PricewaterhouseCoopers recently released a report that attempts to provide a “holistic view” of the so-called sharing economy, including how it is unfolding “across both business and consumer landscapes.” While an exact definition of the “sharing economy” can be hard to pin down, it generally refers to the concept of using information technology to allow consumers to rent or borrow goods, especially those that are underutilized, rather than buy and own them. Undoubtedly, the sharing economy is an important and innovative approach to commerce, especially having given rise to wildly popular services such as Airbnb and Lyft. More broadly, the sharing economy can boost economic welfare by allowing the economy to more efficiently utilize goods and services.
Given all this, we certainly need thorough analysis of the sharing economy to fully grasp its potential. Yet PwC’s report errs badly in at least one important respect: It conflates unlawful sharing of digital media with legitimate peer-to-peer activities.
With regards to the challenges of the sharing economy in digital media, PwC writes:
“The ambiguity of the sharing economy is particularly evident in entertainment and media, where consumers are open to ‘sharing’ products, but it’s less about the underutilization of assets and more about the intangibility of them. To that end, legal and contractual impediments may make it difficult to ramp up a formalized sharing model at the same speed as industries like automotive and hospitality have.”
PwC equates peer-to-peer sharing of copyrighted works—an illegal action that deprives the owner of that copyright their just compensation—with the legitimate peer-to-peer networks that people use to sell rides via their personal automobiles or to rent out their power tools. This distinction is stark: The latter encompasses sharing things that individuals own and thus have the right to share, and the former encompasses sharing things that individuals do not own, and therefore do not have the right to share. By equating these two things, PwC is buying into the false narrative that digital media companies are fighting tech innovation by not succumbing to the peer-to-peer sharing model. The truth is that the film and TV industry are offering a variety of legal services that allow users to watch their favorite programming.
As evidence of its claim that digital media companies do not understand the sharing economy, PwC points to Wavelength, a failed startup that allowed its users to share movies with their friends so they could avoid paying. The program ran on UltraViolet, a cloud-based service created by movie studios in 2010 that let users buy a single copy of a movie and stream it to several of their devices. While the intent of UltraViolet is to improve the consumer experience by allowing consumers (including their family members) to watch the movies they buy from multiple devices, it was clearly not designed to allow one person to buy a movie and allow all of their friends to stream it for free.
Furthermore, PwC points to a December 2014 Consumer Reports National Research Center survey that showed 46 percent of users with streaming media accounts shared their login credentials with others, giving them to access the same content. The implication is that these 46 percent are simply leading-edge adopters of the sharing economy model. But again, PwC makes no distinction between lawful activities and unlawful activities. Breaking an online service’s terms of service to share the content with multiple users is not the same thing as using legitimate services intended for friends and family, such as Amazon’s Family Library, Netflix account profiles, or Apple’s family sharing service.
The sharing economy offers up a world of innovation that will likely drive increased collaboration, peer-influence, and efficiency while cutting down on waste. That is why it is important that public policies at the local, state, and federal level not discriminate against legitimate sharing models.
Yes, the sharing economy will even be great for innovation in digital media. But just as the sharing economy does not allow you to “share” someone’s car without their permission or break into someone’s vacant home while they are on vacation, neither does it allow someone to steal movies, music, books, or any other form of digital entertainment. The sharing economy is legitimate, the stealing economy is not. So let’s not equate the two.
Photo Credit: Flickr user GotCredit.