There are some significant shifts going on in how media companies make their money. The so-called ‘sharing economy’ seems to be based on feel-good ideas about reciprocity and trust. Yet for companies like Uber, Airbnb – and for social media companies like Facebook and YouTube – it has become a new business model, which is massively profitable.
Back in the 1970s, the Canadian scholar Dallas Smythe developed the idea that the media audience was not just a collection of consumers, but also itself a kind of commodity – something that was bought and sold in the marketplace. Smythe was one of the key founders of the political economy approach to media, which focuses on the economic aspects of media production and distribution, and their political implications. The main business of the media, he argued, was ‘selling audiences to advertisers’. The actual programmes we watch or the stories we read are merely an inducement to look at the advertising. Media content, Smythe declared, was just a ‘free lunch’.
When it comes to contemporary social media, this argument needs to be extended. The business model for media companies like Facebook and Google is not just about advertising: they offer us free content, but in exchange we provide them with large amounts of valuable data about our consumer preferences and behaviour (Facebook, for instance is alleged to have an average of 98 bits of personal data on each of its users). What’s more, much of the ‘free lunch’ – the content – is stuff we bring along and cook for ourselves. There is a significant shift here in the business models of media companies, and in the behaviour of media users – and these are shifts that media teachers and students need to understand.
To some extent, we can see these social media companies as examples of the so-called ‘sharing economy’. Various terms and models have been used to describe this new economy. It has been called a ‘peer-to-peer economy’ and a ‘collaborative economy’, although the most familiar term (over a decade old now) is the one I’ll be using here. My online dictionary neatly defines the sharing economy as ‘an economic system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the Internet’. Perhaps the most obvious examples of this are Airbnb and Uber; but I would argue that media companies like Facebook and YouTube are using a very similar approach.
The sharing economy is a fast-growing sector: Uber, for example, has recently been valued at 60 billion US dollars, while Airbnb is worth around 30. Aside from these two well-known companies, there are many others providing a wide range of services, like car sharing (Zipcar, Lyft), help with small everyday tasks (Taskrabbit), rental of tools (Neighbourgoods), holiday homes for dogs (Dogvacay), and even money-lending (LendingClub). The sharing economy has attracted much political interest. For example, the British government’s 2015 budget contained ‘a package of measures designed to help unlock the potential of the sharing economy’; and NESTA (the leading government-funded innovation agency) has generated a range of initiatives and reports on what it calls the ‘collaborative economy’.
Sharing is a feel-good term. It implies the communal use of resources, and relationships of reciprocity, trust and mutual support. Sharing is often aligned with arguments about social justice and democracy. Potentially, it challenges waste and unnecessary consumption, through the lending or recycling of under-used resources. Sharing seems to involve openness, inclusion and equality.
Yet the sharing economy is another matter. Sharing implies non-commercial exchange between individuals, motivated by generosity or a wish to help others; but an economy is about market relationships, where goods and services are exchanged for money, and ultimately for profit. Critics of the idea argue that a sharing economy is a contradiction in terms: it’s not really sharing if people are buying and selling.
Some research has suggested that users of companies like Airbnb or Uber aren’t very interested in the warm ideas about community that such companies tend to promote in their publicity materials – they just want convenience and a cheap price. Yet such companies are not only extremely profitable: they also aim to replace public provision, and to bypass public regulation in areas like employment law, taxation, and health and safety.
The most forceful criticisms of the sharing economy can be found in Tom Slee’s book What’s Yours Is Mine. Slee has conducted detailed research on the reality behind the feel-good rhetoric of sharing. For example, Airbnb claims to offer the opportunity to ‘live like the locals’ by renting spare rooms in people’s houses; but in reality, most lenders are not individuals, but private landlords who are renting out several properties. Many critics of the company have argued that Airbnb is changing the character of city communities, as more and more people sub-let residential properties to tourist visitors.
Meanwhile, Uber claims to provide a ‘ride-sharing’ service for people with spare capacity in their cars. But in reality it is simply a digitally enabled taxi service, which bypasses regulations that official taxi services have to follow (the screening of drivers, the inspection of vehicles, employment laws) and makes it easier to avoid taxation. The company gets a large rake-off simply for maintaining a technological platform, while pushing the costs onto drivers. Such companies are also exceptionally skilful at avoiding taxation, not least by routing their profits through international companies and offshore tax havens.
Despite the popular rhetoric of caring and sharing, these are large companies backed by venture capitalists with deep pockets. This kind of ‘platform capitalism’ often requires a substantial upfront investment in the technology itself. Success in this market depends on becoming a monopoly provider of a particular service, and this means ruthless competition from the outset. Just as we automatically ‘google’ (rather than search online) for information, so many of us will ‘call an Uber’ (rather than a cab): other search engines and cab companies are available, but the aim for the companies is to dominate the market, and thereby achieve large economies of scale (because once the technology is in place, it becomes cheaper to provide for each new customer).
How does any of this relate to media? On one level, the sharing economy largely depends upon social media (in the form of the internet, apps and mobile devices) to market its services, and to develop reputations via user rating and recommendation systems. In this respect, it uses media technologies as tools. However, many of the same arguments apply to the sharing of media artefacts themselves – where the media are products rather than merely tools.
In this sense, platforms like Facebook, YouTube, Flickr, Pinterest and Twitter could all be seen as examples of the sharing economy. They present themselves as services that enable the free sharing of media material (whoever produces it), but they are all commercial platforms that generate (or promise to generate) massive profits for their owners. The only notable exception to this is Wikipedia, which remains one of the very few non-commercial sharing platforms.
This kind of online sharing began in a spirit of libertarian anarchism. Early ‘peer-to-peer’ or ‘file-sharing’ networks like Napster, Kazaa and Pirate Bay were touted as a direct challenge to large capitalist media corporations – record labels, software companies, publishers – and to the restrictive copyright laws that sustained them. But today such media sharing is fundamentally dependent upon the operations of commercial internet service providers, commercial platforms and commercial search engines, which earn their money from advertising and selling user data.
This is a different kind of commercial transaction from the likes of Uber – in that money does not directly change hands – but it is a commercial transaction nonetheless. Facebook and others are definitely selling audiences to advertisers in the manner identified by Dallas Smythe – but they are also selling data about audiences as well. We ‘pay’ for these services both by viewing the advertising they carry, and by giving them access to our personal data. The service may appear to be free of charge; but in this situation, we are no longer merely consumers – we are also the product itself.
Many of the criticisms made of sharing economy companies also apply to these social media platforms. By presenting themselves merely as technology companies, they manage to evade responsibility for the content they provide, and resist any attempt at government regulation (and indeed taxation). They present themselves as innocent intermediaries or ‘middlemen’, who cannot be held to account when things go wrong. Yet Uber is not just a technology company, but a taxi company. Airbnb is not just a technology company, but an accommodation company. And likewise, Facebook is not just a technology company, but a media company.
In the case of social media, many claims have been made about the potential of technology to empower ordinary users, and to create new vehicles for self-expression. Some years back, there was great enthusiasm about ‘user-generated content’ and citizen journalism – although much of what passed as citizen journalism was little more than eyewitness testimony. Today’s media frequently solicit contributions from readers, yet this often functions as little more than a convenient source of free content.
Meanwhile, professional journalists are losing their jobs. Just as Uber is putting trained taxi drivers out of work, and Airbnb is threatening the regulated hotel industry, so the rise of user-generated content is making it harder for trained professional journalists and media producers to make a living. These new forms of ‘sharing’ have contributed to the casualisation of labour in the media industries, and the rise of the so-called ‘gig economy’. Just like Uber drivers, citizen journalists generate profits for those who publish their work, but they do not have employment rights – for example, health benefits, security of employment, or a guaranteed living wage.
In some respects, the sharing economy of social media is a replay of the well-established political economy model – but in some ways, things are changing. In order to understand this, we need to think harder about who’s doing the work, and who’s getting paid. Each click represents a means for these companies to make money. By clicking and liking and following, as well as posting and uploading content, we do the work that is necessary for these services to keep generating profit – and we do it for free.