) 5,875% of
total revenue
to host
Equivalent to hotel room
occupancy tax
San Francisco (US) 14% of total
revenue to
host
Equivalent to hotel tax, valid
for stays of up to 29 days
District of Colombia
(US)
14,5% of
total revenue
to host
For all stays up to 90 days
India 14% of total
listing price
Includes any cleaning fee
Paris and other
French cities
0,83€ per
person / per
night
This amount includes the city-
imposed tourist tax and the
administrative district tax
It is clear that the debate on tax and the collaborative economy
will continue to evolve as governments become more engaged
in this space. In this light, the UK government is developing an
online tax calculator to help users work out how much tax they
should pay. However, this is only part of the larger debate as to
how to regulate the collaborative economy. Innovation is hard
to regulate per se and the dilemmas that arise are whether the
new software platforms should be classified as innovation and
therefore protected, or should be subject to the same rules as
existing commercial operations.
“Regulators are at crossroads: on the one hand, innovation in
sharing economy should not be stifled by excessive and outdat-
ed regulation; on the other, there is a real need to protect the
users of these services from fraud, liability and unskilled service
providers” (Ranchordás 2015).
The debate over regulation versus innovation hinges on wheth-
er experimentation with new technologies and business models
should be permitted by default or whether the precautionary prin-
ciple should be applied, or perhaps something in between. Some
authors suggest that regulation is stifling innovation and support
the concept of permissionless innovation: “Unless a compelling
case can be made that a new invention will bring serious harm to
society, innovation should be allowed to continue unabated and
problems, if they develop at all, can be addressed later” (Thierer
2015). Thierer is not alone, and others argue that the rapid growth
of the collaborative economy “alleviates the need for much of this
top-down regulation, with these recent innovations likely to do a
better job of serving consumer needs” (Koopman 2015).
US Federal Trade Commissioner Maureen Ohlhausen also ar-
gues for a similar “innovate first - fix later” policy; in 2013
she called for “a dose of regulatory humility (…) and if harms
do arise, consider whether existing laws and regulations are
sufficient to address them, before assuming that new rules are
required.”15
However, later in 2015 she made it clear that the
regulatory debate for the collaborative economy is far more
complex: “How should regulators appropriately respond to a
highly dynamic market where the business models of today may
be completely transformed tomorrow?” 16
15
Comments from her speech “Internet of Things: When Things Talk Among Themselves” from the FTC Internet of Things Workshop held on 19th November 2013.
16
Sharing Some Thoughts on the “Sharing” Economy. Prepared Remarks of Commissioner Maureen K. Ohlhausen, “Sharing” Economy Workshop June 9, 2015.
6. Taxation and regulation:
what should governments do?

Different regulators have reacted in different ways so far. Uber,
for example, has been banned in 10 countries, suspended in
6 cities and seen one of its managers in Paris face prosecu-
tion. Although Uber has received considerable bad press for
these incidents, its growth seems unaffected and it is currently
opening operations in its 300th
city. Other regulatory responses
include California’s Public Utilities Commission regulation of
car-sharing, with obligatory vehicle checks, insurance coverage
and police checks for drivers. Australia, Singapore and India
also require drivers to have professional insurance. In response
to this, Uber and Lyft have changed their policy to oblige driv-
ers to have such insurance that covers their driving at least
in “period 1” (i.e. the time they are on the way to pick up a
passenger). Other countries have taken a stricter stance, as
is the case in France, where the “Loi Thévenoud” was passed
in 2014 to protect taxi incumbents. This law states that taxi
providers cannot be geolocalised before they are hired, and
that they must return to a central base before their next call,
as well as inform of their price at the time of booking. Later
in 2015 a new “15-minute rule” was passed to prohibit taxis
picking up passengers unless 15 minutes had passed from
soliciting the ride. This regulation attempt, however, has been
unpopular from incumbents (who ask for a longer wait time)
and ignored by the ridesharing sector. Edelman observes that
policing such extra regulation (such as drug testing, vehicle
inspections, waiting times etc.) implies an additional cost for
the public sector, and in many cases there is no evidence of
the benefits of such requirements. However, in the case of the
collaborative economy the self-regulation mechanisms built
into most software platforms cost the public sector nothing
and could be more effective. For example, it is more likely that
a user will give a driver a poor rating on their phone than take
the time to go to the police station to file a complaint.
Take-aways
We conclude with three reflections on the role of governments in
the collaborative economy. Firstly, a proactive engagement from
regulators with new software platforms could help identify where
government can best contribute to ensure that citizens and the
environment are protected and social needs met. Secondly,
in terms of creating level playing fields between collaborative
companies and traditional counterparts, the jury is still out.
Regulators will as always struggle to keep up with the fast pace
of innovation. Finally, the issue of local tax seems relatively
straightforward with several cities already acting on this, how-
ever for other types of regulation it make sense for regulators
to take advantage of the self-regulation mechanisms built into
software platforms and integrate this into their policies.
The debate around regulation of the collaborative economy is
set to continue, and authors argue for an updated regulatory
framework that takes into consideration the following advantag-
es of the sector: increased efficiencies through reduced trans-
action costs, improved allocation of resources, sophisticated
reputation and accountability systems and pricing efficiencies
(Edelman 2015).

19
The economic crisis coupled with the phenomenon of the Zero
Marginal Cost Society, where the internet has facilitated a shift
from markets to collaborative commons with transactions costs
close to zero, has had profound implications on labour markets
across the world.
“Nowhere is the zero marginal cost phenomenon having more
impact than the labour market, where workerless factories and
offices, virtual retailing and automated logistics and transport
networks are becoming more prevalent. Not surprisingly, the new
employment opportunities lie in the collaborative commons in
fields that tend to be non-profit and strengthen social infrastruc-
ture” (Rifkin 2014).
One of the results of this disruption of entire sectors of the
global economy is a shift away from contract employment with
traditional companies to more short-term, freelance work. For
a sector which has received $15 billion in investment, the
fact that only 60,000 jobs have been created is evidence of
this shift. The Freelancers Union currently estimates that one
third of the US workforce is freelance,17
and the EU Affairs
Freelancers Association18
claims one quarter in Europe. The
Bureau of Labour Statistics19
estimates are that by 2020 50%
of workers in the US will be freelance.
There are several ways of looking at this changing global em-
ployment landscape. On the one hand, the flexible forms of
employment that the collaborative economy provides are a
great opportunity in times of economic crisis. “These plat-
forms are expanding people’s options with an increasing array
of work migrating to on-demand arrangements fuelled by ever
more sophisticated algorithms that match available and quali-
fied workers with the work that suits them, when they want it”
(Boudrou 2015). In the UK the government claims the route to
self-employment has never been easier and the UK government
celebrates the fact that individuals are “empowered to make
money from assets and skills they already own” (Wosskow 2014).
In the context of the Zero Marginal Cost Society, Rifkin foresees
a positive future for workers, where many needs are satisfied
through a highly efficient and highly automated collaborative
commons: “our grandchildren are likely to look back at the
era of mass employment in the market with the same sense of
utter disbelief as we look upon slavery and serfdom in former
times. The very idea that a human being’s worth was measured
almost exclusively by his or her productive output of goods and
services and material wealth will seem primitive, even barbaric”
(Rifkin 2015).
The flip side, however, is that the rights, benefits and fair pay
of the emerging sector of freelancers is under threat. Uber
drivers can be held liable for accidents on the job, TaskRabbit
workers don´t receive a pension and workers looking for health
insurance or job stability are unlikely to find it in the collabora-
tive economy. Micro-task sites have been accused of stripping
opportunities from the bottom of the pyramid as jobs move
from traditional manufacturing to services and micro-services
with software platforms facing fierce competition. Ideological
opponents have used terms such as “shared serfdom,” and
“employee-serfs” to describe collaborative economy workers,
observing that “collaborative companies can shed overhead but
mortgage the future by covering only marginal costs and leaving
nothing for new skills, health care or retirement” (Malhotra 2015).
8. Micro-entrepreneur or shared-serf?
“As start-ups and their wealthy investors increase their valuation
into the millions and billions, sharing companies create a new
kind of digital economy feudalism” (Owyang and Samuel 2015).
In 2015 a comprehensive study of freelancers in the US work-
ing in the collaborative space (ridesharers, micro-taskers etc.)
was carried out and results published in the 1099 Economy
Workforce Report.20
The report provides a fairly bleak picture
for the micro-entrepreneur. “It’s dominated by the Ubers and
Homejoys of the world, companies that use low-cost contract
workers to serve customers at high volume and take a cut. This
is also known as the 1099 economy, since contract workers fill
out 1099 tax forms used to report income other than regular
wages and salary” (Benner, 2015).
The report shows that workers do not rely on this kind of work
as a primary source of income. Around 60% of workers claim
to use the collaborative economy for less than 50% of their
household income and one third said that they can´t see them-
selves as an independent contractor for the rest of their life and
would like to leave after a maximum of three years. Insufficient
1.5 Workers’controversies
7. Does it create more jobs?
17
For more information see: http://www.freelancersunion.org.
18
For more information see: http://www.euro-freelancers.eu/eu-affairs-freelancers-association.
19
For more information see: http://www.bls.gov
20
The RFS 1099 Economy Workforce Report published by Requests for Startups.

pay was identified as the main reason for leaving this type of
work (43%) and not finding enough work was the main cause of
dissatisfaction (49%) with understanding tax and legal issues
as a close second (36%). According to SherpaShare21
Uber and
Lyft drivers earn between $10 and $15 per trip across the US
(with the exception of New York, where they earn double but are
highly regulated). The costs incurred by drivers, such as fuel,
insurance, upkeep are not yet measured across the board so
drivers’ net income is difficult to estimate.
In some cases the precariousness of collaborative economy
jobs has been the source of lawsuits, with contract workers
suing Uber, Lyft, Postmates and Instacart with demands to be
recognized as employees (Benner 2015). Dissatisfaction has
also been expressed by employees of traditional companies,
who value security over flexibility and feel threatened by the new
wave of on-demand micro-task platforms such as TaskRabbit
and Amazon’s Mechanical Turk (Buttonwood 2015). Airbnb fig-
ures, however, tell a different story, with the claim that “more
than 50% of Airbnb hosts depend on it to pay their rent or mort-
gage today” (Friedman 2013). There is still a major information
gap around the economic reality of the new micro-entrepreneur
given the complexities of measuring employment status, labour
force participation and wages earned; in addition, of course,
much of the collaborative economy is not accounted for by
traditional GDP metrics.
Economist Guy Standing named a new type of freelance worker
in 2011 as “the precariat (...) characterised by chronic uncer-
tainty and insecurity.” These workers move in and out of jobs
with no secure role in the market, no occupational identity and
little future perspective. Although this emerging class fuels the
collaborative economy, Standing is now considering the phe-
nomenon as a potential source of social change, advocating
that “the precariat needs to move beyond the primitive rebel
stage manifested in 2011 and become enough of a class-for-
itself to be a power for change” (Standing 2015).
According to the aforementioned 1099 workforce report, inves-
tors welcome regulatory intervention to address worker precar-
iousness in the collaborative economy. As stated by Joanne
Yuan from Cowboy Ventures, “regulatory change will be extremely
impactful in this space.” In the same report Mar Hershenson from
Pejman Mar Ventures comments, “the government will become
more involved and eventually set clear guidelines for classifying
the workers and determining their benefits (….) employers them-
selves will have to reconsider HR practices (…) how to recruit,
how to train, how much to train them, what type of compensation
and benefits, how much integration into the company culture etc.”
A poignant issue for people working in the collaborative space
is the lack of insurance coverage whilst on the job, as com-
panies typically offload the risk to their workers with little or
no insurance to help reduce transaction costs. In the past
couple of years liability issues have become more common,
as illustrated by the two following examples.
“Uber driver held liable for death
of six-year-old pedestrian”
In 2013 in San Francisco, an Uber driver struck a mother
and two children; the six-year-old daughter, Sofia Liu, was
killed. The family sued both Uber and the driver, claim-
ing that the driver was looking at the Uber app on his
phone during the accident. Uber immediately deactivated
the driver’s account and did not accept responsibility,
claiming the driver was not working for them at the time
since he had no passenger in his car.
Uber subsequently changed their policy to insure drivers
from the time they have the app activated, even though
they may not be carrying a passenger. The family lawyers
claimed that this insurance policy is too weak, consid-
ering that the coverage was not applicable to cover the
medical expenses Sofia’s mother and brother incurred
in the accident. Eventually, in July 2015, an out-of-court
settlement was made between Uber and the family and
the driver was charged with misdemeanour vehicular
manslaughter.
Source: Constine 2014 and Bradshaw 2015.
21
Sherpashare is a smartphone app that helps rideshare drivers track their mileage and tax deductions, and is based on over 10,000 drivers taking more than 1
million trips from January to May of 2015.
9. Who pays the bill when something goes wrong?

21
“Living and dying on Airbnb”
“It’s only a matter of time until something terrible hap-
pens,” predicted Ron Lieber in his article on liability
issues of Airbnb for the New York Times in 2012.20
That
very same year, news of the first Airbnb guest to die
hit the press. Whilst staying at a property in Texas, an
Airbnb guest was hit on the head by a branch above the
garden swing. He was rendered unconscious immedi-
ately and, due to the subsequent and irreversible brain
damage, his family later made the decision to take him
off a life-support machine.
As a journalist and keen to spread the inconvenient
truth of Airbnb, the deceased’s son Zak Stone did not
accept the typical out-of-court settlement that would
have prevented him from writing about the situation. He
has since been researching liability issues for guests
and hosts of Airbnb around the world. The findings are
several: firstly, the company’s insurance policy for dam-
age to property has increased (after a host had their
property burnt down and heirlooms stolen); secondly,
integrating safety measures is simply not good business
for Airbnb (imagine the costs of inspection and com-
pliance); and, finally, his father’s death is not the only
story of its kind, as similar accidents have happened in
Taiwan and Canada, though the details were covered up.
Source: Stone 2015.
Liability issues are complex and fast evolving. Companies like
Uber and Airbnb have taken a reactive stance, adapting their
policies as incidents occur, though whenever possible they
avoid paying for any damages. The British Insurance Brokers’
Association has taken a more proactive stance and issued a
new guide to insurance and the sharing economy (BIBA 2014).
This guide suggests that collaborative economy companies
should to pool their resources to jointly negotiate insurance
coverage, which would best be achieved through the creation of
a trade body to represent the sharing economy sector. Another
potential measure would be to enable users (as producers)
to provide reviews of the platforms they are operating under,
an issue which was recently discussed at the Economy Forum
of Le Havre by Catalan collaborative economy expert Albert
Cañigueral and other collaborative economy advocates.
Take-aways
The controversies around the future of work in the collaborative
economy are a growing concern and we summarise the current
debate with the following take-aways. First and foremost, there
are more opportunities than ever to earn money through sharing
out assets, skills and time. The dark side of this reality is that
there is an increasing dissatisfaction being voiced from the
new breed of micro-entrepreneur in terms of low pay, lack of
benefits and stability. This situation is likely to be regulated
in the future. Finally, liability issues are hitting the press as
workers are left exposed by the low marginal cost platforms
and insurance companies are beginning to respond to the
emerging needs for different types of coverage in this sector.

“As we entrust more and more of our lives to connected devices
and smartphone apps, we must ask what happens if a critical
device fails? What are innovators doing to safeguard critical
functions? And what happens to all the data generated by this
sharing activity?“ (Gobble 2015).
Trust was been heralded as one of the cornerstones of the
collaborative economy (Botsman 2010) and online reputation
mechanisms, whereby users and consumers self-police the plat-
forms, have been considered as an alternative to regulation.
Lior Strahilevitz in his essay in the recent book The Reputation
Economy espouses this concept: “imagine if every plumber, manu-
factured product, cell phone provider, home builder, professor, hair
stylist, accountant, attorney, golf pro, and taxi driver were rated…
In such a world, there would be diminished need for regulatory
oversight and legal remedies because consumers would police
misconduct themselves” (Fertik 2013). Trust in brands is there-
fore crucial for collaborative companies. Many of the top sharing
companies such as Etsy, BlaBlaCar and Kickstarter have hugely
popular reputations (Owyang and Samuel 2015) and these are
maintained by a sophisticated system of mechanisms, algorithms
and finely tuned feedback systems for users.
There is, however, an ethical debate around the increasing
penetration of user feedback mechanisms: “How do we feel
about living in an environment of hyper-accountability?” (Tanz
2014). The question it raises is, what happens if the big data
captured through the multiple software platforms gets into the
wrong hands? The organisation Data Justice alerts us to the
danger of our digital identities being increasingly controlled by
just a few players (namely Google and Facebook). They warn
against the potential for these big data platforms becoming
the gateways to all types of service from education to health,
energy to transportation.22
Increasing, services such as the messenger service Telegram
are being used to protect users’ identity; they are heavily en-
crypted to avoid sharing location and identity. A step further in
this direction is the increasing activity on the Darknet and as-
sociated anonymity networks enabling peer-to-peer connections,
which conceal individuals’ identity and location. Tor, currently
the most popular free software for enabling this anonymous
communication, has an estimated 2,5 million users daily, often
associated with Bitcoin and other crypto currency transactions.23
An additional controversial aspect of online reputation issues is
the potential for fraud and bias. “Biases can mislead, ostracise,
shill unearned praise, and damn worthy competitors. A recent
study found 16% of Yelp reviews are not genuine” (Zervas 2015).
Zervas’ later article “Fake it till you make it” explores the eco-
nomic incentives behind the business decision to leave fake
reviews. In response to potential fraud, initiatives have been
developed such as Trustcloud, a trust and safety service for
platforms, users and consumers. From the public sector the
UK government has developed the identity verification system
Verify. Online reputation aggregators are also new mechanisms
to enable people to collect and share their ratings across
multiple sharing platforms; for example, eRated enables users
to transfer their eBay rating to build trust on Etsy. Veridu and
Jumio offer similar services. Helping to build consumer trust
in online transactions is crucial for the future development of
the sector, and public sector collaboration in this aspect has
been highlighted as important in the UK government’s review
of the sharing economy. “The Disclosure and Barring Service
should fully digitise criminal records checks, so they can be (...)
integrated into third party services such as sharing economy
platforms” (Wosskow 2014).
11. Idealists or pragmatists:
do sharers really care?
Given the unprecedented market reach of the collaborative
economy, there is increasing market research activity to support
companies in creating more targeted and effective marketing
strategies to reach the new breed of collaborative consumer
(Hellwig 2015; Mohlmann 2015). It has been estimated that
51% of the US population take part in the collaborative economy
(PWC 2014) and this facet of the economy sees continued
growth across all sectors including goods, services, money,
transportation, space, learning and cryptocurrencies. In terms
of a sharer’s profile, Millenials are more likely to share (33%
of 18- to 34-year-olds already do so) with those over 55 less
inclined to take part (27%). Notably, if the price reduction is
25% or more, sharers are unlikely to ever switch back to the
traditional companies (Owyang & Samuel 2015).
Crowd Companies and Vision Critical recently carried out a
study of 50,000 North American consumers which showed that
price, convenience and brand were the three most significant
factors in choosing a collaborative economy option. “It implies
1.6 Citizens’controversies
10. A community of trust or privacy for sale?
22
For more information see: http://www.datajustice.org/site/network-effects-lock-market-power-big-data-platforms
23
For more information see Jamie Bartlett’s recent book The DarkNet: Inside the Digital Underworld

23
that consumers are more interested in lower costs and conve-
nience than they are in fostering social relationships with the
company or other consumers” (Eckhartd 2015). Findings were
similar for research carried out across users of Car2go and
Airbnb, which revealed that cost savings, familiarity, service
quality, trust and utility had the most influence on the level of
satisfaction of using a sharing option (Mohlmann 2015). This
is not the case for all platforms, of course. For example, an
analysis of the motivations for joining the no-money-transfer
land access platform Landshare showed that people joined
this platform predominantly for the social need of belonging,
politics and ethics, but also for adventure and self-development,
financial benefits and improved health (McArthur 2015).
The above research shows that different people share for dif-
ferent reasons and it appears the decision to share is not
based purely on demographic variables but rather on personal
mindset and psychological disposition. According to a study of
Swiss and German consumers, some of the influencing factors
include the significance of the shared item to its owner. The
more relevant the item to one’s “personal extended self,” the
less likely it is to be shared. Other factors are personal philos-
ophy around reciprocity, level of generosity and whom they are
sharing with. On the whole crafts, recipes and knowledge are
much easier to share than personal items and on the whole
women and younger generations share slightly more than men
and older adults (Hellwig et al. 2015). Hellwig’s study identifies
four different types of sharers, as described in Table 5, and
suggests targeted marketing strategies for each.
Table 5. Four sharing clusters
1. Idealists – largely women who work part time, are
homemakers and believe sharing is a good thing for their
community and the planet. “Sharing idealists are best
targeted by sharing offers emphasising the idealistic and
emotional value of sharing (rooted in intrinsic motivation,
prosocial ideals, hedonic value, and social relationships).”
2. Opponents - slightly more men, tend to be entrepre-
neurs, managers or retired and negators of social media.
This group is basically sharing averse.
3. Pragmatists – tend to be male, full-time workers
who share as they perceive it is the logical and fair
thing to do. “Sharing pragmatists are best targeted by
emphasizing the functional value of sharing (functionality,
efficiency, utility value).”
4. Normatives - share because it’s seen as socially
desirable. This group is likely to be the most active
group on social media. “Sharing normatives are best
targeted by sharing offers emphasizing the signalling
value of sharing (sharing to signal that I am an ethical,
responsible and social person).”
Source: Hellwig 2015.
12. Is sharing good for the planet?
It depends of course, on whom you ask. Zipcar will tell you
that each car club car removes 14 privately owned cars from
the roads and estimates that London alone will have 1 million
car-sharers by 2020.24
Lyft paints a similar picture and is now
working with city councils to collaborate on reduced emissions
plans. Likewise, Airbnb will tell you that home sharing is anoth-
er way to save the planet. In 2015 the company published an
environmental report25
claiming that in Europe Airbnb guests
consume 78% less energy than their hotel guest counterparts
(and 63% less in the US), as well as achieving significant
reductions in waste production and water consumption and
practicing greener travel habits. Airbnb has since been accused
of greenwashing, however, and the full results of the survey
across 8,000 guests are not publicly available. Many platforms
present sharing as a way to reduce users’ carbon footprint and
there is a general assumption that sharing is less resource in-
tensive than traditional ways of accessing goods and facilities,
particularly when considering the entire life cycle of a product.
This said, there are some controversies around the environmen-
tal implications of the collaborative economy. Does it overall
generate more resource use through a potential “boomerang
effect” whereby lower prices enable more transactions? What
are the transport implications of decentralised systems? On the
whole there is limited data available to answer such questions.
24
For more information see: http://www.zipcar.co.uk/car-lite-london-reports
25
For more information see: http://blog.airbnb.com/environmental-impacts-of-home-sharing/

One of the few sectors that has been studied in more detail,
albeit with varying indicators, is the collaborative economy’s
disruption of mobility and its environmental implications. For
example, the change in car culture has been measured through
the decline in applications for driving licenses (particularly in
16- to 29-year-olds) over the past decade with data for several
countries including the US, France, UK, Germany and Austra-
lia.26
There is also a wealth of statistics around reduced city
congestion (London claims 30% less traffic over the past ten
years), increased multi-modality and of course bike-sharing
and car-sharing. “Mobility as a service” is the emerging trend,
with digital information as the fuel of mobility. Gilles Vesco,
the politician responsible for sustainable transport in Lyon,
France, has gone so far as to predict the car will become an
accessory to the smartphone (Moss 2015).
In terms of emissions reductions from this new mobility, com-
prehensive data is still limited. One exception is the research
on greenhouse gas (GHG) emission impacts from car-sharing. A
US-based survey of users of the major car-sharing organisations
showed that while individuals may increase emissions due to
better access to cars, these small increases outweigh the de-
creases from those who are sharing vehicles and driving less.
The collective emissions reductions outweighed the collective
increase, implying that car-sharing does reduce emissions as
a whole. The study showed a mean reduction of −0.58 t GHG
per year per household and 27 kilometres less driven per year
(Martin & Shaheen 2011). Research in Korea showed similar
results with car-sharing reducing the total C02 emissions in a
small town by 62,07 t GHG/year with the car-sharing location
as a key influencing factor (Lee et al. 2014).
In terms of the environmental impact of the on-demand economy
where goods are delivered directly to the consumer, it is useful
to consider the environmental analysis of e-commerce more
broadly. A comprehensive review of 56 scientific research pa-
pers27
revealed that the ecological footprint of B2C e-commerce
is significantly greater than conventional shopping (Mangiaricina
et al. 2015). Several influencing factors were noted: increased
use of less efficient delivery vans, failed home deliveries caus-
ing further travel, consumers tending to purchase from different
sites each requiring independent deliveries, warehouse oper-
ations becoming more complex with larger numbers of small
deliveries and consumer returns, and finally greater packaging
needed for individual item delivery.
Take-aways
To sum up our exploration of the controversies that affect
citizens, we suggest the following take-aways. Firstly, in an
era of hyper-accountability, the risks to privacy loss and data
manipulation are increasing. Secondly, the response to this
situation ranges from one extreme to another, from the gen-
eration of online reputation aggregators to anonymous peer-
to-peer networks. Thirdly, different people share for different
reasons, and there are interesting reflections on how to best
market a collaborative service depending on the type of sharer
one is targeting. Last but definitely not least, the claim that
the collaborative economy is the key to unlocking significant
carbon reductions and resource efficiencies cannot be taken
at face value. Of course, more rigorous research is need, but
given that the collaborative economy has resulted in an overall
increase in economic activity, whether it be through production,
consumption, education or finance, it is possible that the overall
increase in environmental impact far outweighs the reduced
impact of each individual transaction.
26
See the study “The reasons for the recent decline in young driver licensing in the US” by the University of Michigan, US PIRG Education Fund’s report “21st Century
Transportation” and Charting Transport in Australia as examples.
27
This review analysed 56 scientific papers on the environmental implications of e-commerce published from 200 to 2014 in 38 peer-reviewed international journals.

27
“We are learning to use our resources in a smarter way thanks
to new technologies. Driving alone in your car for 300 miles has
always been a nonsense, it is an economical and an ecological non-
sense and it is boring” (Frédéric Mazzella, founder of BlaBlaCar).
Overview Leading European carpooling startup, which
enables passengers and drivers heading
in the same direction to share the journey
and associated costs through an integrated
software platform, BlaBlacar charges a
commission for every ride shared (in some
countries), and the company is now worth
over a billion dollars.
Location Active in 22 countries worldwide: Belgium,
Netherlands, Luxembourg, Croatia, Czech
Republic, France, Germany, Hungary, India,
Italy, Poland, Portugal, Romania, Russia,
Serbia, Spain, Slovakia, Turkey, Ukraine, the
United Kingdom, Mexico and Brazil.
Founded 2006, France.
Users 25 million people registered.
Social impact 10 million rides shared a quarter, 1
Megatonne of CO2
saved over the last 12
months.
Economic
sustainability
Not publicly disclosed. Estimated turnover
of $96 million annually. Market value: $1.6
billion. 15 offices. 410 employees.
Innovation type A combination of well-designed safety and
online reputation mechanisms with an
effective global communications strategy.
Cross-sector
collaboration
Several partnerships with traditional
companies and governments to integrate
carpooling across sectors and amplify
positive impacts.
Replicability
and scalability
Model successfully replicated in some
countries, and has expanded through a
targeted global “acqui-hire” strategy.
Plans for further international expansion
in Asia and Latin America.
Launched in France in 2006, BlaBlaCar connects drivers who
have empty seats with paying passengers who are heading in the
same direction, generally for trips over 250 km. Since 2014 there
have been 47 million human interactions across Europe through
the BlaBlaCar platform. From the outset, BlaBlaCar has aimed
to become the world’s leading long-distance carpooling platform.
In early 2015, it acquired German competitor Carpooling.com,
the biggest and oldest player in Europe with 6 million members,
and in December 2015 the company launched in Brazil, its first
venture into South America. It doubled its membership from 10
million to 20 million in 2014, making it the fastest growing col-
laborative consumption company in Europe, and it now operates
in 22 countries. It has entered the group of “Unicorn startups”
with a market value of $1.6 billion and plans to expand further in
Latin America and Asia. BlaBlaCar’s business model relies on a
commission charged to the passenger (10%-15%) taken through
their online booking system which is being introduced gradually
in all countries once a critical mass of users has been reached
in the respective country. The platform is based on a trusted
community where both drivers and passengers share information
about themselves, their car and their travel preferences, while be-
ing encouraged to rate each other after sharing a ride. BlaBlaCar
provides extra insurance; secure online payments and moderation
to create a safe and fair environment. Additionally, BlaBlaCar’s
impact on the environment is significant, with 90.000 tonnes of
CO2
saved in Spain alone in the past 5 years.
From traditional carpooling to BlaBlaCar
Carpooling is not a new phenomenon and has adopted many
names and variations around the world throughout the years.
The first documented example of carpooling began shortly after
the introduction of Ford’s Model T, America’s first affordable au-
tomobile. In 1914 the recession hit the US prompted many car
owners to offer seats in their cars to share costs. Just like today,
carpooling’s popularity gave rise to opposition by public transport
companies who lobbied the US government to control the com-
petition. New liability regulations were introduced by 1918 which
reduced ridesharing by 90%. By World War II, the US government
partnered with the oil industry to launch an ad campaign to raise
awareness on the need to save resources (Cozza 2012).
Another example of public support for ridesharing was prompted
by the 1973 oil crisis and the subsequent oil embargo imposed
by oil-producing countries. A steep hike in the price of the oil
barrel ensued, leading President Nixon to design new policies to
promote and provide funding for ridesharing initiatives. However,
carpooling’s popularity declined again as the oil price fell and
disposable incomes rose.

In Europe, carpooling has also flourished for decades in some
countries. For instance, in Germany the concept has been popular
for nearly 50 years. Interestingly, at present carpooling has largely
replaced the longstanding European InterRailing and hitchhiking
tradition. In countries such as Germany and France, where state-
run railway monopolies have prevented the emergence of intercity
bus networks, carpooling platforms have thrived. The Internet, and
social networking in particular, combined with the focus on saving
money brought about by the economic downturn, has helped fa-
cilitate and promote carpooling among a wider spectrum of users
beyond the earlier young, bohemian carpool users (see Table 1).
All these elements have paved the way for the phenomenal rise
of BlaBlaCar in Europe and elsewhere.
Table 1. Definitions of car-sharing and associated concepts
B2C Car-sharing: Service whereby a number of people
use a company-owned fleet of cars that are parked in
dedicated car bays around the city. Members can book
(and extend) by the hour via web or phone and access the
car via a smart card.28
Many traditional car manufacturers
now offer this service as well as new startups.
Carpooling: Shared use of privately owned cars by the
driver and one or more passengers.29
For the purpose
of this study, we will refer to carpooling when it involves
long-distance rides where costs are shared. BlaBlaCar is a
carpooling platform. The terms carpooling and ridesharing
are often used interchangeably.
Ridesharing: Inner-city taxi-like service where private ve-
hicles operated by independent contractors are booked
over the Internet at short notice using geolocation tech-
nologies. Uber is a ridesharing platform.
P2P Car Rental: Platforms enabling car owners to rent
out their cars to other individuals in exchange for a fee,
and usually a commission from the platform.
Figure 1. Evolution of the car-sharing sector
Car Ownership Car-sharing Carpooling
Mercedes
Seat
GM
Bluemove
Respiro
Clickcar
BlaBlaCar
Amovens
Ridesharing P2P Car Rental
Uber
Lyft
SocialCar
Drivy
OuiCar
28
Car-Sharing. Available from: < http://p2pfoundation.net/Car_Sharing>. [15 December 2015].
29
Carpooling. Available from: <http://p2pfoundation.net/Carpooling>. [15 December 2015].

29
The rise of BlaBlaCar
BlaBlaCar was founded with a vision of transforming the world
of mobility to make it more efficient, accessible and affordable.
As Vincent Rosso, co-founder of BlaBlaCar Spain, puts it: “The
initial vision was to ‘Digitalise the motorways’ bridging the gap
between the carpool lanes and the internet injecting thus efficien-
cy and accessibility into road transport”. BlaBlaCar’s concept
has been described as “the hitchhiking of the 21st century” or
the “Ryanair for the road” (Nusca 2015). Through its software
platform, it connects drivers who have empty seats with paying
passengers headed in the same direction. BlaBlaCar is often
compared to Uber, however its business model is fundamen-
tally different. It connects people who are travelling between
cities (the average trip is 320 km long), not within a city, and,
critically, BlaBlaCar drivers don’t make a profit. BlaBlaCar puts
drivers and passengers in touch with each other and everyone
shares the cost of the trip—which would happen anyway, as it
is not an on-demand service. This strategy also protects the
company from having to deal with taxi regulations that have
plagued Uber. In a context of rising fuel costs, expensive public
transport and traffic congestion on European roads, BlaBlaCar
is a win-win proposition: the driver offers empty seats to cover
petrol and road tolls and the passenger gets a cheap trip and
convenience. In addition, cost sharing has two implications:
drivers are insured since they are only splitting costs and they
are not making any revenue that needs to be declared.
The idea for the company came to Frédéric Mazzella, founder
of BlaBlaCar, during the Christmas holiday. It was the 24th of
December 2003 and he was trying to get from Paris to his family
home 500 km away for Christmas. The trains were full and his
sister had to to make a detour to come to pick him up. On the
way back, he hatched a business idea. “The highway goes the
same way as the trains and I could see the trains were full with no
seats left and the cars were empty.” This was a vast inefficiency
in his eyes. “The idea was to organise all the available seats in
cars just like we organise all the available seats in planes and
trains, with a real search engine, and this did not exist. There
was only demand and no offer and organised in a very weird
way in that you would have neighbours who would share a ride
but you did not know where they were going and when” (Hick-
ey 2014). In 2006 Mazzella launched the V1 of the website
www.Covoiturage.fr which he coded himself with a few friends,
changing the name to BlaBlaCar in 2013. The platform is based
on a trusted community where both drivers and passengers
share information about themselves, their car and their travel
preferences and are encouraged to rate each other. BlaBlaCar
provides extra insurance free of charge, secure online payments
and moderation to create a safe and fair environment.
Monopolies and legal disputes
“From the beginning, I realised that what we are disrupting is
not hitch-hiking, it’s the transport industry,” (Nicolas Brusson,
BlaBlaCar co-founder and COO).
The collaborative economy has revolutionized the way we think
about car ownership. While ownership of a personal vehicle
still looms large, the existence of an increasingly diverse array
of mobility modes has prompted many individuals to rethink
their own approach to getting around. Collaborative platforms
like BlaBlaCar, Uber and Lyft are disrupting the transport sector
and are prompting defensive reactions from coach companies
and taxi drivers. Over the past year or so, incumbents have
filed a number of lawsuits against these startups worldwide.
Many of these new software platforms have different business
models; BlaBlaCar dubs itself a social network, Cabify is a
travel agent and Uber connects paying passengers with drivers
who are not licensed for commercial driving, which is illegal in
many countries. Given its cost-sharing model, BlaBlaCar has
by and large avoided Uber-style conflicts with regulators and
incumbents. However, carpooling is undercutting trains and
coaches and has attracted an increasing number of users who
are keen to save costs and make last-minute travel decisions.
BlaBlaCar is currently involved in a lawsuit in Spain for unfair
competition with the coach company trade association. This
is the first lawsuit it has had to fight in all 22 countries where
it operates in. In Spain, transport companies apply to the
Transport Ministry for a transport public service authorisation
to operate routes that they exploit on a monopolistic basis. In
exchange, they are obliged to cover a number of daily services
and unprofitable routes in order to provide a public transport
service. Against this backdrop, the Confebús trade group claims
that BlaBlaCar is operating a for-profit public transport company
without complying with the necessary licenses and regulations.
The trade group claims that it has lost 20% of the market share
as a result. Confebús asked the judge to issue a restraining
order to shut the service down, which the judge turned down
at the end of November 2015 (Martínez 2015).

Antenna for Social Innovation. We Share. Who Wins: unravelling the controversies of the collaborative economy.

Antenna for Social Innovation. We Share. Who Wins: unravelling the controversies of the collaborative economy.

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