THE BLOG
11/13/2014 12:32 pm ET Updated Jan 13, 2015

The Right to Share (Rides, Rooms and More)

Technology has enabled many Americans to become better at sharing.

The rapid growth of the collaborative, or sharing, economy is proof of this phenomenon.

Jeremiah Owyang, founder of sharing-economy analytics firm Crowd Companies, defines the sharing economy as "a powerful movement ... [enabling] peer-to-peer sharing of goods, services, transportation, space and money at a speed and scale that were unimaginable a decade ago."

In the sharing economy:

  • You can pay someone to stay the night in his or her guest room. (Airbnb)
  • You can pay a stranger to borrow his or her car. (Relay Rides)
  • Better yet, you can pay a stranger to give you a ride. (SideCar, Lyft, Uber)

Widely accessible smartphone technology takes a car or house and potentially doubles its value by turning that property into a revenue stream. Conversely, consumers using ridesharing or Airbnb pay less because rideshare drivers and roomsharing participants face minimal overhead costs.

The benefits of the sharing economy are numerous, but they stem from the fact that these business models have evolved past a traditional middleman, meaning services and goods cost less for consumers, and providers can keep more profits. In "Sharing is the new buying," released in spring 2014, Owyang reported that approximately 80 million Americans are already "sharing," and estimated that the number of those using emergent sharing services like Uber and Airbnb could double within a year.

But many people with vested interests in the way things have always been done work actively to crush new models to protect existing businesses.

Take Chicago's taxi system.

Chicago's system revolves around the "medallion," a permit issued by the city that a driver must own or lease to operate a cab. Problem is, only a handful of people in the city can afford to become medallion owners -- in September 2013, the city of Chicago hosted an auction for 50 medallions and started the bidding at $360,000 a piece. The city keeps making money off of medallions even after they're sold -- Chicago gets a 5-20 percent cut each time a medallion is sold privately (that takeaway would range from $17,500-$70,000 on a $350,000 medallion).

Because the system is so prohibitively expensive, University of Illinois at Chicago researchers estimated that only a quarter of taxi drivers in Chicago owned medallions. The rest of the drivers pay an average of about $500 per week to lease the right to operate taxis using the remaining medallions.

So it's not surprising that the people benefiting from this setup aren't fond of UberX, through which drivers can bypass the medallion system entirely.

The sharing economy is disruptive, and that's a good thing.

But the city and medallion stakeholders have a lot to lose -- in fact, the city of Chicago and the state of Illinois have attacked the ridesharing model.

Fortunately, a drastic city ordinance proposed in February was scaled back. Unfortunately, under the city's new rules, if a driver works more than 20 hours a week, they have to pay to get a chauffeur's license. Uber drivers also cannot pick up passengers at the Midway or O'Hare airports, or at McCormick Place, though the city ordinance gives the Commissioner of the Department of Business Affairs and Consumer Protection the authority to allow pickups from these locations if he or she deems it can be safely done.

The state tried to pass an even more severe law, which would have set an 18-hour weekly limit on drivers who want to avoid additional steep regulations that would be enacted throughout the entire state. Though it passed in the House and Senate, Gov. Pat Quinn vetoed the bill in August.

Uber isn't the only sharing mechanism that has come under attack. San Francisco finally legalized Airbnb this fall (though new rules won't take effect until Feb. 1, 2015) -- but at a price. Users can only offer short-term rentals (less than 30 days) if they are permanent residents of San Francisco, meaning they occupy their San Francisco property for at least 60 consecutive days with the intent to make it their primary place of residence. Prospective roomsharers must also register as "hosts" with the city. New York City is also in the process of determining how it will regulate roomsharing services like Airbnb.

Government shouldn't get in the way of the collaborative economy, and politicians, bureaucrats and the politically connected shouldn't try to stifle those who are making a living through innovative platforms such as Uber and Airbnb.