All the names for the new digital economy, and why none of them fits

How nice of you to think of him as your “peer”.
How nice of you to think of him as your “peer”.
Image: Reuters/Peter Jones
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The gig economy, the platform economy, the networked economy, the sharing economy, the on-demand economy, the peer economy, the bottom-up economy… You’ve probably heard these and maybe other terms bandied about, often interchangeably, to describe how companies like Uber, Airbnb, Taskrabbit, and countless others operate.

The trouble is, these terms are not interchangeable, and none of them accurately sums up the phenomenon they’re trying to name. What is that phenomenon? Here’s one attempt at an overall summary: the restructuring of the traditional relationships between workers, resources, and customers made possible by digital systems for connecting them to one another with low transaction costs.

It has implications for everything from workers’ rights to consumers’ rights to company sizes to how economic data are collected; O’Reilly Media, which is organizing a conference on the subject this week in San Francisco, calls it simply ”the Next:Economy“ and has framed the event under the broad question “What’s the future of work?”

The profusion of names reveals the fact that there isn’t, in fact, a single phenomenon going on here. And since muddled naming leads to muddled thinking, here’s a rundown of what each name really means, and why it’s an inadequate label for the bigger shift that’s going on.

Sharing economy

One of the oldest and still most widely used names, probably because the first big success of this new economy was Couchsurfing, the site that matches travelers up with people willing to let them stay a few nights for free. The name is apt for any service that allows a thing previously available only to its owner to be used by other people, thus making more efficient use of resources.

But the name is often applied to any firm that uses a snazzy app or algorithm to manage access to a resource—such as Zipcar, which rents out cars by the hour. And if Zipcar is the sharing economy, then so are Hertz and Avis. Moreover, “sharing economy” is about the reallocation of resources, when most of the biggest changes going on are about the reallocation of labor, as with Uber and Taskrabbit, for example.

Peer (or peer-to-peer) economy

The most insidious term in the lexicon. It’s meant to get at the more direct connection between the people on either side of a transaction, unmediated by a big faceless company, but ”peer economy” is misleading in two ways.

First, it implies that you and the poor soul who bikes across the city in the snow to deliver a gift for your child’s birthday are peers, when in fact, wealth inequality is essential to making this kind of economic relationship work. Second, it intentionally elides the role of the platforms that connect these so-called peers, presenting them as almost frictionless, neutral, practically invisible marketplaces for facilitating transactions. In reality, design decisions made by companies such as Uber determine how much power people on each side of the transaction have, and of course the companies themselves are big economic actors too.

Gig economy

This seems to be a favorite right now, perhaps because it’s a relatively value-neutral way of expressing the nature of work for many people in the new order: not a steady job but a series of gigs. (See also, in American terminology, the 1099 economy.) It also has promise because it hints at the fact that gig-style working could expand, from work like driving cars and delivering groceries to more specialized work; why not an Uber for lawyers?

However, for the same reason,”gig economy” is narrow, not getting at either the “sharing” part of things, nor at the fundamental shifts that are taking place. (After all, freelancers of all sorts, from journalists to plumbers, have been gig workers since forever.) Also, the gig economy could be short-lived: Legal disputes about gig workers’ rights, liability, and so forth could force the creation of a new category of worker that is neither freelancer nor employee.

On-demand economy

Another recent favorite, probably because this is where the venture capital money is: services that offer cars, food, home-cleaning, and other services at the touch of an app button. But it’s way too narrow to capture all the new kinds of businesses that are being created.

Platform economy

This one has the advantage of being more inclusive than most of the above, since the common feature of the companies we’re talking about is that they create a digital platform that, whether through algorithms, a rating system, or some combination of the two, serves to connect customers with providers of goods or services.

The main problem: It’s so broad as to be meaningless. Lots of digital services that predate the phenomenon, from Craigslist to Amazon, are also platforms in that sense. One could even argue that any company is a platform, in that it provides a framework for connecting workers, resources, and customers.

Networked economy

See “Platform economy.”

Bottom-up economy

A term coined by the San Francisco venture-capital firm Homebrew, this is meant to describe the newfound ability of small businesses and freelance workers to find customers or band together with other workers from all around the world. And indeed, this is going on and there are companies, the kind Homebrew invests in, which are building the tools to make it possible. It’s an idealistic slice of the larger phenomenon—the true peer-to-peer economy, if you will—but only a slice.

Access economy

Not used much, because it refers to something pretty specific: services that let you pay to use things like cars (Zipcar), movies (Netflix), or music (Pandora, Spotify) without owning them. (See also “rental economy.”) This is indeed a big economic shift, and one that’s been going on since long before the Ubers of this world came into being, but it’s only one aspect of the broader changes.

Uber economy

Of course, “the Uber for X” has become an easy shorthand, but it’s simplistic—the Uber model is only one of many—and even perhaps a little unfair to Uber.

So what to call the shifts that are taking place? Faute de mieux, the ”next economy” is probably as good as a name as any for now.