The case for collaborative consumption - Rachel Botsman

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So today I'm going to talk to you about the rise of collaborative consumption. I'm going to explain what it is and try and convince you in just 15 minutes that this isn't a flimsy idea or a short-term trend but a powerful cultural and economic force reinventing not just what we consume but how we consume.

Now, I'm going to start with a deceptively simple example. Hands up, how many of you have books, CDs, DVDs, or videos lying around your house that you probably won't use again, but you can't quite bring yourself to throw away? I can't see all the hands, but it looks like all of you, right?

Um, on our shelves at home, we have a box set of the DVD series "24," season 6 to be precise. I think it was bought for us around 3 years ago for a Christmas present. Now, my husband Chris and I love this show, but let's face it, when you watched it once, maybe twice, you don't really want to watch it again because you know how Jack B is going to defeat the terrorist. So there it sits on our shelves, whoops, um, obsolete to us but with immediate latent value to someone else.

Now, before we go on, I have a confession to make: I lived in New York for 10 years, and I am a big fan of "Sex in the City." Now, I’d love to watch the first movie again as sort of a warm-up to the sequel coming out next week. So how easily could I swap our unwanted copy of "24" for a wanted copy of "Sex in the City?"

Now, you may have noticed there's a new sector emerging called swap trading. Now, the easiest analogy for swap trading is like um, an online dating service for all your unwanted media. What it does is use the internet to create an infinite marketplace to match person A's haves with person C's wants, whatever they may be.

The other week I went on one of these sites, appropriately called SwapTree, and there were over 59,000 items that I could instantly swap for my copy of "24." Lo and behold, there in Reseda, California, was Rondon who wanted to swap his or her like-new copy of "Sex in the City" for my copy of "24."

So in other words, what's happening here is that SwapTree solves my carrying company Sugar Rush problem—a problem economists call the coincidence of wants. In approximately 60 seconds, what's even more amazing is that it will print out a postage label on the spot because it knows the weight of the item.

Now, there are layers of technical wonder behind such SW sites such as SwapTree, but that's not my interest and nor is swap trading per se. My passion, and what I've spent the last few years dedicated to researching, are the collaborative behaviors and trust mechanics inherent in these systems.

When you think about it, it would have seemed like a crazy idea even a few years ago that I would swap my stuff with a total stranger whose real name I didn’t know and without any money changing hands. Yet 99% of trades on SwapTree happen successfully, and the 1% that receive a negative rating is for relatively minor reasons, like the item didn't arrive on time.

So what's happening here? An extremely powerful dynamic that has huge commercial and cultural implications is at play, namely that technology is enabling trust between strangers. We now live in a global village where we can mimic the ties that used to happen face-to-face, but on a scale and in ways that have never been possible before.

So what's actually happening is that social networks and real-time technologies are taking us back to bartering, trading, swapping, sharing, but they're being reinvented into dynamic and appealing forms.

What I find fascinating is that we've actually wired our world to share, whether that's our neighborhood, our school, our office, or our Facebook network, and that's creating an economy of “what's mine is yours.” From the mighty eBay, the grandfather of exchange marketplaces, to car sharing companies such as GoGet, where you pay a monthly fee to rent cars by the hour, to social lending platforms such as OPA, which will take anyone in this audience with $100 to lend and match them with a borrower anywhere in the world—we're sharing and collaborating again in ways that I believe are more hip than hippie. I call this groundswell collaborative consumption.

Now, before I dig into the different systems of collaborative consumption, I'd like to try and answer the question that every author rightfully gets asked, which is: where did this idea come from?

Now, I'd like to say I woke up one morning and said, "I'm going to write about collaborative consumption," but actually, it was a complicated web of seemingly disconnected ideas. Over the next minute, you're going to see a bit like a conceptual fireworks display of all the dots that went on in my head.

The first thing I began to notice is how many big concepts were emerging—from the wisdom of crowds to smart mobs—around how ridiculously easy it is to form groups for a purpose. Linked to this crowd mania were examples all around the world, from the election of a president to the infamous Wikipedia and everything in between, on what the power of numbers could achieve.

Now, you know when you learn a new word and then you start to see that word everywhere? That's what happened to me when I noticed that we are moving from passive consumers to creators to highly enabled collaborators. What's happening is the internet is removing the middleman so that anyone from a T-shirt designer to a knitter can make a living selling peer-to-peer.

The ubiquitous force of this peer-to-peer revolution means that sharing is happening at phenomenal rates. I mean, it's amazing to think that in every single minute of this speech, 25 hours of YouTube video will be loaded.

Now, what I find fascinating about these examples is how they're actually tapping into our primate instincts. I mean, we're monkeys, and we're born and bred to share and cooperate, and we were doing so for thousands of years—whether it's when we hunted in packs or farmed in cooperatives—before this big system called hyper consumption came along, and we built these fences and created our own little thorns.

But things are changing, and one of the reasons why is the digital natives or Gen Y. They're growing up sharing files, video games, and knowledge; it's second nature to them. So we Millennials—I am just a millennial—are like foot soldiers moving us from a culture of "me" to a culture of "we." The reason why it's happening so far is because of mobile collaboration.

We now live in a connected age where we can locate anyone, anytime, in real time, from a small device in our hands. All of this was going through my head towards the end of 2008 when, of course, the great financial crash happened.

Thomas Friedman is one of my favorite New York Times columnists, and he commented that 2008 was when we hit a wall, when Mother Nature and the market both said "no more." Now we rationally know that an economy built on hyper consumption is a Ponzi scheme; it’s a house of cards. Yet it's hard for us to individually know what to do.

So all of this is a lot of twittering, right? Well, it was a lot of noise and complexity in my head until actually I realized it was happening because of four key drivers: one, a renewed belief in the importance of community and a very redefinition of what friend and neighbor really means; two, a torrent of peer-to-peer social networks and real-time technologies fundamentally changing the way we behave; three, pressing unresolved environmental concerns; and four, a global recession that has fundamentally shocked consumer behaviors.

These four drivers are fusing together and creating the big shift away from the 20th century defined by hyper consumption towards the 21st century defined by collaborative consumption. I genuinely believe we're at an inflection point where the sharing behaviors through sites such as Flickr and Twitter that are becoming second nature online are being applied to offline areas of our everyday lives—from morning commutes to the way fashion is designed to the way we grow food.

We are consuming and collaborating once again. My co-author R. Rogers and I have actually gathered thousands of examples from all around the world of collaborative consumption. Although they vary enormously in scale, maturity, and purpose, when we dived into them, we realized that they could actually be organized into three clear systems.

The first is redistribution markets. Redistribution markets, just like SwapTree, is when you take a used or pre-owned item and move it from where it's not needed to somewhere where it is. They're increasingly thought of as the fifth R: reduce, reuse, recycle, repair, and redistribute because they stretch the life cycle of a product and thereby reduce waste.

The second is collaborative lifestyles. This is the sharing of resources, things like money, skills, and time. I bet in a couple of years phrases like co-working, couch surfing, and time banks are going to become a part of everyday vernacular. One of my favorite examples of collaborative lifestyles is called "Ler." It's a scheme in the UK that matches Mr. Jones with some spare space in his back garden with Mrs. Smith, a would-be grower. Together, they grow their own food.

It's one of those ideas that's so simple yet brilliant you wonder why it's never been done before. Now the third system is product service systems. This is where you pay for the benefit of a product—what it does for you—without needing to own the product outright. This idea is particularly powerful for things that have high idling capacity, and that can be anything from baby goods to fashion.

How many of you have a power drill? Own a power drill, right? That power drill will be used around 12 to 13 minutes in its entire lifetime. It's kind of ridiculous, right? You see, what you need is the hole, not the drill. So why don't you rent the drill? Or even better, rent out your own drill to other people and make some money from it.

These three systems are coming together, allowing people to share resources without sacrificing their lifestyles or their cherished personal freedom. I'm not asking people to share nicely in the sandpit.

So I want to just give you an example of how powerful collaborative consumption can be to change behaviors. The average car costs $8,000 a year to run, yet that car sits idle for 23 hours a day. So when you consider these two facts, it starts to make a little less sense that we have to own one outright.

This is where car sharing companies such as Zipcar and GoGet come in. In 2009, Zipcar took 250 participants from across 13 cities, and they're all self-confessed car addicts and car sharing rookies, and got them to surrender their keys for a month. Instead, these people had to walk, bike, take the train, or other forms of public transport. They could only use their Zipcar membership when absolutely necessary.

The results of this challenge, after just one month, were staggering. It's amazing that £413 were lost just from the extra exercise, but my favorite statistic is that 100 out of the 250 participants did not want their keys back. In other words, the car addicts had lost their urge to own.

Now, product service systems have been around for years; just think of libraries and laundries, but I think we are entering a new age because technology makes sharing frictionless and fun. There's a great quote that was written in the New York Times that said, um, sharing is to ownership what the iPod is to the 8-track, what solar power is to the coal mine.

I believe also our generation's relationship to satisfying what we want is far less tangible than any other previous generation. I don't want the DVD; I want the movie it carries. I don't want a clunky answering machine; I want the message it saves. I don't want a CD; I want the music it plays.

In other words, I don't want stuff; I want the needs or experiences it fulfills. This is fueling a massive shift from where usage trumps possessions, or as Kevin Kelly, the editor of Wired magazine, puts it: where access is better than ownership.

Now, as our possessions dematerialize into the cloud, a blurry line is appearing between what's mine, what's yours, and what's ours. I want to give you one example that shows how fast this evolution is happening. This represents an 8-year time span.

We've gone from traditional car ownership to car sharing companies such as Zipcar and GoGet to ride-sharing platforms that match rides to the newest century, which is peer-to-peer car rental, where you can actually make money out of renting that car that sits idle for 23 hours a day to your neighbor.

Now, all of these systems require a degree of trust, and the cornerstone to this working is reputation. Now, in the old consumer system, our reputation didn't matter so much because our credit history was far more important than any kind of peer-to-peer review. But now, with the web, we leave a trail. With every spammer we flag, with every idea we post, comment we share, we're actually signaling how well we collaborate and whether we can or can't be trusted.

Let's go back to my first example, SwapTree. I can see that Rondon has completed 553 trades with a 100% success rate. In other words, I can trust him or her. Now mark my words, it’s only a matter of time before we're going to be able to perform a Google-like search and see a cumulative picture of our reputation capital.

This reputation capital would determine our access to collaborative consumption—it's a new social currency, so to speak, that could become as powerful as our credit rating.

Now, as a closing thought, I believe we're actually in a period where we're waking up from this humongous hangover of emptiness and waste, and we're taking a leap to create a more sustainable system built to serve our innate needs for community and individual identity.

I believe it will be referred to as a revolution, so to speak, when society, faced with great challenges, made a seismic shift from individual getting and spending towards a rediscovery of collective good. I'm on a mission—I’m on a mission to make sharing cool. I'm on a mission to make sharing hip because I really believe it can disrupt outdated modes of business, help us leapfrog over wasteful forms of hyper consumption, and teach us when enough really is enough.

Thank you very much.